The Acting Secretary of State to the Embassy in Colombia

No. 205

The Acting Secretary of State acknowledges the receipt of the Embassy’s despatch No. 592 of September 21, 1948 under the subject of “Settlement of Colombia’s Lend-Lease Account in Pesos” and transmits herewith for the confidential information and records of the Embassy a copy of the Department’s note of October 28, 19481 to the Embassy of Colombia in Washington through which the Government [Page 474] of Colombia is informed of the final figures of the “treaty” lend-lease account and is requested to indicate its intentions concerning settlement.

It will be noted that the final balance due from Colombia under the Lend-Lease Agreement of March 17, 19422 is $1,092,406.87 and that, in accordance with the terms and conditions specified in the Agreement, full settlement was due on or before June 30, 1948.

The Department’s position in respect to working out a settlement formula for this account already has been outlined in its instruction No. 113 of July 3, 19483 and the Embassy’s discussions with Colombian officials, as reported in despatch No. 592, have the approval of the Department. It is noted that the matter of a proposal for payment of the lend-lease indebtedness in pesos is now under consideration by the Colombian Government which would like to know whether, in addition to a buildings program, there would be any possibility of using a part of the resulting peso funds in the development of “a cultural interchange program”.

As the Embassy may be aware, the Fulbright program is specifically limited to the use of local currencies arising from the disposal of surplus property abroad. While the Legal Adviser of the Department has said that it is legally possible under the Lend-Lease Act to use local currencies arising from lend-lease transactions for an educational program, the Department has not yet determined that, as a matter of policy, such use would be wise. The authority under the Lend-Lease Act is exceedingly broad indicating in Section 3(b) that the terms and conditions upon which any foreign government receives aid shall be those which the President (or those acting by delegation from him) deems satisfactory, and the payment for lend-lease aid may be any direct or indirect benefit that the President (or those acting by delegation from him) deems satisfactory.

The Congress has already given specific authorization in the education and cultural field in the Fulbright Act and the Smith–Mundt Act. It would seem desirable that before efforts are made to use local currencies arising from lend-lease transactions for educational purposes, the Department consult with interested Congressional leaders or obtain specific legislative authorization. Such consultation would provide a firm foundation for the program, and any resulting legislation would also specify clearly the administrative responsibilities and arrangements. While the matter has been considered from time to time in the Department, no decision has been reached yet as to whether the necessary legislation will be requested.

In view of the foregoing, you should not encourage the Colombians [Page 475] to expect an educational program by payment of pesos in settlement of the lend-lease obligations. In your discretion, you may indicate, however, that at some time in the future, should the Department seek and obtain Congressional approval for such programs, it may be possible to find an appropriate solution to suit Colombia’s needs.

For the present there is a recognized need by this Government for improved and expanded facilities in Colombia for the Embassy and other units of the foreign service establishment and FBO has legislative authority to use lend-lease foreign currencies. While a new settlement arrangement should not limit the uses of lend-lease pesos, you should make it clear to the Colombian officials that, for the present, they will be used only for the buildings program and other administrative expenses of this Government. In connection with these negotiations it would also seem timely to remind the Colombians that there are still outstanding and unpaid certain other accounts contingent to the “treaty” lend-lease account which, it is expected, will be paid soon in dollars. These other accounts, which have not been considered in any contemplated settlement plan which would be acceptable to the Department, are as follows:

1. Cash Reimbursable (100%):
Hospitalization (post V–J Day) $127.00
Transportation (land) 343.70
Military Air Transport Service 1,680.93
2. Lend-Lease Vessels’ Account:
11 vessels, offered at 10% of cost 5,152.004
Total amount of reported unliquidated contingent accounts $7,303.63

Prompt payment of these contingent accounts would considerably reduce the attendant fiscal work and, in the case of the vessels, would permit the transfer of full title to the Government of Colombia.

The Embassy is requested to advise the Department of the result of any further negotiations it may have with the Colombian Government concerning these matters.5

  1. Not printed.
  2. Foreign Relations, 1942, vol. vi, p. 189.
  3. Not printed.
  4. Further documentation relating to this item is in Department of State file 821.34.
  5. In despatch 347, May 27, 1949, the Embassy in Colombia transmitted copies of two memoranda from the Colombian Foreign Office dated May 2 and 25, 1949, respectively, containing a proposal for settlement of the Colombian lend lease debt; the Foreign Office suggested that in view of Colombia’s difficult economic circumstances payment be made in approximately five equal installments payable quarterly beginning in January 1950, and the Colombian Government would prefer that payment be made in Colombian pesos (821.24/5–2749). In a note of December 23, 1949 to the Colombian Ambassador in the United States (Restrepo-Jaramillo), the Secretary of State noted that no indication had as yet been received that the Colombian Government had taken steps to settle this obligation and requested that the matter be brought to the attention of the Colombian Government for early action (821.24/12–1949).