833.51/724
The Minister in Uruguay (Lay) to the Secretary of State
[Received September 11.]
Sir: Referring to the Department’s instruction No. 84 of July 25, 1936,5 relative to Uruguay’s dollar debt, I have the honor to report that, at a dinner recently in conversation with Dr. Charlone, the Uruguayan Minister of Finance, he told me that he intended to go to New York in January next to discuss the question of the adjustment of Uruguay’s dollar debt. When I expressed the hope that the Uruguayan Government would at least increase the interest rate on the dollar issues to the proportional equivalent of the interest paid on Sterling issues, he said that, while Uruguay was unable to pay as yet more than a basic rate of 3½ per cent, he would tell me confidentially that he intended to propose an increase to about 4% on the 8% dollar issue, but that it would be inadvisable for him to recommend an increase of the basic rate of interest which this country might be able to bear for a short time and then be obliged to reduce it again if the financial situation became more unfavorable later. He then observed that his Government has no intention of seeking further foreign loans in the United States or elsewhere.
The Minister said that he was sending me a confidential brief outline of what he intends to propose when he goes to New York. I told him that I could not comment on any proposals as I was not in a position to say what the bondholders were likely to accept but that he would find the Council most helpful in recommending to the bondholders for their favorable consideration an equitable and reasonable proposal. When he sends me this outline, a copy will be forwarded to the Department.
I suggested to Dr. Charlone that it would assist the Council if he would furnish it with pertinent facts, explanations and detailed budget figures showing the extent of Uruguay’s ability to meet the service of her dollar debt. Perhaps it would be advisable, without alluding to Dr. Charlone’s proposed visit to the United States in January, for the Council to write to the Minister of Finance for the financial and fiscal figures which it requires for a comprehensive study of the Uruguayan debt situation.
Respectfully yours,
- Not printed; it transmitted a copy of the letter, and enclosure, of July 21, 1936, from the President of the Foreign Bondholders Protective Council, printed supra.↩