File No. 815.51/339.
Memorandum of Mr. Pierrepont of the Division of Latin-American Affairs of the Department of State concerning an interview with the Agent of Honduras.
Mr. Samuel Zemurray, who spends most of his time in Honduras, called at the Division today and talked with Mr. Doyle and myself, and later with Mr. Clark. What he wished to find out was the Department’s answer to the inquiry made in Mr. Wexler’s telegram to Mr. Clark,1 in which it was suggested that the Chief Justice should be named as the umpire in the arbitration clause of the contract with Honduras regarding the $500,000 loan, and also to discuss the same proposition with regard to the larger loan which the Whitney Bank and others proposed to make to Honduras.
Mr. Clark explained to Mr. Zemurray that Mr. Wexler had misunderstood him in claiming that he suggested that the Secretary of State himself should be the umpire, Mr. Clark having actually said his personal idea would be to have the umpire named by the Secretary of State. Mr. Zemurray continued to discuss the plan of having the Chief Justice act as umpire, and in this connection Mr. Clark suggested unofficially that the best way would be to have some of His New Orleans friends ascertain personally from the Chief Justice whether he would be willing to act in such a capacity, and if he should answer in the affirmative, to have the President of Honduras make a formal request of him through the Department of State. Mr. Zemurray thought this would be the best way. Mr. Clark added, however, that he thought the arrangement of having the umpire named by the Secretary of State would perhaps be slightly preferable as it would lend more political significance to the arbitration clause in the loan contract.
Mr. Zemurray then sought to find out whether the Department thought that such an arbitration clause in the contract for the large loan, which would have to be approved by the Honduran Congress, would have nearly the same weight as the convention. In reply to this Mr. Clark called Mr. Zemurray’s attention to the Hague Convention respecting the limitation of the employment of force for the recovery of contract debts, which provides, in Article I, that the undertaking not to use force is not applicable “when the debtor State refuses or neglects to reply to an offer of arbitration, or, after accepting the offer, prevents any compromise from being agreed on, or, after the arbitration, fails to submit to the award”, the inference being clear that this Government would have the right, should any of those exceptions arise, to use force in behalf of the Americans making the loan.
Mr. Clark also said unofficially that the action this Government would take would depend entirely upon the policy of the Administration, and that in his opinion this Hague Convention would give the Government just about as good a right to use force as the [Page 617] original loan convention. Mr. Zemurray seemed very pleased upon learning of this Hague Convention, and seemed to think that it afforded a satisfactory guaranty.
Mr. Zemurray told me, regarding the $500,000 loan, that the Whitney Bank put up $100,000; that he himself put up $100,000; Mr. Bradley Palmer $100,000; Mr. Wexler and some other man $50,000 each; and the other $100,000, I think, by some parties in Chicago. He said that so far as he knew Sheldon did not put up any of the money for this preliminary loan, unless he had a share of that put up by the Whitney Bank.
Mr. Clark made a point of the fact that he was speaking informally and unofficially: that what he said was in no way binding upon the Department; and that it could not be regarded as the views of the Department. Mr. Zemurray said he understood this.
- See ante, telegram of June 8.↩