File No. 837.77/86A.

The Secretary of State to the American Minister.


The complaint of the Cuban Central Railway Company against the Nuevitas-Caibarién project has been brought to the Department’s attention by the British Embassy, accompanied by a request for this Government’s investigation and for such action as the disclosed facts may warrant. It is alleged in the documents submitted by the Embassy that: (1) The decree accepting the proposal of the North Coast Company is illegal because it violates rights of the Cuban Central Company already possessed; provides in an illegal manner for the payment of the subvention; makes the award contrary to the law relating to bids; and ignores the proper formalities in making [Page 388] awards for lines other than the Nuevitas-Caibarién. (2) The award to the North Coast Company was financially and economically unwise because the subvention was at an essentially higher figure than was asked by the Cuban Central Company, which, moreover will build the line without any subvention whatever if given reasonable time; under the bid and award the North Coast Company may build the road with Government money and then withdraw the road from public service and make it a private road; the North Coast Company is newly organized and not heretofore engaged in railroad building and operation, whereas the Cuban Central Company is a successful going concern; and the conclusion that the Cuban Central project was the better one is corroborated by technical reports to that effect by the Inspector General of Railroads and by the Secretary of Public Works, which were ignored by the President in making the award. (3) According to the best information received by the Cuban Central the North Coast promoters have private assurances from a high Cuban official that the Cuban Government will undertake to guarantee the several million of bonds that the North Coast Company proposes to float, if such a guaranty become necessary in order to sell the bonds.

The legality or illegality of the Executive’s action in awarding the contract is not one for this Department at this time; but you will observe that (2) and (3) above involve the use of the Government’s funds and the possible increase of the Government’s obligations; they are accordingly of immediate interest to this Government, in pursuance of the policy outlined in the Department’s instruction No. 123 of August 15, 1912.1

You will bring these allegations to the serious attention of the President of Cuba, pointing out that a proper disposition to avoid future trouble in the matter would seem to require his renewed and serious consideration of the question, in order that no action shall be taken either involving the Government of Cuba in future difficulties or constituting an improvident use of national funds and credit or increasing the national financial obligations. You will at the same time avoid giving the impression that this Government is espousing either project as against the other.

Investigate carefully the allegations made by the Cuban Central Company and report.