File No. 817.51/923

The Secretary of State to Minister Jefferson


Your March 21, 11 a.m., March 30, 4 p.m.6 and April 10, 5 p.m. have been carefully considered by the Department.

You may inform General Chamorro that after giving much thought to the matters taken up in various cablegrams exchanged between the Department and the Legation and between the Nicaraguan Legation in Washington and his Government, the Department decided to bring to the bankers’ attention in a further conference the statements made by General Chamorro setting forth his position in regard to the appointment of a Financial Adviser.

As a result of this conference the Department, giving due consideration to General Chamorro’s views, the political situation and local conditions confronting him, was able to secure from the bankers a [Page 1124]tentative consent to renew their negotiations with the Ethelburga and to continue their cooperation in the plan made at the conference of December 18, 1916, which was outlined to the Legation in Department’s December 22, 4 p.m.,7 upon the following conditions:

All revenues to be collected by the Collector General of Customs.
Government to receive from such revenues 75,000 dollars per month to meet its expenses, but present commission to be continued and to have power to approve additional expenditures whenever absolutely necessary, such additional expenditures, however, not to exceed 40,000 dollars per month.
Commission of three to have control over the expenditures (as part of budget) of such amount as would have been payable to the 1909 bonds under old arrangement.

The Department considers that this plan, which was the only one it was able to obtain from the bankers, meets all objections to the original plan which contemplated the appointment of a Financial Adviser, and should be immediately accepted by the Government of Nicaragua in view of the conditions at present prevailing due to the conflict with the Government of Germany, and in order that the original plan may be carried out without further delay, with as few changes as possible.

You will again remind General Chamorro that the motive which has actuated this Government in lending its good offices for the purpose of endeavoring to bring about a readjustment of the finances of Nicaragua, was entirely based upon its friendship for that country and a realization of the very serious internal and international difficulties which are confronting her and you will say that it is the confident hope of the Department that this suggestion will be immediately accepted in order that the bankers may proceed with their negotiations with the Council of Bondholders at once, for any further delay would be most detrimental to the best interests of Nicaragua.