The Under Secretary of State (Welles) to the Ambassador in Peru (Norweb)
Dear Harry: Your letter of April 6 only reached me on April 14. I am therefore unable to send you any reply to your observations concerning the Peruvian foreign debt question to reach you during Mr. Wallace’s visit.
It seems to me that we must give a firm indication to President Prado that (1) the degree to which the United States can cooperate financially with Peru is dependent upon the existence in the United States of a public opinion favoring our present inter-American policy; (2) that the maintenance of this state of public opinion depends in part upon the treatment accorded the legitimate interests of our citizens in the other American republics; and (3) that this Government considers the aspirations of American citizens to a fair settlement of the indebtedness of the Peruvian Government to them as a very definite legitimate interest.
It seems to me that it would be a serious mistake for us to tie any specific foreign debt settlement to any specific measure of economic cooperation. For a variety of reasons, including that of political expediency, I think we wish to avoid any semblance of a clear cut bargain. On the other hand, we are prepared to make it clear that the whole trend of our economic policy toward Peru is by no means independent of and is, in fact, highly sensitive to the trend of Peru’s policy toward the interests of our citizens.
I realize that it may be difficult for a business man like Dasso fully to understand the type of policy which I have outlined. Nevertheless it is the only one which we as a Government can afford in the long run to follow.
As I believe you have been informed, the Foreign Bondholders Protective Council recently addressed a communication to the Peruvian Finance Minister which will, I hope, furnish an opportunity for a constructive reopening of this matter.