Office of the Historian

821.51/2442

The Secretary of the Treasury (Morgenthau) to the Under Secretary of State (Welles)

Washington, February 7, 1940.

Dear Mr. Welles: I have pleasure in enclosing a copy of a letter which I have today received from the Colombian Ambassador indicating the decision of his Government to accept the terms of the arrangement reached with Mr. Traphagen as representative of the Foreign Bondholders Protective Council, Incorporated, through conferences held under the auspices of our governmental committee. A communication in a similar sense is expected from Mr. Traphagen in the immediate future.

Permit me to express to you my best thanks for the cooperation which you so generously gave toward achieving this settlement.

Sincerely yours,

H. Morgenthau Jr.
[Enclosure]

The Colombian Ambassador (Turbay) to the Secretary of the Treasury (Morgenthau)

Washington, February 6, 1940.

Dear Mr. Secretary: My Government has authorized me to accept on its behalf the proposal which you suggested at the conference held under your auspices, with Mr. Traphagen as representative of the Foreign Bondholders Protective Council, Inc., on Thursday, February 1st, and which I undertook to recommend to my Government. The terms of this proposal are the following:

(1) Every effort will be made between now and the 15th of this month to arrive at a permanent settlement of the direct dollar debt of the Republic of Colombia.

(2) If, by the 15th of February, such a permanent settlement shall not have been reached, my Government will apply $1,750,000 for the service during the calendar year 1940, of the outstanding amount of [Page 696] $45.000.000 of the Colombian Government dollar issues of 1927 and 1928, as follows:

To pay the 1940 coupons of the two above issues at the rate of 3% a year $1,350.000
To apply to the purchase in open market for amortization of bonds of said issues 400.000

(3) Approval by my Government of this temporary arrangement assumes approval thereof by the Foreign Bondholders Protective Council, Inc. and recommendation to the holders of the Bonds by the Council, without any reservations.

I should add that my Government’s decision to accept this temporary solution is made in appreciation of the helpful mediation which you and other high officials of the Government of the United States have offered, and in the hope that by these means the permanent settlement of the debt will be brought sooner to realization.

My Government awaits the reply of the Council in order to work out the details to give effect to this temporary settlement, in case that proves to be necessary. It will be appreciated, therefore, if you can send me as soon as it is convenient, the Council’s statement on its decision.

Permit me [etc.]

Gabriel Turbay