File No. 817.51/565.

The Minister of Nicaragua and the Minister of the Treasury of Nicaragua to the Secretary of State.

[Not a translation.]

Excellency: Having in a general way pointed out the pressing immediate needs of our country, we wish to add that there is but one bank in the Republic of Nicaragua, that it has an insignificant capital, so little that it can not extend loans to even a small percentage of those worthy of credit. The current rates of interest are from 18% to 24% for loans in general, even for those with which to move the crops. We need a bank with more capital, and an experienced man who understands dealing with our people at its head.

Very shortly the former “billetes” of our country cease to be legal tender. We need money now to supply in their stead the new standard “córdoba,” which is the equivalent of your American dollar.

The Mixed Claims Commission, created at your country’s suggestion, sorely needs money to begin to pay off the awards it has made. Already there is evidenced a tendency to endeavor to effect settlements direct with Nicaragua because the creditors have so far seen no practical evidence of finality in matters the Commission has taken up.

The original suggestions of Mr. Jarvis, a man who has in dealing with Latin America succeeded largely in Cuba, that he could arrange a loan for us of from two million to two million and a half dollars in gold, and could put up a million of it himself, on terms better than those of the present bankers, met with our approval and immediately Mr. Jarvis delivers this amount to the Department of State in Washington, or to whomsoever it shall designate, approximately 711,000 of which shall be used for liquidating our obligation and thus cancelling our contract with the present bankers, and the balance placed at the disposition of Nicaragua, we, having the authority of the President of Nicaragua to do so, will definitely appoint Samuel Miller Jarvis as Finance Commissioner, the appointment to be according to the terms of the agreement copy of which is attached to this letter, and have the appointment confirmed by our Congress now in session at home.

This offer is made in the belief that Mr. Jarvis can raise money in any reasonable quantity in the near future and that instead of two and a half millions the loan might be for as much as four millions, and at long instead of short time, with precisely the same guaranties as the present bankers have except the option on the Railroad stock.

After great reflection it occurs to us that any plan which did not comprehend liquidating with the present bankers prior to definitive naming of a Finance Commissioner might give rise to differences the effect of which might reflect little credit on the foresight of our [Page 1051] country, or possibly even give rise to question as to our fair intention towards those who have had business with our Republic.

We have [etc.]

  • Emiliano Chamorro.
  • Pedro Raf. Cuadra.
[Inclosure—Not a translation.]

Memorandum of Agreement between the Republic of Nicaragua and Samuel M. Jarvis, which becomes effective on compliance with terms of letter dated September 1, 1913.

The Republic of Nicaragua shall through its Congress create the office of Finance Commissioner, who shall attend to the international financial affairs of the Republic; and he shall cooperate with the Minister of Finance in Nicaragua under the advice of the Secretary of State at Washington. It shall be the duty of the Finance Commissioner, and he shall be required, at all times to furnish to the Minister of Finance of Nicaragua and to the Secretary of State at Washington any information which either may request as to the financial affairs of the Republic; and he shall make to the Minister of Finance of Nicaragua quarterly reports of such affairs. He shall in no case be interested in any concessions from the Government, except that mentioned in Clause 7, referring to Banco Nacional de Nicaragua.
The office of Finance Commissioner shall be filled by the appointment by the President of Nicaragua of Samuel Miller Jarvis of New York. And he shall continue to hold this office during the existence of the present loan and of all loans negotiated by him for Nicaragua, if approved and accepted by the latter. His appointment shall be officially certified to the Department of State at Washington.
Said Jarvis shall do everything in his power to arrange for meeting the present financial needs of Nicaragua and shall have authority to secure funds for the conversion of currency, the refunding of all loans in a proper and economical manner on the best terms obtainable by him, all contracts to be subject to the approval of the Department of State at Washington, D. C., and ratification by the Nicaraguan Government, and for the placing of the finances of Nicaragua on a sound basis. All expenditures of the loans to Nicaragua shall be made through the National Bank of Nicaragua; and the books of the bank shall at all times be open to the inspection of the Minister of Finance of Nicaragua and of the Secretary of State at Washington.
Said Jarvis shall have at all times the active cooperation of the Government of Nicaragua. He may also have the right to refer for advice to the Department of State at Washington, independent of the Minister of Finance of Nicaragua.
Said Samuel Miller Jarvis shall be empowered at once by Nicaragua to investigate and report upon the financial and economic condition of Nicaraguan financial affairs. And to authorize and to have executed and carried out such action, legal or otherwise, as shall be necessary to properly protect and conserve the interest and welfare of Nicaragua; and to recover whatever may be properly due her on any account or from any source. And for this purpose he shall have the right to investigate records and accounts, demand accountings, employ auditors and legal and other services wherever necessary to carry out the purposes of this article.
Said Samuel Miller Jarvis shall have proper compensation for the services performed in pursuance of the duties devolving upon him under this instrument And shall have reimbursement for all his proper expenses incident to said work. Said expenses to be determined and allowed from time 10 time as the same are incurred. The compensation for services in connection with loans shall be one per cent upon amount negotiated and approved by the Department of State at Washington and accepted by Nicaragua. All compensation for services in all other matters to be agreed upon between the Government of Nicaragua and said Samuel Miller Jarvis, and approved by the Department of State at Washington, D. C.
Samuel M. Jarvis shall have the right to purchase a controlling interest in the shares of the National Bank of Nicaragua within a reasonable time to be determined by the Secretary of State at a price to be agreed upon by the [Page 1052] Minister of Finance of Nicaragua and said Jarvis, and in case they should be unable to agree, to be fixed by a person to be designated by the Secretary of State of the United States.

It is understood that the purpose of this transfer of the shares of the bank is to assure its development as an institution whose importance, strength and solidity shall comport with the dignity of the Republic.