821.51/2358

Memorandum by the Chief of the Division of the American Republics (Duggan)

When I called Mr. White today to speak with him about the Brazilian debt situation,28 I inquired whether he had yet presented to his Executive Committee the proposal for a settlement of the Colombian debt default which he had mentioned to me several days ago. Mr. White stated that he had not had this opportunity since most of the members of his Executive Committee were out of town. He informed me, however, that this would not be an obstacle to his discussing his proposal with the Colombian Ambassador the next time the Ambassador called upon him.

[Page 496]

I informed Mr. John Laylin later in the day that I thought that if the Ambassador were to call on Mr. White the latter might have something to say to him on the debt question. Mr. Laylin indicated that the Ambassador would be in New York tomorrow and would probably take the occasion to call on Mr. White.

Mr. White told me that his proposal would provide for an expenditure of about $650,000 more than the amount of $2,064,000 provided for the payment in the fifth year under the Colombian offer.

Mr. Laylin told me in the strictest confidence that the Ambassador has agreed to submit to Bogotá a proposal which would be a considerable improvement over the original Colombian offer. The original offer contemplated the following payments:

1940 2% of $45,000,000 $900,000
1941 2¼% 1,012,500
1942 2½% 1,125,000
1943 ¾% 1,237,500
1944 3% 1,350,000

plus enough to purchase $600,000 face amount of bonds every year after the Colombians had retired at this rate $5,972,000 of bonds now held by them. Thus there would be no cash payments for sinking fund purposes for ten years. The offer to be suggested would provide for the cancellation of the $5,972,000 in bonds now held by the Colombian Government and on the $45,000,000 balance would make the following payments:

Current interest Arrears Amortization Total
1940 at 3%. $1,350,000 1935 at 1%. $450,000 *$200,000 $2,000,000
1941 ” 3%. 1,350,000 1936 ” 1%. 450,000 **300,000 2,100,000
1942 ” 3%. 1,350,000 1937 ” 1%. 450,000 **400,000 2,200,000
1943 ” 3%. 1,350,000 1938 ” 1%. 450,000 **500,000 2,300,000
1944 ” 3%. 1,350,000 1939 ” 1% 450,000 **500,000 2,300,000
1945 “ 4%. 1,800,000 **500,000 2,300,000

  1. See pp. 357 ff.
  2. This would retire about $400,000 principal amount.
  3. Add to this interest saving on bonds previously retired.
  4. Add to this interest saving on bonds previously retired.
  5. Add to this interest saving on bonds previously retired.
  6. Add to this interest saving on bonds previously retired.
  7. Add to this interest saving on bonds previously retired.