File No. 817.51/989
The Secretary of State to Minister Jefferson
Washington, August 9, 1917, 4 p.m.
Your August 1, 11 a.m. Department is convinced that the financial plan will fail totally if the Government of Nicaragua insists that the so-called “Emery claim” be treated as indicated. There is, properly speaking, no longer any such claim. There exists only a protocol to which the Governments of Nicaragua and the United States are the sole parties. This protocol has already been carried out in part but certain definite payments remain to be made by Nicaragua to the United States. The Department does not understand that Nicaragua can now desire to go behind this protocol thereby assuming that this formal and carefully considered instrument was improperly or inadvisedly entered into by the two Governments.
The Department has sought to induce those who would benefit by the payments under the protocol to waive interest. It has, however, been exceedingly difficult to secure any concessions from these parties since they rely on the fact that the protocol provides for payments to the United States itself and there exists the Federal Statute referred to in Department’s cable of August 2, 5 p.m., which they construe as prohibiting the Treasurer of the United States from making any payments to one who is a debtor of the United States without first deducting the amount of such indebtedness. This they believe insures the prompt payment of the entire principal and interest of the protocol payments out of the Treaty fund. The utmost concession which the Department has been able to obtain is the waiving of the compounding of interest and deferring the payment of fifty per cent of the principal. These concessions however, the Department regards as very substantial.
The Comptroller of the Treasury Department is inclined to accept the above-mentioned construction of the Federal Statute and unless the sum due under the protocol is paid in a manner satisfactory to the interested parties it is highly improbable that the Treasury Department will permit of any further payments from the Treaty fund for back salaries or other purposes until the sum due under the protocol is paid in full.
You will informally utilize the foregoing information to make clear to President Chamorro the attitude of the Department of State and you will point out to him that insistence on further concession from those interested in the Emery protocol will doubtless result in a complete failure of the financial plan and the consequent deduction of the Emery protocol payments in full with interest from the Treaty funds.