Foreign Relations of the United States, 1949, The United Nations; The Western Hemisphere, Volume II

823.51/12–3149

The Ambassador in Peru (Tittmann) to the Secretary of State

restricted

Lima, December 31, 1949.

On December 29, 1949 I had an audience with President Odría on the subject of commercial debts in arrears, at which time I left with him an additional copy of my letter to him of December 24, 1949,¹ including a verbatim text of the Department’s clear language telegram no. 439 of December 23, 1949² expressing the view that the continued delay in the payment of these obligations is obviously damaging to the credit standing of Peru.

At the same time, I left with the President, in memorandum form, so much of my note of November 29, 1949³ to the Minister of Foreign Relations as bears upon the problem of these commercial arrearages.

1) The President said that the Peruvian Government, anxious to regain its lost credit abroad, intended to pay all its legitimate commercial obligations in arrears, even though these might have been contracted by a previous regime. He added that he himself was giving his personal attention to the solution of this matter.⁴ However, he said he did not wish to agree to something that was beyond Peru’s capacity to pay, especially at a time when Peru is changing over from a policy of controlled to free exchange. Therefore, immediate and complete payment of the arrears was out of the question but as soon as the Commission investigating the legitimacy of the claims for payments had completed its work early in the new year, a schedule of payments over a period of time would be worked out. The President added that he was thinking of using the commercial debt payments in connection with exchange control; that is, when the sol displayed too much strength he would correct this by purchasing dollars for the commercial arrears amount.

2) The President asked me if I knew anything about the status of his recent offer to us to start immediate payments of 300,000 soles per month into a lend-lease account. Acting on my suggestion that the negotiations for the settlement of the lend-lease account be transferred to Washington, he had telephoned his proposition to Ambassador Berckemeyer several weeks ago, but had heard nothing whatever from him in reply. When I reiterated that the matter was now in the hands of the State Department and Ambassador Berckemeyer, the President said that he would telephone Berckemeyer again as he would like to have an answer as soon as possible.⁵ He said the details regarding an exchange rate, etc., could be worked out later but meanwhile, if we wanted them, the soles would be accumulating to our credit beginning immediately. The President urged that a prompt reply be made by the Department since he wishes to include the item in the budget which is at present being made up.

3) The President said that general elections would take place on the first Sunday in June next and that the new Legislature would meet for the first time on July 28th. He would give no other details of electoral plans, but said that it was obvious that in a politically immature country like Peru, the Executive and Legislature would have to follow the same policy or the result would be another disaster.

Respectfully yours,

Harold H. Tittmann

1. Not printed.

2. The text of this telegram read as follows:

   “No indication yet recd Peru has acted upon Klein Mission recommendation that commercial arrearages be liquidated. Report whether action probable near future. Obviously contd delay damaging credit standing Peru.” (823.50/12–2349)

   The Klein Mission, under the direction of the American economist Julius Klein, had been conducting a study of the Peruvian economic and financial situation at the request of the Government of Peru.

3. Not printed, but see footnote 1 to telegram 699, December 1, from Lima, p. 769.
4. Under date of December 19, 1949, the Peruvian Ambassador had transmitted to the Department a payment of $58,285.67 on Peru’s Surplus Property account. The figure reflected a U.S. allowance of $57,886.92 by way of settlement of Peru’s claim against the United States in the Marañon case. (823.24 FLC/4–3049; 823.51/5–2549; 823.24/12–1949; 823.24/12–2049). For documentation, see Foreign Relations, 1941, vol. vii, pp. 508 ff.

5. A marginal note, dated January 10, 1950, by Mr. J. C. Lobenstine of the Office of North and West Coast Affairs read: “Ambassador Berckemeyer informed informally”.

   For the Department’s reaction to the Peruvian lend-lease offer, see telegram 423, December 8, to Lima, p. 772, and instruction No. 310, December 28, to Lima, supra.