File No. 817.032/23

Minister Jefferson to the Secretary of State

No. 404

Sir: For the information of the Department I have the honor to transmit herewith a copy and translation of President Chamorro’s message of July 31, 1917, to the National Congress of Nicaragua at the opening of its special session called to pass upon the financial plan of the Department of State for the settlement and reorganization of Nicaragua’s indebtedness.

I have [etc.]

Benjamin L. Jefferson

Message of the President of the Republic

Upon entering the Presidency I met with the grave economic situation which you all know, without more revenues available for the needs of the ordinary budget than the small revenues from whisky and tobacco and other lesser ones, called internal revenues, which, as a result of the election struggle recently passed, were in a sad state of disorganization. The former Administration had made contracts with the bankers, by which the latter forbore to collect from the customs duties the part to which they were entitled by the preceding conventions, awaiting the arrangement to capitalize the respective coupons, which according to the last extension of time would begin to be refunded in whole from the customs receipts the first of January of the present year, exactly on the very day on which the transfer of power was effected. In addition to this lack of resources is added to the burden of the State the back salaries not paid, as well as the value of the tobacco received from the producers, which amount to half a million dollars. Also there was in the hands of private persons a great quantity of stamps, stamped paper, whisky, tobacco and other species which were given them in payment for documents of credit against the State through compromise or exaction, preferences which constituted a powerful obligation for immediate payment from the few and limited receipts which remained for the Government.

Such was the problem which I had to confront from the first of January, 1917, outside of the most complicated problem for the settlement of the foreign debt and the consolidation of the internal debt.

The Minister of Finance and the other members of his department managed through the wise administration of the internal revenues to make them rise from the depression in which they were found, and produced an increase of almost forty per cent over what they formerly yielded. On the other hand, they have continued making the economies compatible with our existence as a nation, without impairing the efficiency of the Government as guarantor of public order, and by endeavoring to eliminate all superfluous expenses without suppressing those necessary and useful at present and for assuring the prosperity of the future. We have asked of the people new taxes, which it has been endeavored [Page 1098] to make fall on the businesses which at present yield the greatest profits. But all these measures, although effective, bear their fruit with the slowness which does not correspond with the urgent needs of the moment, and from this it results that from the first day of January were extended the efforts of the Government towards a definite arrangement with the bankers and to cause to be brought to the country the three million dollars of the Chamorro-Bryan Treaty, which according to the clause expressed in said treaty should have been deposited to the order of this Government from the date of its ratification, now more than a year ago. Referring to these arrangements the previous Administration left behind projects with a certain fixed direction which, although they were not satisfactory to the men of the new Government, necessarily had to serve as the base for the renewal of negotiations.

During the first days of January last, instructions were given to our Minister in Washington to request of the American Government the payment of half a million dollars in part payment of the total amount which is due us by the treaty previously cited, for the purpose of paying the back salaries and the tobacco debt to which I have referred and to leave the balance of the three millions for the arrangements which would have to be made, in accordance with the Department of State, by virtue of the former contracts with the bankers which gave to the latter the right to be paid with said money for the amounts loaned to the former Government. The Department of State agreed to give the money requested to be used as was proposed; but it expressed the desire that first a definite arrangement should be made with the Ethelburga and the bankers, in accordance with the plan of which I have heretofore made mention and which proposes the appointment of a Financial Adviser and the creation of a commission charged with the revision of the whole public debt, including the awards of the Mixed Claims Commission and with the sole exception of those loans in force and guaranteed by special hypothecation of the customs duties. After the discussions engaged in and the explanations of the case which you well know, I proposed to you to pass the decree which established the said Commission on Public Credit, which is in operation in this capital and which I believe will give beneficial results to the country.

The appointment of the Fiscal or Financial Adviser, although it is not a new idea, since its establishment was approved in the Treasury Bills Agreement, with which the Assembly, convoked because of the dissolution of the first Constituent Assembly, was acquainted, is, in my judgment, an important step, which deserves the consideration and study of the principal men of the country, and from the beginning I have tried to learn the opinions of the leaders of both parties, given in confidence and free of the restrictions which the respect for certain popular prejudices or the political interest might impose; sober judgments; entirely free from the passion with which complex problems generally are treated, which at times are claimed to be settled, having in view opinions hastily given, even when having no insuperable prejudices.

It is the opportunity for stating now that I am firmly convinced of the advantage, which there is for Nicaragua in maintaining the closest political relations with the Great Republic of North America and which is to the interest of our own system of government, to our own security, to stimulate those relations, in order that they may grow into an increasing and perfect friendship between both Governments and peoples; and it is in the light of this judgment that we must examine that question and not by the erroneous method of an exaggerated patriotism which converts itself into vain pride, when it is not inspired with the spirit of sacrifice, which has always filled the spirit of all patriots who in the course of history and in all countries have aspired to the creation of political entities, which the succeeding generations may with pride call fatherland.

About this cardinal idea have been centered the negotiations which I have endeavored to conclude with the entire approval of the Cabinet and in the midst of lack of funds in the Public Treasury, of which you, more than anyone, are well acquainted. The result of these negotiations cannot help but be the exact consequence of the antecedents pointed out, since the Government must, in all cases, be inspired with the strict fulfilment of the obligations contracted. Any observer of the present events in the economic world will arrive at the conclusion that the power of nations is allied with the establishment of its credit and no one can deny that this can be preserved except by the faithful fulfilment of its pledged word and the due respect for the honor of the Nation, but from this it should not be understood that the Government should refrain from taking steps for the betterment of the existing conditions, a thing which can only be obtained by means of the firm establishment of its own credit.

[Page 1099]

Inspired, then, with the ideas previously expressed, the Executive has come to agree upon the bases which the Minister of Finance will submit to your worthy attention, after being approved by the Cabinet, and in regard to which he will give you the necessary explanations and will present to you all the documents in the case, even those of confidential character. There are two points to which I wish to call your special attention; that the main object be accomplished within my own period of government and that the Republic reserve the right to pay at any time its debts and to remain free of all other obligations, thus leaving the field open for the new economic conditions to which the world will be subjected at the termination of the present universal catastrophe.

In wishing you patriotic prudence in your deliberative task, I am pleased to give you my cordial salutation of welcome.

Emiliano Chamorro