Memorandum by the Chief of the Division of Latin American Affairs (Wilson)

Mr. J. Lawrence Gilson, Chairman of the Bondholders Protective Committee for the External Bonds of the Republic of Salvador, telephoned me from New York. He referred to his recent conversation with Mr. Welles, and said that day before yesterday he had received a cable from the Finance Minister of Salvador reading in translation as follows:

“Government resolved to pay coupon up to June. We request designation of representative to urgently take up modification of interest and to calculate amount to be set aside in budget of next fiscal year.”

[Page 270]

Mr. Gilson said that it appeared that President Martínez wanted to reduce the bond interest by about 50%, and that this was evidently a move to initiate discussions with this object in view. He said that the attitude of the Committee had been to do nothing to disturb the present arrangement, to endeavor to extend the present arrangement for another year and then, following the election and inauguration of a new President early in 1935, to take up the matter of a revision of the 1922 loan contract on an equitable basis. He said that the Committee had not yet replied to the recent cable from the Finance Minister and did not wish to do so until it had an expression of our views in the matter.

I said that I did not see how we could advise his Committee as to the attitude it should take in this matter. I said that once the Committee had determined upon the course of action it thought well to pursue we would of course be interested in being advised thereof. Mr. Gilson then said that the Committee would take the matter under consideration and would write us a letter indicating what it proposed to do and probably inquiring whether we had any comments to make.53

Edwin C. Wilson
  1. Letter dated May 25, 1934, confirming this conversation, not printed.