File No. 817.51/1013a
The Secretary of State to Minister Jefferson
Washington, October 6, 1917.
Bankers have now presented final draft of financial plan for approval State Department which is studying matter.
State Department at request of Nicaraguan Chargé d’Affaires used its good offices with owners Emery claim in endeavor to obtain from them waiving or reduction of their interest. This owners of claim state they are unwilling to do. Government of United States in view of statements contained in its August 9, 4 p.m., feels that matter must be considered closed as any further efforts on its part in this direction might jeopardize whole plan. It has been suggested however, that the payment to be made out of the Treaty funds to the Emery claimants, as provided for in financial plan, be called payment on account of principal and that the remainder of the principal and interest be paid through means of deferred Treasury bills referred to in plan. This would obviate criticism that interest on this claim was paid directly from Treaty funds.
British Embassy has presented memorandum protesting against preferential treatment being given to Emery claim and stating that their claim, known as Legation claim, was decided by protocol between the two Governments, and therefore in same class as Emery claim.
Please cable Department what negotiations have taken place between British Minister and Nicaraguan Government and also inform Department what other foreign nations have made protests or have stated that they consider their claims to be in same category as Emery claim.
British Embassy further state that they do not consider internal bonds furnish good security and that further guaranties are necessary.
You are instructed to discuss question of further guaranty with Nicaraguan Government and suggest that a law be passed providing for supervision by High Commission of payment of interest on bonds. Nicaraguan Chargé d’Affaires, in conversation with Department suggests that the proceeds of 12½ per cent surtax on general import and one-half of proceeds of property tax should be deposited with High Commission for payment of interest and the payment be supervised by it.