File No. 817.51/958

Minister Jefferson to the Secretary of State

[Telegram—Extract]

Referring to the Department’s May 23, 5 p.m.6 In view of the importance of this question I quote the full text of the agreement which Chamorro accepted and if it meets with approval of the Department please cable me immediately. Chamorro will submit it to his Congress at once which adjourns next week.

The National Bank of Nicaragua shall be the depository of all Government funds.

The Government of Nicaragua will administer and collect all internal revenues such as tobacco, liquors, powder, ammunition, et cetera, and agrees further to improve this service by the enactment of appropriate laws not later than January 1, 1918. The proceeds of same shall be deposited with the National Bank of Nicaragua monthly and accredited to a fund which will hereafter be called “budget fund”.

No drafts or checks against the budget fund will be drawn unless signed by the Minister of Finance and which will be accepted by the manager of the National Bank of Nicaragua only when in strict conformity with provisions of the budget. The Minister of Finance before signature will require the production of original documentary evidence such as vouchers, pay-rolls, invoices, orders, etc., to verify whether it is a true and correct budgetary expense or under executive decree.

Before the opening of each regular session of the Congress of the Republic the Minister of Finance shall prepare a statement in detail of the probable receipts of the Republic for the ensuing fiscal year from all sources, of the amounts required during such fiscal year for the service of any outstanding Government loan and all other amounts payable under existing laws or outstanding contracts or engagements of the Republic or otherwise in any manner against such receipts and of the residue of Government receipts estimated to be available for appropriation by the Congress, it being agreed and understood that in no year will the aggregate of appropriations of the budget exclusive of debt service exceed 1,500,000 dollars or 125,000 dollars per month for the fiscal year except for the advancement of internal improvements as schools, etc., or, if at any time due to acts of God or disturbances of the public peace, unforeseen expenses are made necessary in the judgment of the President of the Republic and the Secretary of State of the United States such additional sums may be appropriated as they may agree upon for ordinary and extraordinary expenses and may be paid from the balance or the regular customs or other revenues. A budget statement so approved by the Minister of Finance shall be submitted through the President of the Republic to the National Congress at the beginning of its session and shall constitute the official estimate of receipts and fixed charges of the Republic for such fiscal year. Within ten days after the adjournment of the Congress the Minister of Finance shall prepare a statement of all appropriations regular and special which shall have been authorized and said appropriation accounts shall be kept by the National Bank of Nicaragua and whenever an account is exhausted no more checks or drafts will be honored on said appropriation nor can any money be transferred to another fund unless authorized by Congress.

The Minister of Finance and the manager of the National Bank shall cooperate in putting into effect a system of financial administration which shall secure economy in the use and expenditure of the public funds and a proper accounting to the President of Nicaragua of all moneys received and disbursed by the National Bank for the Republic and to this end the Minister of Finance shall aid the manager of the Bank in the laws governing all collections of monies.

Every Jefe de Deposito, or other receiving officer of the Government is absolutely prohibited under penalty of the law from disbursing funds in his possession for any purpose whatsoever unless by checks signed by the Minister of [Page 1126]Finance which will be accepted by the manager of the National Bank of Nicaragua only under the pretext of strict conformity with provisions of the budget or by direct telegraphic instructions.

A monthly report of all receipts and expenditures shall be made to the Minister of Finance by telegraph or mail or both within five days after the close of each month by the Treasurer-General, by each Jefe de Deposito de Especies Fiscales or other receiving officer and by the Director General de Rentas a copy of which shall be filed with the National Bank. The form of such report shall be prescribed by the Minister of Finance.

The manager of the National Bank of Nicaragua will have the control over the expenditures (as part of the budget) of such amount as would have been payable to the 1909 bonds under old agreements.

In order to carry out the provisions of this agreement the President of the Republic, the Minister of Finance and the manager of the National Bank of Nicaragua hereby agree and consent that in case any controversy, question, dispute or difficulty whatsoever arises regarding the interpretation or performance of this agreement such controversy, question, dispute or difficulty arising shall by either or all of these parties hereto be immediately referred to the Secretary of State of the United States for decision and award which when after such reference shall be and is hereby accepted by such parties as final and conclusive and shall with the terms and specifications thereof be at once recognized, adopted and faithfully executed by the Republic and the National Bank.

The customs revenues will continue to be collected by the Collector General of Customs in accordance with existing contracts. From the proceeds thereof the following monthly disposition will be made and in the following order: A. Expenses of administration and customs refunds. B. Arrears of interest on bonds of 1909, seven thousand eight hundred and seventy-five dollars. C. Amortization of unpaid Treasury bills, eight thousand three hundred and thirty-three dollars thirty-three cents. D. For the purpose of funding the internal debt of Nicaragua the Commission on Public Credit will certify to the amounts of bonds to be issued as well as the rates and sinking fund or amortization charges subject to the liens hereinbefore stated under previous and existing contracts.

In order to pay the monthly budget the Minister of Finance will from time to time issue checks which will be accepted by the manager of the National Bank of Nicaragua only when in strict conformity with provisions of the budget for the payment of military garrisons and the police and on the 25th of each month to the last date he will issue the budget for officials and employees and for other public services in accordance with the budget in force to which the bank will adhere strictly in the payment of said checks.

In order that the Government may properly pay the current budget whose minimum amount for salaries and expenses is calculated at one hundred thousand dollars monthly, disbursements or checks will first be drawn against the excise and other re venues, referred to previously and any deficiency will be drawn from the surplus in customs revenues on checks signed by the Minister of Finance which will be accepted by the manager of the National Bank of Nicaragua only when in strict conformity with provisions of the budget.

The customs revenues will continue to be administered and collected in the form already established by the Treasury Bills Agreement of September 1, 1911, and the agreement with the Council of Foreign Bankers of May 5, 1912, until the obligations with the bankers, with the holders of the bonds of 1909, and with the holders of the consolidated internal bonds which it is proposed to issue are paid, redeemed or canceled, and in order to better guarantee the obligations for the payment of these credits as well as the punctual payment of interest.

The Republic may at any time pay part or all of the obligations enumerated in the preceding paragraph and redeem in case of such complete cancellation of these credits the customs as well as 49 per cent of the shares of the railroad and the Bank which are now pledged as guaranty for the Treasury Bills Agreement.

Whatever monthly surplus or annual surplus resulting from increases in the national revenues after first paying all the fixed charges for external and internal debt services as well as the administrative expenses under the budget previously referred to shall be applied and paid in the customary manner. Fifty per cent of such excess shall be paid monthly to redeem the certificates to be issued for the arrears on the 1909 bonds representing the 75 per cent which remains each month. Pertaining to this service 30 per cent will be used for the redemption of consolidated internal bonds and 20 per cent for the building of schools and roads.

Jefferson
  1. Not printed.