File No. 817.51/532.

The American Minister to the Secretary of State.


Your February 24. Brown Brothers have rejected all proposals. Government must now either revoke the whole plan of monetary conversion or make a new contract with other bankers. Situation serious. Railroad 51% option expires March 23; bankers want not only to extend option on entire railroad to October 15 but also to accumulate for the purchaser by that date earnings up to $500,000. Nicaragua willing to extend entire option to June 30 but not willing to concede earnings.

With all the Government’s resources tied up in order to secure a loan which is now less than $400,000 the situation becomes more embarrassing daily. Any of the several suggestions of my recent telegrams would be acceptable to the Government and probably to the Assembly also.