Memorandum of Conversation, by the Assistant Chief of the Division of North and West Coast Affairs (Wells)

Participants: Sr. Carlos Montero Bernales, Peruvian Ex-Minister of Finance
Mr. Spruille Braden, Assistant Secretary of State
Mr. Wright, A–Br81
Mr. Wells, NWC

Sr. Montero briefly described the difficult but successful fight which he had faced upon returning to Peru with the debt settlement proposal. He had obtained a vote of confidence in both houses of Congress. The budget* which he presented for Congressional approval provides for the first year’s servicing of the settlement. He believes that the settlement will be approved exactly in the terms negotiated here with Mr. Rogers.82

Critics, including ex-Ambassador Beltrán, have used every conceivable argument against the proposal, however unavailing. One of their most effective arguments was that whereas other countries such as Chile, who had not satisfactorily settled their foreign debts, had nevertheless been able to obtain substantial Eximbank loans in the United States, Peru had not been so favored. He said both Chile and Colombia had obtained financing for steel mills (at that point Mr. Braden interrupted to inform him that the Colombia steel mill project had been rejected).

The Peruvian steel mill project had been reported upon favorably by two American engineering firms. While here, he wished to explore the possibility of getting approval for this steel project, and [Page 1256] also for a zinc plant. It was emphasized to Sr. Montero that the Eximbank considers projects presented to it solely on their economic and technical merits; and that the Bank’s own engineers had of course appraised the Brassert and Morfit surveys. Mr. Wright discouraged the idea of assistance on the steel mill, but indicated in his personal opinion that the zinc and ammonium sulphate projects may offer better economic justification.

Sr. Montero indicated he intended to discuss the matter directly with the Bank upon his return to New York in early April. It was agreed that we would inform the appropriate Bank officials of his impending visit in order that they could review both the steel and zinc projects to prepare to discuss these matters with him.

  1. James H. Wright, Special Assistant to the Assistant Secretary of State for American Republic Affairs.
  2. Budget passed on March 1. [Footnote in the original.]
  3. James Grafton Rogers, President of the Foreign Bondholders Protective Council, Inc.