821.51/2383: Telegram

The Under Secretary of State (Welles) to the Secretary of State

16. The Colombian Foreign Minister and Esteban Jaramillo41 have put before us with evident seriousness their anxieties lest the present European war disturb their whole exchange situation and peril their present reserves and force them to restrict imports needed [Page 505] for various national developments. The fear centered particularly around the prospect of reduced coffee sales and depressed coffee prices. They have asked us whether in connection with our general declaration42 we will be prepared to grant them financial assistance. An explanation has been given to them of the various types of operations which might be considered by our Government and they have now presented a memorandum requesting financial assistance in the form of a credit from the Banco de la Republica for reserve purposes and to enable it to continue necessary imports and to maintain the stability of Colombian money for economic purposes and for the acquisition of naval vessels. (Regarding this matter of financing it will immediately be explained to the Colombian Government that it cannot be considered). The Government suggests that the amounts to be determined after careful study of the most urgent needs and the conditions which should be established for the service of the existing debt and of the form and terms of the money to be loaned.

It stated that it would be disposed to organize a new banking institution to receive loaned monies and control its expenditure with such technical help as the United States may believe necessary. It suggests that as a first step the Government of Colombia would be willing to invite us to send a representative to Bogotá to study the whole question. Copies of the memorandum submitted will be sent you at once by air mail. The scope of the proposals are obvious and it is to be foreseen we believe that any actual arrangement would have to be based on an exchange of letters and commitments similar to that negotiated with Aranha. It would help us greatly if we could say either that we would accept the invitation of the Colombian Government to send a representative to Bogotá or to say that we had been authorized by you to extend an invitation to the Government of Colombia to send a special representative to Washington. Would you please consult Jones,43 Pierson44 and the Treasury and cable us as promptly as possible. It has already been explained to the Colombian Government that any undertakings taken by any branch of the American Government must be at the present time conditional upon the possession of necessary funds.

The Peruvian Foreign Minister has presented a memorandum45 in the same sense though less extensive. This memorandum emphasizes the loss of markets for cotton, sugar, and other products [Page 506] and the necessity of financial assistance to avoid further depreciation of the sol and further curtailment of imports from the United States. It asks Export-Import Bank credit to the Reserve Bank of Peru for the payment of American exports to Peru. It offers to deposit equivalent sums in sols to be liquidated on bases to be determined.

In our judgment the problems facing Peru will be genuinely serious perhaps as serious as those faced by any of the American Republics. We would like authorization also to inform the Peruvian Foreign Minister that he is invited to send a representative to Washington to discuss the situation with the Export-Import Bank.

  1. Former Minister of Finance, member of the Colombian delegation at Panama.
  2. See address of the Under Secretary of State on September 25, 1939, at Panama, Report of the Delegate of the United States of America to the Meeting of the Foreign Ministers of the American Republics Held at Panamá September 23–October 3, 1939 (Washington, 1940), pp. 33–39.
  3. Jesse H. Jones, Chairman of the Board of Directors, Reconstruction Finance Corporation.
  4. Warren L. Pierson, president of the Export-Import Bank of Washington.
  5. Post, p. 779.