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

My Dear Mr. Secretary: Reference is made to the cable I just sent the Department (No. [16]) regarding the requests made by the Governments of Colombia and Peru for financial assistance.

These were presented to me before my general address46 to the Conference, which included a statement of what type of financial assistance the American Government was prepared to consider, in which address I included the statement agreed upon in the conversation that took place before I left Washington with the Secretary of the Treasury and Mr. Jesse Jones. I feel that we would be distinctly well advised to respond as promptly and as effectively as we can to both requests by showing a willingness to enter into immediate discussion as to the possible financial assistance. Since in both instances careful study will no doubt be required and rather extensive discussions and negotiations will have to be undertaken to determine what assistance may be practicable and available, I requested in my cable authorization to extend invitations to both Governments to send representatives to Washington—or in the case of the Colombian request, alternatively the acceptance by us of their suggestions that we send a special representative to Bogota. I hope to receive a reply in sufficient time to enable me to discuss the matter further with the Colombian and Peruvian Delegations while still in Panama.

I am enclosing for the information of the Department the copy of a memorandum of conversation between Dr. Feis and Mr. Jaramillo which was arranged by the Colombian Foreign Minister and myself. Subsequent to this conversation, Mr. Jaramillo submitted the prepared memorandum which is the basis for my cable. I am enclosing the original of this memorandum.47

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I enclose also the original of the memorandum received from the Peruvian Government48 which was the basis of my cabled request with regard to that country.

Sincerely yours,


Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)

Mr. Welles: I had a systematic and straightforward conversation with Mr. Jaramillo.

He stated, in substance, that the Colombia Reserve and Exchange situation had been satisfactory up to the recent present, but that now his Government entertained fears lest the loss of markets and possibly fall in prices, especially coffee prices would bring them embarrassment by diminishing their gold and exchange reserve, by compelling them to restrict imports in a way which would force the Government to curtail its work of economic development and public improvement.

He, therefore, wanted to know whether it might be possible with the American Government to make them a loan, as he put it, for the protection of their reserves.

I explained that there were three possible ways in which the matter might be presented:—

If the Colombian Government were willing to put up gold as collateral, the Treasury or the Federal Reserve could make the loan.
If they wanted a direct gold loan, it might be considered in the same form as was worked out in the exchange of letters with Brazil49—but this would require the authorization of Congress.
If it was desired to make payments of imports from the United States, some arrangement might be worked out with the Import-Export Bank.

We discussed each of the three methods of procedure in some detail. He said that after having had the chance to think it over and to discuss it with his colleagues, he would give me a memorandum more clearly indicative of their desires.

I explained that if a loan through the Export-Import Bank was desired, it would probably prove advisable for the Colombian Government to send a representative to Washington to discuss the matter with the Bank and Mr. Jones—after we had cleared the way for the discussions. I explained further the present financial position of the [Page 508] Bank, stating that all transactions now being entered into by the Bank were being entered into subject to an understanding that they would only become valid when and as the Bank might have the necessary funds.

We then had a general conversation about the nature and effects of foreign borrowing and lending, especially when Governments directly entered into the transaction. He said he was aware that while the moment the money was obtained everything was cheerful but when the payment date came along the mood changed; he compared it with the mien of a person entering and leaving a gambling casino. I said that it was the reflection on this subject even more than the matter of a financial risk that preoccupied official authorities in the United States and made us cautious in the undertaking of loan transactions.

I made direct reference to the still existing default of the Colombian Government Dollar Debt. He said that the Colombian Government was on the point of doing something effective, when the war crisis arose, but now it felt that it had to postpone a decision. He seemed to think, however, that there was a chance that in connection with any loan arrangement worked out something might be done on the present debt. This was left vague.

We agreed that after he had presented his memorandum, discussion would be resumed.

Herbert Feis
  1. September 25, 1939, Report of the Delegate of the United States of America to the Meeting of the Foreign Ministers of the American Republics, pp. 33–39.
  2. Not printed.
  3. Post, p. 779.
  4. March 8 and 9, 1939, pp. 352356.