823.51/1234: Telegram
The Chargé in Peru (Dreyfus) to the Secretary of State
[Received 3 p.m.]
67. The Peruvian Government has made a counterproposal to the Bondholders Committee plan referred to in my despatch 521, July 14 [Page 886] [13].56a The offer is 1½% interest on the national loan and 2% on tobacco loan for the first 5 years; after 5 years rate of interest to be 3% on both. Oreamuno states that if this proposal is accepted promptly, the resulting agreement will not require ratification by Congress, thus avoiding public debate and possible rejection here. Roca is resigning as Minister of Hacienda but he would withhold his resignation until the matter is settled and would accept responsibility and the bitter public criticism which will surely follow publication of the settlement. He is resigning in any case and if present offer is not accepted, negotiations will have to start all over again with a new minister. Roca said the other members of the Cabinet are opposed to the settlement but will approve it. Oreamuno feels that the President hopes that the counterproposal will be rejected and Peru be relieved of further responsibility. Oreamuno therefore considers that this is the last chance and that any efforts to obtain better terms would give Peru the desired opportunity to break off the negotiations.
Local feeling is opposed to any settlement whatever and the Embassy strongly favors acceptance.
- Not printed.↩