The Minister in El Salvador (Corrigan) to the Secretary of State

No. 245

Sir: I have the honor to refer to my despatch No. 235 of May 6, 1935,39 regarding the conversations in progress in San Salvador between the Government and Mr. Fred Lavis, representative of the Bondholders’ Protective Committee in the matter of the 1922 Loan Contract, and to my telegram No. 29 of May 10, 1935,39 and to report that Mr. Lavis came to the Legation yesterday to inform me that he was leaving by the SS Santa Paula on May 11 for New York without having been able to arrive at a readjustment of the Loan Contract with the Salvadoran Government. He expressed the opinion that further negotiations with respect to the matter in San Salvador would not bring results, because the Government in seven weeks had not [Page 580] modified its first proposal, i.e., 3% on the “A” bonds, 2% on the “B” bonds, and 2% on the “C” bonds. He had therefore, after an unsatisfactory interview with President Martínez, proposed to the Government that the negotiations should be transferred to New York or Washington. He felt that the state of public opinion in El Salvador, developed by an acrimonious newspaper campaign, precluded hope of concluding a satisfactory agreement.

Before his departure this morning, Mr. Lavis sent me copies of his most recent correspondence with the Ministry of Finance (Dr. Samayoa’s letters to him of May 8 and 10, and his reply dated today), and translations of it are enclosed40 in order to bring the Department’s information on the subject up to date.

Respectfully yours,

Frank P. Corrigan
  1. Not printed.
  2. Not printed.
  3. Not printed.