FOREIGN RELATIONS, 19 4 2, VOLUME VI



  In discussion Dr. Salazar insisted that he had not been informed
as to the terms on which National Bonds might be offered the holders
of the Bank's bonds. He thought it might be in mind to offer less
favorable treatment of arrears of interest than had been given the
holders of National Bonds in the recent settlement. This was with
reference to guaranteed bonds. For the non-guaranteed bonds he
thought that the holders might be offered a reduced capital amount.
But on these points he had not been informed. All he was to do was
to ask questions as to how this means of settlement was regarded in
principle and as to any legal difficulties which could be foreseen.
  On the basis of personal opinions he was told that no objection in
principle was perceived to a type of settlement in which the Colom-
bian Government would offer to exchange dollar bonds of its own for
dollar bonds of the Agricultural Mortgage Bank. The idea might
even be regarded as a favorable point of departure. On the legal
side it was not perceived that there was any difficulty, although the
offer of a settlement of this kind would, of course, have to be registered
with the Securities and Exchange Commission in conformity with
whatever requirements the Commission may establish, which would
probably call for full information regarding Colombian finances and
regarding the finances of the Agricultural Mortgage Bank.
  It was suggested that on the legal question he might also want to
speak to trustees of the Bank's bonds and to the Fiscal Agent of the
National Loan. Mention was also made that American counsel who
have been retained in the recent adjustment of the Colombian Na-
tional Bonds must be highly qualified in such matters as S. E. C.91
procedures, etc., and fully familiar with the question of the Agricul-
tural Mortgage Bank bonds. Dr. Salazar indicated that part of the
procedure might be for the Mortgage Bank to sell internal oekdulas and
pay the proceeds to the Government for assuming the Bank's foreign
debt. He did not define just what advantages would be derived from
this but evidently from the Colombian point of view it is regarded as
one of the attractive elements in the procedure.
  Dr. Salazar expects to return to Colombia early in February and
has long since asked the Bank to name his successor. He has never
received a reply on this point. He said that if the procedure of the
Government taking over the debt is followed, the negotiations might
possibly be entrusted to the Embassy, although Colombia had no one
here highly qualified to handle such a matter.
  Dr. Salazar said that he would at once telegraph Bogota the ex-
pressions of personal opinions which he had been given. He made it
very clear that he understood that these conversations were not direct

91 Securities and Exchange Commission.



206