FOREIGN RELATIONS, 19 4 2, VOLUME VI



lombian Minister of Finance for a ten years settlement of the bank-
ing debt, which would leave a balloon of about $5,500,000 at the end
of the period, with an understanding that this would be further fi-
nanced. Mr. Lancaster stated that in view of my previous discussion
with Ambassador Turbay the Bank felt somewhat reluctant to accept
the Minister of Finance's schedule of payments beginning at $800,000
in the first year, but rather would like to receive $1,000,000 at the out-
set. One million dollars has been the basis of all previous discussions.
  I called Ambassador Turbay and informed him of Mr. Lancaster's
conversation. The Ambassador stated that he had previously tele-
graphed the Minister of Finance suggesting that the banking group
might be disposed to accept some arrangement with a balloon to be
further financed, and that the Minister of Finance had cabled to him
the proposal which he had made to the National City Bank. I indi-
cated that the bankers hoped to receive $1,000,000 in the first year and
that all previous discussions had been on a basis of at least $1,000,000.
The Ambassador stated that he would telegraph the Minister of Fi-
nance indicating that the banking group would probably accept the
proposal if the initial payments were stepped up to $1,000,000, and
recommending such basis of settlement. I thanked the Ambassador.
  I subsequently informed Mr. Lancaster in general terms of the pro-
posed telegram from the Ambassador to the Minister of Finance, and
he stated that the bankers would proceed on that basis, being probably
willing to recede a little on the initial payments if the Minister of
Finance remained firm.


821.51/2744
      The Department of State to the Colombian Embassy 6

                         MEMORANDUM
  In accordance with the informal conversations carried on between
His Excellency the Colombian Ambassador and representatives of the
Department of State, it is considered that the following formulae offer
acceptable bases of solution of the defaulted obligations of the Agri-
cultural Mortgage Bank of Colombia in respect of dollar bonds:
  (1) Government-guaranteed Issues of 1926, 1927, and 1928. For
each $1,000 principal amount of dollar bonds of the Agricultural
Mortgage Bank of Colombia guaranteed by the Government of the
Republic of Colombia now outstanding in the hands of the public,
together with all unpaid coupons thereon including those past due,
there would be exchanged $1,100 principal amount of bonds of the Re-

' Handed to the Colombian Ambassador on March 20, 1942.



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