816.51C39/539: Telegram

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

17. Reference your despatch 190, June 8, 1938. Please seek an audience with President Martinez and convey to him the earnest hope of this Government that the Government of El Salvador will find it possible to make the payment on its bonds due on July 1, in accordance with the provisions of the Readjustment Agreement of April 27, 1936, between that government and the Bondholders Protective Committee for El Salvador. You may tell President Martinez that this Government has observed with sympathetic interest the very able management of the financial affairs of El Salvador during his administration and it has been gratified with the reports which have been received from various sources indicating that the [Page 569] present financial situation of El Salvador is better than it has been for several years. You should remind the President that while this Government did not actively participate in the negotiations leading up to the Readjustment Agreement, it followed those steps with the greatest of interest and the successful termination of the negotiations was a source of sincere satisfaction both to this Government and to the private interests concerned.

When in November of last year the Salvadoran Government announced the suspension of payments on its debt, it spontaneously gave assurances that it was its firm intention to resume these payments as soon as improved conditions made this possible. In view of these assurances this Government now believes that the very satisfactory financial condition of El Salvador justifies it at this time in expressing the hope that the approaching payment will be promptly made.

You should report the results of your interview by telegraph.