File No. 837.77/75.

The Secretary of State to the Chargé d’Affaires of Great Britain.

No. 1529.]

Sir: I have the honor to acknowledge your note of the 31st ultimo in which you state that the Cuban House of Representatives has approved the grant of a subsidy to the North Coast Railway Company of Cuba and that His Majesty’s Government regards this action as an unjust infringement of the existing rights of the Cuban Central Railways, Limited, a British company, and has accordingly instructed His Majesty’s Minister at Habana to enter a strong protest.

In reply to your suggestion that the Government of the United States support the action of His Majesty’s Government on behalf of the Cuban Central Railways Company, and referring to the several conferences between the Embassy and officers of the Department, I regret to inform you that the Department under the circumstances does not see its way clear to take the action desired.

I may say at the outset that upon its information it has been the Department’s view that the merits of the respective pretensions of the British company and the North Coast Railway Company have constituted an open question. For example, it may be observed that from a report received from the American Legation at Habana in April last there appeared to be at least a serious doubt as to whether the British company’s claim of priority was, under the facts and the applicable provisions of Cuban law, sustainable. In this view of the matter and in view of the further fact that it has been represented that the North Coast Railway Company, though a Cuban corporation, will be substantially an American enterprise, the action desired has appeared to be open to misconstruction and to place this [Page 386] Government on the surface of the matter at least in the embarrassing position of taking sides with a British company in a controversy with American interests, the merits of which are, at best, still to be determined. This difficulty has been further intensified by the controversy between the two companies as to the route to be adopted, in which connection petitions have been addressed to the American Legation at Habana by a number of American citizens who own and are operating railroads in the territory proposed to be traversed by the British line, protesting against the selection of the route chosen by the British company as detrimental to the interests and welfare of their properties.

Finally, I may say that the Department’s view of the facts indicated above would seem to be verified and its conclusions fully warranted by its latest information in the matter from the American Legation at Habana. Following the conference on the 7th instant between yourself and officers of the Department, the American Legation was instructed by cable to report on the present situation in the light of your information that the concession for the Caibarién-Nuevitas railway had actually been given to the Cuban Central Railways, Limited, and that this company had commenced construction and that the rival project was an enterprise directed in bad faith against the British company’s vested interests. In response to this instruction, the Department has received a cable report from the Legation, of which the following is a paraphrase:

[Here follows the telegram of June 9 from Mr. Beaupré.]

Accept [etc.]

P. C. Knox.