File No. 817.032/24

Minister Jefferson to the Secretary of State

No. 461

Sir: For the information of the Departments have the honor to enclose herewith copy and translation of President Chamorro’s message to the National Congress, which he read at the convening of the ordinary session on December 15, 1917.

I have [etc.]

Benjamin L. Jefferson

Message of the President of the Republic, General Emiliano Chamorro, to the National Congress in ordinary session December 15, 1917

When I became President I found an insolvent Treasury and a public debt not liquidated, that for years had gone on increasing through improvidence and governmental optimism. During General Zelaya’s dictatorship, to the external debt enlarged by the Ethelburga loan obtained in Europe, were added the emission of customs bonds and also that of compulsory and personal loans which were never paid, and which were so numerous and without limit that there exists no exact account of them. To this must be added the later emission of the Bonds of Internal Revenues, whose payment the State unfortunately did not make, thus ruining the credit of the Government. The past wars and revolutions have caused to fall on the State the burden of indemnities legally accepted, and these and other amounts due some years ago have placed us in the hard position of not being able to obtain the necessary credit for the good advancement of the country. This floating and unliquidated debt has meant also a political danger, since Nicaragua has often been exposed to a forcible collection of her debts, it being enough to say that of the so-called internal debt which has been placed under the direction of the Public Credit Commission 43% belongs to foreigners who have continually, through the diplomatic representatives of their respective countries, demanded immediate payment.

This also explains the necessity to give the bonds to be issued for the total extinction of the debt such securities as will make them easily received and accepted with entire confidence, even abroad, giving to them such guaranties that their own funding shall be placed beyond the contingencies or failures which nullified the emission of the former, and such securities are given equally to the Nicaraguan creditors without party distinction and to the subjects of foreign nations.

To the Public Credit Commission have been presented claims for twelve and a half millions in value which, through a rigorous scaling down of some and the voluntary agreements of others, are going to be paid with a million and a half in actual cash out of the remainder of the money from the Bryan-Chamorro Treaty and four millions in Customs Bonds at 5%, whose emission you have just authorized.

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The agreements, which have been made to arrive at the unavoidable and transcendent end of the consolidation of our debt, have met with the bitterest censure from the opposition. That censure is explained by the necessity of attacking the Government, not being able to reproach any of the proceedings as contrary to law or its political principles. Some others, imbued with certain ideas of exaggerated nationality, have pretended to see in some of the clauses foreign political intervention or violations of the Constitution. It has been argued that the obligation contracted by the Government to limit the budget for general expenses to a certain fixed sum deprived the Congress of a constitutional function, and that the establishment of a High Commission in whose appointment the American Government has part constituted a danger for the sovereignty of the Republic.

Arguments easily refuted, if it be considered that the respective contracts had to be approved by Congress and that the financial plan is simply a law passed by the same high body. It is Congress, then, which making use of its constitutional functions of fixing the budget, fixes it from this moment to ninety-five thousand dollars a month for expenses exclusively administrative, and it does so until there are no more bonds to pay. It is natural that creditors, and above all anyone to whom payments are being made in the form in which Nicaragua has been doing it should seek the proper guaranty and security with respect to a debtor, who for twenty-five years has been at fault, and that the latter should reduce those expenses that are above its revenue capacity. And precisely those expenses exceeding simply administration, which we might call unproductive and which are the ones that have made the constant deficit in former budgets, are the only ones fixed, since the surplus of the revenues, which will be quite considerable when the present abnormal situation passes, will be spent after the payment of the debt on works of public utility, as it will remain for the free determination of Congress.

No person or nation considers its dignity and sovereignty lessened when for the solution of its problems it agrees that any arising difficulty should be settled by arbiters. On the contrary, in the disputes among various countries there are always sought as arbitrators citizens or sovereigns of nations without any connection with the interested parties. This is precisely what has been done in creating the High Commission. I stated before that 43% of the internal debt belonged to foreigners, and the history of our small nations teaches what sorrowful complications have arisen in Spanish America from that class of binding obligations, for the best solution of which there is finally recourse to arbitration or mixed international tribunals. In our case all contingencies are once and for all solved, with the maintenance of the High Commission in whose organization the American Government intervenes. The moral force of the Great Republic extends over our contracts its powerful protection which, if it is a guaranty for the exact fulfilment of the assumed obligations, also means that our weak country shall no longer be a victim of any class of demands.

Emiliano Chamorro