Foreign Relations of the United States Diplomatic Papers, 1939, The American Republics, Volume V

821.51/2375: Telegram

The Ambassador in Colombia (Braden) to the Secretary of State

Bogota, September 2, 1939—2 p.m.
[Received 8:33 p.m.]

71. Minister for Foreign Affairs³⁵ this morning gave me copy of President Santos’ message³⁶ to President Roosevelt and other American Chief Executives.

He then stated that while Colombia’s economic and fiscal position was excellent, outbreak of hostilities in Europe necessarily would have some adverse effect, therefore Government would economize and reduce public works and all other expenditures which were not absolutely essential. Both Bank of the Republic and private banks are in strong position to carry through unless public became hysterical and for example presented government mortgage bank cedulas for payment. The Minister was satisfied even such contingencies will be avoided if a credit of say $50,000,000 were available from us since its mere existence would so fortify public confidence as to make it unnecessary to draw thereon. He suggested possible restriction limiting withdrawals to $5,000,000 in first 6 months and $10,000,000 in first year. By such an arrangement the Minister considered government fiscal position would be protected and it would not be forced at any time to default on payments such as salaries to army or public employees; the country’s financial and banking structure would be supported and in case certain products such as drugs or chemicals were unobtainable from abroad small national industries insuring supply thereof could be initiated. As the Department is aware I consider this latter idea largely uneconomic and hope they may later be dissuaded therefrom.

I described to the Minister my conversation (as reported to the Department³⁷) on this subject with the President and Minister of Finance and which I initiated last February on instructions from President Roosevelt who I said had in mind possibility of just such a crisis as the present. I said I had left with President Santos August 17 and Minister of Finance August 21 memorandum quoting letter from Secretary of the Treasury (in accordance with Department’s telegram #77). It therefore now devolved upon Colombian Government to define its request in order for the question to be further investigated. This I suggested could be done through the Ambassador in Washington although of course I would always be happy to lend them every assistance. The Minister considered the matter so pressing that he would prefer to proceed through both Embassies. I observed there was one factor, which, perhaps, would not arise; but in all fairness I felt obliged to mention, viz, because of the default on Colombian securities widely distributed among 40,000 to 50,000 bondholders in the United States, my Government faced a measure of political embarrassment in giving financial assistance of the kind contemplated, nevertheless I sincerely hoped the two problems would not be linked. The Minister said he understood my viewpoint, deeply appreciated the steps we had already taken and indicated that the matter will be promptly pursued with us.

I deemed it expedient thus to mention foreign debt since with support of Federal Reserve credit and/or through Stabilization Fund operations Colombian Government might be enabled to overcome political opposition here to settlement and be willing to begin payments on higher interest rate than June offer³⁸ and White, by reason of world conditions, might now accept such terms. In any event it can do no harm for Colombian Government again to be informed of political considerations which confront us in this particular.

Braden

35. Luis Lopez de Mesa.
36. This message, dated September 1, reiterated Colombia’s resolution to proceed in close agreement with the Governments of America in the matter of solidarity; Department of State Bulletin, September 9, 1939, p. 235.
37. Despatch No. 22, March 3, not printed.
38. See telegram No. 56, July 1, 3 p.m., to the Ambassador in Colombia, p. 481.