812.51/2236
Memorandum by the Chief of the Division of the American Republics (Duggan) to the Under Secretary of State (Welles)
Mr. Welles: I had a long conversation with Mr. Rublee on Saturday regarding his debt negotiations. He told me that Mr. Suarez informed Mr. Thomas W. Lamont that he is ready to sign the agreements with respect to the Government funded debt and the railroad. Mr. Layhn [Laylin] of Mr. Rublee’s office has already gone to Mexico and Mr. Rublee himself intends to leave at the end of this week. Mr. Rublee stated that he intended to see you prior to his departure.
In view of the present tight situation in Government finances, it is somewhat surprising to learn that the Government is prepared to sign agreements looking to the resumption of debt service. It is my own belief that this aspect is secondary in the calculations of Mr. Suarez who is so desperately in need of finding funds that he is willing to undertake a commitment to resume debt service in the near future in exchange for receiving a sizeable slice of the $7,000,000 impounded in New York. Mr. Rublee informs me that the Government will receive $1,000,000 at once, and a further participation, depending upon the number of bondholders who assent.