File No. 817.51/571d.

The Acting Secretary of State to the American Minister.


The Department desires you to ask the President whether he favors the sale of the 51% of the railroad merely because the bankers have an option in their present contract and whether he would consider the option price of $1,000,000 sufficient if no option existed.

The Department has under consideration with the bankers, Minister Chamorro and the Nicaraguan Minister of Finance an immediate loan of $2,000,000, of which $1,000,000 involves the said option. The Department is inclined to believe the railroad worth more than the option price.