Office of the Historian

459. Memorandum From Albert H. Gerberich of the Office of South American Affairs to the Acting Assistant Secretary of State for Inter-American Affairs (Rubottom)1

Washington, February 4, 1957.

SUBJECT

  • Appointment with Ambassador Urrutia

I note that Ambassador Urrutia has asked for an appointment with you at 2:45 today and my guess is that he is going to tell you that Finance Minister Morales Gomez has obtained the consent of the U.S. banks to go ahead with his plan for liquidating the commercial debt.

The arrangement as I understand it is to pay the banks that accept his plan 60 of their debt in dollars at once and finance the other 40 with 4 bonds over a 30-month period. Morales told reporters on Saturday that he had already paid out $62,140,000 to 8 New York banks that had accepted and had between $3 and $4 [Page 931] million more for 3 others. There were still 8 other banks scattered across the country which would receive their money in due course. I am told that there were 30 banks in all with whom negotiations were carried on, of which 19 accepted. First National City Bank received the largest sum.

I understand that Morales obtained the dollars for paying off these banks by keeping the Office of Exchange Control closed through December and January and refusing to release dollars for commercial payments except in dribbles for emergency items. Maybe if he continues this policy long enough he may get himself out of the hole.

(N.B. I hardly think Urrutia will bring up the Protestant problem in view of the telegram received from Piggott over the weekend,2 which says the Colombians are still giving us the run-around and goes so far as to recommend that we threaten Rojas through Urrutia with economic sanctions if Congressional agitation continues on this subject.3)

  1. Source: Department of State, Central Files, 821.131/2–457. Confidential.↩
  2. Telegram 580, from Bogotá, February 1. (Ibid., 821.131/2–157)↩

  3. “It would seem that my telegram No. 580 of February 1 was interpreted to mean that we should threaten President Rojas with economic sanctions should he not accede to a satisfactory solution to the Protestant church problem. …

    “As I review my words, I suggested that we might approach President Rojas through Urrutia, explaining that the Protestant problem is assuming such proportions in the minds of the American people and many of the Members of Congress that it may well affect our entire relations and possibly jeopardize some of the programs which are presently being studied.” (Ibid., Rubottom Files: Lot 59 D 573, Colombia)

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