Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

816.51C39/548: Telegram

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

San Salvador, June 30, 1938—noon.
[Received 5:43 p.m.]

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

(1) Correctness of figures in memorandum admitted and reference made to solemn promise of last November to renew payments when possible;

(2) Small increase in revenue cannot be alone considered for country is developing and new public services are necessary;

(3) Government bank deposits may not be freely disposed of as they are for specified uses stipulated by law;

(4) The gold reserve cannot be regarded as a financial resource available for current expenses or to meet contractual obligations;

(5) 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;

(6) 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.

Frazer