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

Mr. Lancaster called from New York to state that the National City Bank was disposed to accept in principle the proposal of the Colombian [Page 218] Minister of Finance for a ten years settlement of the banking debt, which would leave a balloon of about $5,500,000 at the end of the period, with an understanding that this would be further financed. Mr. Lancaster stated that in view of my previous discussion with Ambassador Turbay the Bank felt somewhat reluctant to accept the Minister of Finance’s schedule of payments beginning at $800,000 in the first year, but rather would like to receive $1,000,000 at the outset. One million dollars has been the basis of all previous discussions.

I called Ambassador Turbay and informed him of Mr. Lancaster’s conversation. The Ambassador stated that he had previously telegraphed the Minister of Finance suggesting that the banking group might be disposed to accept some arrangement with a balloon to be further financed, and that the Minister of Finance had cabled to him the proposal which he had made to the National City Bank. I indicated that the bankers hoped to receive $1,000,000 in the first year and that all previous discussions had been on a basis of at least $1,000,000. The Ambassador stated that he would telegraph the Minister of Finance indicating that the banking group would probably accept the proposal if the initial payments were stepped up to $1,000,000, and recommending such basis of settlement. I thanked the Ambassador.

I subsequently informed Mr. Lancaster in general terms of the proposed telegram from the Ambassador to the Minister of Finance, and he stated that the bankers would proceed on that basis, being probably willing to recede a little on the initial payments if the Minister of Finance remained firm.