Memorandum by Mr. Emilio G. Collado, Special Assistant to the Under Secretary of State (Welles)

In accordance with Mr. Welles’ suggestion of March 2,99 the Colombian Ambassador was asked to come in on March 3 to discuss with Messrs. Hooker,1 Wright, and myself the banking debt, and the proposal made by Mr. Lancaster in the third paragraph of the memorandum of February 28, which is attached,2 was transmitted to the Ambassador.

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The Ambassador stated that he had been for some time advocating a fifteen year period and that he would continue to do so. He asked whether the proposal could not be changed to a straight fifteen year basis with the debt to be paid in the earlier years of the period or, alternatively, following the precedent set in some Export-Import Bank transactions, the balloon might be paid off during an additional two and one-half or three years providing all other payments had been met when due during the twelve and one-half year term. The Ambassador stated that if the banking group was prepared to accept either of these proposals, he would personally write to the President of the Republic and the Finance Minister urging immediate settlement of the matter.

I telephoned Mr. Lancaster regarding this the following day and he stated that he had received a message from the National City Bank manager in Bogotá stating that the Finance Minister had made the following proposal:

The debt would be settled on a ten-year basis with payments as follows:

First year $800,000 (as compared with total payments of $630,000 now)
Second year $900,000
Third year $1,000,000
Fourth year $1,200,000
Fifth year $1,200,000
Sixth year $1,300,000
Seventh year $1,300,000
Eighth year $1,400,000
Ninth year $1,500,000
Tenth year $1,500,000

This would leave a balloon at the end of the period of $5,500,000 and the Minister of Finance would expect to enter into an understanding that this could be serviced over an additional period of years.

Mr. Lancaster remarked that the two alternatives of Ambassador Turbay and the Minister of Finance were substantially alike and that he would take them up immediately with the banking group and inform the Department. He stated that only Lazard Freres3 was holding out.

Mr. Lancaster pointed out that a number of officials of the Department have been calling many officials of the National City Bank with respect to this matter, and requested that all communications be concentrated in himself.

  1. See footnote 97, above.
  2. John S. Hooker, Assistant Executive Secretary, Board of Economic Operations of the Department of State.
  3. Supra.
  4. French banking company.