File No. 815.51/326.
The American Minister to the Secretary of State .
Tegucigalpa , February 4, 1912 .
Sir: I have the honor herewith to enclose the terms of the contract which this Government proposes to make with the Whitney Central National Bank of New Orleans for a loan of $500,000 American gold, cut from La Gaceta of the 15th ultimo (Series 391, No. 3905), published yesterday. This clipping is accompanied by a translation.1
[Page 608]In this connection it may be of interest to know that Mr. Samuel Zemurray (Mr. Wright’s Nos. 229 and 232, of August 14th1 and 30th last, respectively) returned from the United States about two weeks ago and has called at the Legation. He stated to me that he negotiated the above-mentioned loan; that he was negotiating a second loan of from six to ten millions gold to take the place of the Morgan loan; that this loan was to be protected by a convention which would replace the Knox-Paredes Convention; that he had a copy of this new convention with him and that if I had not already received a copy of it I could shortly expect to receive it with instructions from the Department, Mr. Zemurray said, as I recall, that this loan was underwritten by Mr. Sheldon, President of the Bethlehem Steel Company, that Mr. Sheldon had been in communication with the Department and had arranged with it the terms of the convention that was to protect the loan and that he (Mr. Zemurray) had therefore found it unnecessary to go to Washington. I understood from his conversation that he had obtained from Mr. Sheldon the copy of the convention which he claims to have. He described to me certain provisions of this convention which, he said, removed certain features of the Knox-Paredes Convention that he considered objectionable to the Government and people of Honduras and added that Mr. Lamar C. Quintero was on his way to Tegucigalpa in connection with the matter.
In the absence of instructions in so important a matter I can not give credence to Mr. Zemurray’s statements concerning this large loan. It seems evident that he would like to make this loan for Honduras and he appears to have felt the pulse of the Administration and people and in the loan and convention as described to me to have conceived a proposition which he believes more acceptable to them than the pending ones.
I have [etc]