File No. 817.51/534.
The American Minister to the Secretary of State.
Managua, March 2, 1913.
Your February 28. Assembly refuses to authorize sale of entire railroad. Only two possible courses now open: (1) bankers to exercise [Page 1039] option on 51% and reimburse themselves for existing indebtedness, thereby releasing all Government revenues; or (2) bankers to release all securities except railroad, the option on 51% of which to continue until discharge of the debt. President Diaz feels that the bankers are unreasonable in insisting on the same security now, when the debt is only $400,000, as when it was $2,500,000. The situation is critical.