The Ambassador in Colombia ( Wiley ) to the Secretary of State
[Received January 11—4:45 a.m.]
54. Colombia’s Exchange Control Office suspended further registrations on January 8 on the grounds that 90% of the basic quota had now been registered and that it was consequently necessary to distribute the remaining 10% among exporters, in proportion to previous exports, in order to avoid over-registration. So far as can be ascertained this is the first time registrations have been stopped because of fear of exceeding the basic quota rather than the usual increased quota. However, Exchange Control Office claims that no official confirmation has been received of recent Inter-American Coffee Board decision fixing Colombia’s quota at 4,437,607 sacks.59
This explanation cannot be considered acceptable and is not being taken seriously locally since even if Coffee Federation and Exchange Control Office have not been informed “officially” they must have received some advice from the Coffee Board delegates and Bogotá papers published the new quota decision several days ago. It is believed here that any of several motives may have prompted closing of registrations at this time. El Tiempo published report yesterday that the OPA60 will permit United States coffee importers to charge roasters 2% on United States ceiling prices and it would therefore not be surprising [Page 871] to see coffee registrations resumed here with higher Federation61 prices and even higher export prices. It is also suggested that if the Coffee Federation wishes to hold back on coffee shipments to the States it will not wish to have registered and licensed coffee in excess of the basic quota lying in port and ready for shipment. On the other hand the Federation may wish to use this opportunity to stop further coffee movement until future policy can be decided upon in view of failure to secure increased United States ceiling prices. A national committee meeting is scheduled for tomorrow morning and some sort of decision is likely at that time.
Up to the present press comment has been rather noncommittal but of possible significance is the telegram sent to members of the Asociación Nacional de Exportadores de Cafe by Arcesio Londono Palacio, head of the Asociación and brother-in-law of Gonzalo Restrepo, Minister of Finance, which reads in paraphrased translation: Government resolved to postpone registration of coffee contracts applying to increased quota recently decreed until it can regulate matter so as to take advantage of the export of said increase in the basic quota.
Also worthy of comment is a recent declaration made to the press by Salvador Camacho Reyes, former manager of the Bolsa de Bogotá, in which he stated Colombia would do well to withhold her coffee rather than her dollars, since coffee could be kept over an indefinite period and a good future in foreign markets was in prospect. Camacho also suggested possibility of exchanging United States transport equipment for coffee. This morning’s El Tiempo gave favorable editorial comment to this viewpoint. Incidentally Camacho’s statement regarding the inadvisability of receiving additional United States dollars coincides with the views on inflation recently expressed to me by the President.