The Minister in El Salvador (Corrigan) to the Secretary of State
[Received February 12.]
Sir: I have the honor to refer to my telegram of February 5, 3 p.m.,24 reporting that the Cabinet had approved the bases for an agreement amending the Loan Contract of 1922.25 As reported, the Cabinet decision was taken at a special meeting, and provided for complete condonation of the outstanding scrip. After the meeting, the Minister and Subsecretary of Finance had a private conference with the President; it is understood that he continued the discussion [Page 575] of the question of the scrip with them, authorizing them to settle it as may seem most expedient.
Mr. Bradford, Secretary of the Bondholders’ Protective Committee, suggested to Doctor Max P. Brannon, Subsecretary of Finance, that they go to New York together, possibly leaving here February 15th, where Mr. Bradford could introduce him to the Committee, to the officials of the Stock Exchange, the Securities and Exchange Commission, the Foreign Bondholders’ Protective Council, et cetera. Doctor Brannon could also discuss the details with the Committee’s legal counsel, and with such counsel as he may select, Judge Frank Feuille, attorney for the Standard Oil Company of California, having been prominently mentioned in this connection.
The Committee has informed the Salvadoran Govermnent that it will give favorable consideration to the Government’s request for cancellation of the scrip, but that it considers that the agreement would have a much better chance of approval by a majority of the bondholders if some provision were made for retiring it, the present suggestion being that the annual payment, for principal and interest, as agreed upon, be unchanged, and that some $60,000 per annum of the sum provided for amortization be devoted to retiring the scrip at 20% or 25% of its face value (that is, more or less at its present market value). Mr. Bradford feels that if Doctor Brannon goes to New York, he will gain a better understanding of the problems facing the Committee, and perhaps be willing to approve the retirement of the scrip rather than its cancellation.
If Doctor Brannon should go to New York, it is probable that his stay there will not be less than two months; and that the trade agreement negotiations which have been conducted with him will be interrupted for that period. There have been no conversations on this subject during the last three weeks, due to his being occupied with the loan negotiations and the annual report of the Ministry of Finance.