File No. 817.51/855
The Secretary of State to Minister Jefferson
Washington, December 22, 1916, 4 p.m.
Your December 14, 2 p.m.
1. Conference was held in Washington on December 18 between representatives of State Department and of bankers of Nicaragua under the auspices of the Pan American Permanent Nicaraguan Committee of the United States with Mr. W. L. Saunders as chairman, looking toward a satisfactory settlement of Nicaragua’s financial situation.
As a result of the conference the Department expressed itself as not being opposed to the performance of Nicaragua’s contract with Ethelburga and that Ethelburga’s interest and sinking fund up to January 1, 1917, should be paid out of the Canal fund, thereby releasing funds held by collector of customs and allowing Nicaragua to receive that part of the customs receipts which have been held for Ethelburga.
The Department is endeavoring to arrange postponement for three years of future interest and sinking fund payment in order to release further funds. These funds should meet pressing needs of Nicaraguan Government and enable Chamorro to enter upon his term of office with a fairly clean slate.
2. The Department has also given its consent to the practical performance of the bankers’ wishes based on their contract of December 2, 1914, by means of a general arrangement to include the settlement of all of Nicaragua’s indebtedness to the satisfaction of all concerned as far as possible.
The final sense of the conference was as follows: That the arrears of the Ethelburga debt should be paid out of the Canal fund as soon as possible; that the claims adjudicated by the Mixed Commission and all domestic and foreign claims against the Government should be investigated by a commission, consisting of two Americans and one Nicaraguan, and scaled down as far as possible; and that upon the results of this investigation combined with the already ascertained amounts of the foreign debts, as a basis of liquidation, the whole Nicaraguan debt should be practically refunded by an arrangement involving the assistance of the bankers and the issue of bonds secured by a second lien on the customs, and a first lien on 49% of the stock of the railroad and National Bank, and the payment of claims by the delivery of such bonds where possible.
Department also considers it imperative that legislative decree be issued immediately forming commission to study conditions of indebtedness and ample scope must be given commission to compel disclosure of facts and give all facilities to ample investigation.