816.51C39/548: Telegram

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

20. The following is digest of principal points in reply dated June 28 from President Martinez to my memorandum of June 23:

Correctness of figures in memorandum admitted and reference made to solemn promise of last November to renew payments when possible;
Small increase in revenue cannot be alone considered for country is developing and new public services are necessary;
Government bank deposits may not be freely disposed of as they are for specified uses stipulated by law;
The gold reserve cannot be regarded as a financial resource available for current expenses or to meet contractual obligations;
Payment of amount due June 30 would seriously dislocate financial position for amount accumulated as result of nonpayment of debt service is exactly that required to meet threatened deficit;
Prudent foresight requires that regular performance of public services be not jeopardized by the disposition of resources which may be of vital importance later on.