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Memorandum of Telephone Conversation, by the Chief of the Division of the American Republics (Duggan)

Mr. Laylin called Mr. Duggan to state that despite the attitude of the Foreign Bondholders Protective Council on the terms for the Colombian permanent debt settlement evolved at the July 6 meeting, the Colombian Government in the knowledge of this Government’s opinion in the premises had decided to go ahead with an offer to be made direct to the bondholders. The executive branch of the Colombian Government was to meet at once with the special junta, whose approval is necessary before a decree providing for a new loan contract can be issued. Ambassador Turbay was reported to be awaiting a telephone call from Bogotá on this subject at any moment. It is understood to be the Ambassador’s plan when he hears from Bogotá that the junta has approved the issue of the decree in question to write the Department informing it of the offer and to work out a public statement covering the offer.

In reply to Mr. Duggan’s query regarding the retention in the hands of the President of the authority to suspend service temporarily, etc., Mr. Laylin stated that the initial “authorization” decree which will be issued will contain the “reservation”. Later, however, an enabling decree containing the precise terms of the new loan contract will be issued without any reference to the “reservation”.

The conversation terminated with a brief reference to the failure of the Executive Committee of the Foreign Bondholders Protective Council to consider specifically the formula reached at the meeting in [Page 710] the Under Secretary’s office, that is, to accept or reject it; and to the attitude toward the formula which Mr. Traphagen had taken at that meeting, including his agreement to convoke the Executive Committee for the following day to act on the formula.