File No. 817.51/846
[Inclosure 2—Translation]
The Minister for Foreign
Affairs to Minister Jefferson
National
Palace,
Managua,
September 30, 1916.
Mr. Minister: In your official
communication of the 5th of the present month, your excellency, in
behalf of your Government is pleased to state: that Señor Pedro
Rafael Cuadra, Financial Agent of Nicaragua, has forwarded to the
Department of State of the United States corresponding copies of a
contract made on the 31st of July, between the same Senor Cuadra and
Messrs. Brown Brothers and Company and J. and W. Seligman and
Company, and of another contract of the same date made between the
same agent and the National Bank of Nicaragua, Limited; that both
contracts refer to the settlement of the debts of the Nicaraguan
Government with the aforesaid firms, counting on the funds, which
according to the Treaty already ratified and relative to an
interoceanic canal the United States Government is obliged to pay to
that of Nicaragua; that pursuant to Article III of that Treaty no
decision can be made by the Government of the United States or by
that of Nicaragua in regard to the disbursement of the aforesaid
funds, until both have agreed as to the use which will be made of
them for one or both of the general purposes designated in the
Treaty; that under such circumstances the Nicaraguan Government
being unable to enter into negotiations with the firms as to the
payment which must be made to them, the Department has found it
strange that in the contract made between Mr. Cuadra and Brown
Brothers and Company and J. and W. Seligman and Company there should
be the following clause:
The Republic, besides, as a prior condition, agrees in that
it shall not consent to any disbursement or distribution of
the money to be received from the United States, according
to the treaty of August 5, 1914, in violation of the clauses
of this agreement, or that would deprive the bankers of any
of the rights herein stipulated or of those which have been
granted to them in previous contracts and which have been
mentioned in this agreement;
that, in accordance with that clause and others of
the contract, the Nicaraguan Government would place itself in a
position in which it would be unable to cooperate with the United
States Government in compliance with Article III of the aforesaid
Treaty; that it is the purpose of the United States Government to
choose the most adequate means to fulfill the object of the Treaty
in regard to the disbursement of funds destined to pay the debts of
Nicaragua or for other public purposes, when the agreement to this
effect may be made with the Nicaraguan Government; that, for such
reasons, the Department cannot, at this moment, recognize the
aforesaid contracts, unless it be to transmit to my Government its
judgment upon them, and to express the desire of the Government of
the United States to receive from that of Nicaragua a memorandum of
its intentions in regard to such contracts, which seem to have been
entered into without interpreting in a proper manner the
stipulations of the Treaty lately ratified.
In regard to the said contracts and in reference to the observations
contained in the note to which I am replying, I have the honor to
state to your excellency that my Government will give, on its part,
faithful compliance with the stipulations contained in the Treaty
which has just been ratified, relative to an interoceanic canal, as
they must be interpreted; and duly appreciates the good disposition
which the United States Government has to choose the most adequate
means to fulfill the object of the Treaty in regard to the
disbursement of the funds which are to be applied to the payment of
the nation’s debts or to other public purposes, when the agreement
between both Governments concerning this disbursement can be
effected.
My Government expects, on these grounds, that from the previous
agreement arrived at by the two contracting parties, as to the use
of the funds proceeding from the aforesaid Treaty, there will be a
conciliation of Messrs. Brown Brothers & Co.’s and J. & W.
Seligman & Co.’s interests with those of the other creditors of
the country and with the end in view for the progress and welfare of
Nicaragua, as considered in Article III of the Treaty so many times
mentioned.
In this manner I have received instructions to answer your
excellency’s note; and in so doing, I avail [etc.]
