The Secretary of State to the Chargé in El Salvador (McCafferty)

No. 165

Sir: There is transmitted herewith a “Memorandum of Facts in connection with the Republic of El Salvador Customs Lien Sinking Fund Bonds of 1922, Series A, B and C”,50 together with a copy of its covering letter of April 3, 1934, received from Mr. J. Lawrence Gilson, Vice President of the Manufacturers Trust Company of New York City,51 which is the Fiscal Agent of the 1922 Loan. Mr. Gilson [Page 269] is also Chairman of a “Bondholders Protective Committee for Republic of El Salvador”.

There is also enclosed a copy of a memorandum of a conversation of March 21, 1934, between Mr. Gilson and the Assistant Secretary of State,52 with respect to the Loan. The Department desires that you make a study of the situation regarding the service of the Loan and report thereon, with particular reference to Mr. Gilson’s contention “that the Republic of El Salvador is financially able to meet its external obligations” but “that funds which should accrue to the bondholders are being diverted by the Republic for purposes directly contrary to the terms of the Loan Contract”.

Very truly yours,

For the Secretary of State:
Sumner Welles
  1. Not printed.
  2. Supra.
  3. Ante, p. 266.