821.24/680: Airgram

The Ambassador in Colombia (Lane) to the Secretary of State

A–756. My telegram No. 1582, September 8, 1 p.m. President López informed Connell and me on the morning of September 8 that he had conferred with Ramón Muñoz, Superintendent of Importations, on September 7. As a result, it had been decided that the Colombian Government will require importers to continue to obtain importation permits (permisos para importaciones) for articles which are on the free list through the Office of Exchange Control. The President said that the Colombian Government has no objection to the third alternative of the Decentralization Plan as presented to the President by me on September 2 (see my 1555, September 221).

The President then went into an extended discussion of the Colombian Government’s policy to bring about deflation. He pointed out that in 1939, the year the war began, the gold holdings of the Banco de la Republica, bank deposits and bank notes in circulation amounted respectively to 42, 46, and 60 million dollars, and that these figures for 1943 have risen to 164, 96, and 108 million dollars respectively. He added that the gold reserves at the present moment amount to over 169 million dollars. He added that the stock market prices have decreased very sharply and that there is tendency on the part of the public to believe that they will drop even further. The Government’s aim, he added, is not only to bring about a deflation in prices, bank deposits, gold reserves and bank notes in circulation but also to increase imports, which would automatically bring about deflation. Through the procedure proposed in paragraph 1, currency in circulation, bank deposits and gold reserves would be required to purchase foreign exchange for importations. The President added that one of the difficulties facing the Government at the present time is its fiscal position due largely to the decrease in import duties. A stimulation of imports would therefore have a most salutary effect on the Government’s financial position.

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