The Acting Secretary of State to the Ambassador in El Salvador (Simmons)
With reference to previous communications concerning the debt arrangement negotiated between the Government of El Salvador and the Foreign Bondholders Protective Council29 but not yet consummated, there is enclosed a memorandum30 of a conversation between Mr. James Grafton Rogers, Acting President of the Council and officers of the Department in which Mr. Rogers requested further action by the Department and the Embassy.
The Department believes that the Embassy would be justified in taking vigorous action to bring about a settlement of the dollar bonds without further delay and without waiting for British action or approval of Salvadoran terms for the sterling bonds. On March 2, 1944 the Ambassador of El Salvador31 publicly announced agreement on the bases negotiated with the Council. It would appear that they are within the capacity of El Salvador to execute and are not unfavorable to El Salvador. Resumption of payment would greatly promote the credit and reputation of El Salvador in the United States and failure to proceed with the announced settlement has been having a correspondingly bad effect. The difficulties which have intervened appear to be matters of detail which in so far as concerns holders of dollar bonds could be readily adjusted with good will on the part of El Salvador. The Foreign Bondholders Protective Council stands ready to discuss such details and is anxious to bring the matter to a conclusion without further delay.
You are therefore requested to interest yourself actively in this matter having due regard to the current political situation32 and the choice of an opportune time. Please report action taken or submit your views in case you deem it inappropriate to take immediate action.
For your confidential information, it is understood that Mr. Rogers is in close contact with the British Council33 representing the sterling bonds34 and that he feels free to move independently of them although [Page 1076] he will keep them informed of developments. His judgment is that the British Council will be willing to accept any arrangement that he is able and willing to make.
Very truly yours,
- See Memorandum of Understanding, January 13, 1944, ibid., p. 1115.↩
- Not printed.↩
- Hector David Castro.↩
- El Salvador was at this time in the third week of a Cabinet crisis which was resolved on October 8 with the appointment of a new Cabinet.↩
- Council of Foreign Bondholders, London.↩
- For information concerning the sterling bonds held by British bondholders, see penultimate paragraph of despatch 1363, March 4, 1944, from San Salvador, Foreign Relations, 1944, vol. vii, p. 1119.↩