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

Mr. F. J. Lisman and Mr. Fred Lavis, of the Bondholders Protective Committee for El Salvador Bonds, called on Mr. Welles. Mr. Wilson was present. Mr. Lisman referred to a telephone conversation he had had with Mr. Wilson on November 13, (see memo, of that date)60 said that the Committee had held its meeting on November 16, and that as yet no reply had come from the Salvadoran Finance Minister to the Committee’s letter of last October.

Mr. Lavis said that reports from Mr. Renwick were to the effect that the Salvadoran Finance Minister maintained that Salvador could not continue, in an extension of the present temporary agreement, to make the same interest payments, and that some reduction in interest would have to be effected. The Minister’s reason for this was the difficulty Salvador was meeting in marketing its coffee crop, due to restrictions on imports in Germany. Mr. Renwick had advised Mr. Lavis that in his own opinion it would probably be impossible for Salvador, because of the coffee difficulties, to continue the present interest rates; Mr. Lavis, however, stated that he doubted whether this represented a considered view on Mr. Renwick’s part …

Mr. Lavis said that he felt the Salvadoran Finance Minister was probably confusing two matters: one, his natural desire to obtain a reduction in interest on any definitive settlement; and, two, the matter of a mere extension for one year of the existing temporary arrangement. Mr. Lavis said that the members of the Committee felt that they owed it to the bondholders to do everything possible to obtain an extension of the present temporary arrangement for one year in [Page 276] order to have an opportunity to work out with the new Administration, which would come into office next March, a definitive settlement. The Committee had, therefore, determined to send a representative to Salvador to discuss the matter with the Government, and Mr. Lavis would be the representative; he plans to leave by Grace Line steamer on November 24.

Mr. Lavis said that he would not desire to go to Salvador if there was any objection on the part of the Department. Mr. Welles said that, on the contrary, he thought it was a wise move and that Mr. Lavis’s visit should be of assistance to the bondholders. Mr. Lavis then said that he hoped he could count upon the support of Dr. Corrigan in his negotiations. Mr. Welles said that, as Mr. Lavis knows, Dr. Corrigan was fully informed in the matter and had recently expressed interest to the Foreign Minister in this matter through his inquiry as to the views of the Salvadoran Government on the Committee’s proposal for an extension of the present agreement. Mr. Welles said that, while he was sure Dr. Corrigan would be glad to discuss the situation fully with Mr. Lavis, he thought it would be unwise for Dr. Corrigan to associate himself with Mr. Lavis in any way in the latter’s negotiations, or to accompany him in his visits to the Salvadoran authorities. Mr. Lavis stated that he shared this view.

Edwin C. Wilson
  1. Not printed.