721.23/2158: Telegram

The Ambassador in Peru (Dearing) to the Secretary of State

37. Department’s 23, March 26, 5 p.m. As nearly as Embassy can gather the reports of adverse developments cover the following:

Prado who went to Rio de Janeiro under special instructions [Page 330] to pacify Peruvian delegation and give negotiations a more favorable turn is meeting with scant, if any, success.
Impression is gaining ground Leticia must be returned to Colombia and thus will make Peru lose face and by angering armed forces and Cerristas may lead either to internal trouble or war.
Prospect of necessity for Peru to pay an indemnity which would aggravate effects under (2) and bring financial and business disturbances also. Minister of Hacienda has thought it necessary to make public statement today that the Government has been forced to make a loan but that to take care of “unpostponable national necessities which no Peruvian could gainsay the Government has been able to secure the necessary resources without disturbing any public interest worthy of being considered”.
Prospects [of] war the expense of which would prostrate the country.
Continued secrecy and slowness of Rio de Janeiro negotiations disquiets public, favors rumor and heightens effect of the foregoing.
Minister for Foreign Affairs yesterday described the outlook to me more optimistically as follows:
Prado has special instructions to speed up negotiations and more frequent sessions are expected to bring forth concrete bases of settlement within the next fortnight.
Peruvian Government confidently expects definitive settlement to be reached before the expiration League Commission’s occupancy of Leticia, June 23.
The only prolongation of League occupancy therefore contemplated by the Peruvian Government is merely sufficient time for ratification of the agreement by Peruvian and Colombian Congresses.
Personally this seems to me too simple and too sanguine. Situation easier perhaps but by no means cleared up.
Please instruct if the Department wishes fuller or more frequent reports by cable. Embassy endeavoring to avoid expense.