821.51/1722: Telegram

The Secretary of State to the Chargé in Colombia (Dawson)

73. Your telegram No. 84, October 28, 11 a.m. The Department desires you to seek an early interview with President Olaya and say to him that we are much surprised at the passage by the House during a secret session in second debate of a bill providing for the suspension of debt service and trust that the bill does not represent his views. We are aware of no developments of an economic nature in Colombia which would require a suspension of the present extremely reduced debt service payments still being maintained. On the contrary the 15 percent of all foreign exchange drafts to be retained by the Bank of the Republic appears to be ample to cover present cash debt service payments as well as to provide a considerable sum for government purchases abroad. Complete suspension of all cash debt service would therefore seem difficult to justify. Furthermore, October 20th, the White House publicly announced a project for the formation of a central bondholders organization for handling the whole question of debts of foreign countries owing to citizens of this country.45 It will be recalled that President Olaya has several times expressed interest in just such an organization (your telegram No. 58, June 19). It would seem particularly unfortunate, therefore, for Colombia to suspend debt service at the very moment when active steps are being taken for completion of this organization, especially when such action is considered in connection with the recent mortgage bank reorganization scheme which appears to discriminate against foreign bondholders.

  1. See Department of State, Press Releases, October 21, 1933, p. 227.