821.51/2389
The Under Secretary of State (Welles) to the Secretary of State
Ancon, Canal Zone, September 26,
1939.
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,
[Enclosure]
Memorandum of Conversation, by the Adviser on
International Economic Affairs (Feis)
Ancon, Canal Zone,
September 24,
1939.
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:—
-
a)
- If the Colombian Government were willing to put up gold as
collateral, the Treasury or the Federal Reserve could make
the loan.
-
b)
- 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.
-
c)
- 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
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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.
