File No. 417.00/49.


There has been a leak in Government circles and the substance of your telegram of June 26 has got out somehow and produced considerable agitation, and the opinion generally expressed is that the United States Government has repudiated its policy of protecting Nicaragua against foreigners holding rights in ruinous concessions or contracts. I have reason to believe that the Department’s suggestion as to expropriation proceedings would not greatly help the matter, and strongly urge that no further action be taken until the assembly approves the loan contract.