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

Mr. John Laylin telephoned to inform me that the debt negotiations had reached a very critical stage. The Ambassador transmitted to [Page 498] his Government the suggested settlement proposed by Mr. Francis White. The Ambassador has now received a telegram from his Government stating that Mr. White’s proposition had been laid before the President. The telegram continued that the President first of all regretted greatly that the Colombian proposal had been turned down by the Council because he would have to inform the Congress, and secondly, that he considered unreasonable Mr. White’s proposition, and therefore had instructed the Ambassador to inform the Council that the Colombian Government would carry on no further negotiations with it.

The Ambassador today wired his Government, advising against his taking this action, and, in order to open the way for further negotiations, inquiring whether further negotiations with the Council could be held providing they were not on the basis of Mr. White’s proposal.

If the reply of his Government is favorable, the Ambassador will then request permission to present to the Minister of Finance a new project of settlement of the debt problem. Mr. Laylin explained that the Ambassador had transmitted to his Government as the formula of Mr. Laylin and Mr. Simpson, of Schroeders,30 the proposal contained in my memorandum of conversation with Mr. Laylin dated July 21 [20?] The Ambassador may recommend the Laylin-Simpson formula or he may concoct something new.

The Ambassador told Mr. Laylin that he would support the Laylin-Simpson project provided that the Department could ascertain in advance from the Council that this project would have the Council’s acceptance. I again informed Mr. Laylin that the Department did not feel that it could undertake to present to the Council the Laylin-Simpson formula, much less to negotiate with the Council to secure its acceptance of that proposal.

Mr. Laylin said that he would post me should there be any further developments.

Laurence Duggan
  1. J. Henry Schroeder Banking Corporation of New York was acting as adviser to the Colombian Government in negotiations connected with a debt settlement.