File No. 837.156/232
The Attorney for the Cuban Ports Company to the Secretary of State
Sir: I have the honor to confirm, as briefly as possible, my conversation of yesterday with Mr. J. Butler Wright, [Chief of the Division of Latin American Affairs] relating to the existing relations between the Government of Cuba and the Cuban Ports Company.[Page 439]
It now appears from the majority report of the commission, appointed by Presidential Decree No. 869 of March 1916, and from the reports of our clients in Cuba, which have been confirmed by the American Minister at Havana, that the President of Cuba no longer intends to carry out his promises for an equitable settlement of the claims of the stockholders and bondholders of the Cuban Ports Co. and that there is no possibility of securing any settlement through the Cuban Congress, and we beg to respectfully request the good offices of the State Department as hereinbelow outlined. In order that our specific requests, and the grounds upon which they are made, may be better understood, we will briefly rehearse some of the facts leading up to the present situation:
Subsequent to the organization of the Cuban Ports Co., and the passage of the Law of February 20, 1911, imposing a ports tax, the proceeds of which were to be devoted to certain ports improvements to be carried on by the Cuban Ports Co., the company applied to a group of London bankers for a loan of six million dollars. Under date of May 12, 1911, Messrs. Kleinwort Sons & Co. of London in a letter addressed to the Department of State of the United States inquired as to the validity of the contract made between the Government of Cuba and the Cuban Ports Co. The Department answered under date of June 9, 1911, criticizing the terms of the agreement, which were characterized in that communication as: “wasteful and against the best interests of Cuba.” The operation of the contract between the London bankers and the Cuban Ports Co. was thereupon suspended, and representatives of the company called upon the then Secretary of State with a view to eliminating, if possible, the objectionable features in the existing contract. As a result of many conferences, and special investigations conducted by the State Department, the Secretary of State addressed a letter to the Cuban Ports Co. under date of June 11, 1912, which read in part as follows:
With reference to the question of the validity of the contract under the Platt Amendment, however, you are informed that this Government has called to the attention of the Government of Cuba, the fact, which is apparent from the nature of the concession itself, that as it seriously affects the ability of the Cuban Government to defray the expenses of administration if deprived of these revenues, which are given over under the concession for a period of thirty years to your company, it is necessary, in order to remove this objection, that the concession should be modified so that if such revenues are needed at any time during the period of the concession, the Government of Cuba should have the right to terminate it upon terms which are just and fair, and again be placed in a position to avail itself of the revenues to be derived from the port duties.
This Government, in view of your fair attitude and expressed willingness to have your bondholders and stockholders agree to the modifications suggested, has reason to feel that the objectionable features of the concession can be eliminated by the agreement between your company and the Government of Cuba.
Negotiations then followed between officers of the Cuban Ports Co. and officials of the Government of Cuba with a view to agreeing upon the language of an amendment as suggested in the letter of the Secretary of State above quoted from.
Under date of March 1, 1913, the Secretary of State wrote to the Cuban Ports Co. enclosing a copy of a letter of instructions forwarded to the American Minister at Havana on the subject of the modifications in the terms of the Cuban Ports Co. agreement.
We quote from this letter of instructions as follows.[Page 440]
The Ports Improvement Company having been informed of the views of the Government of the United States * * * has indicated its willingness to adopt as a substitute for its former proposal an amendment to the concession in the following terms:
The Government of Cuba shall have the right at any time to take over the operation of the Cuban Ports Company by purchasing all the outstanding stock of the Cuban Ports Company at a just and equitable valuation to be fixed by three appraisers and approved by the Government of the United States, such appraisers to be appointed by the Government of the United States upon the request of the Government of Cuba, one being nominated by the Government of Cuba and one being nominated by the Cuban Ports Company, such valuation to be fixed by a majority of the appraisers in case of disagreement among them.
A new contract was immediately entered into between the Government of Cuba and the Ports Company confirmed by Presidential Decree 510 of May 12, 1913, from which we quote as follows:
Whereas: The Cuban Ports Company has also agreed with the Government of Cuba that: The Government of Cuba shall have the right at any time to take over the operation of the Cuban Ports Company by purchasing all the outstanding stock of the Cuban Ports Company at a just and equitable valuation to be fixed by three appraisers and approved by the Government of the United States, such appraisers to be appointed by the Government of the United States upon the request of the Government of Cuba, one being nominated by the Government of Cuba and one being nominated by the Cuban Ports Company, such valuation to be fixed by a majority of the appraisers in case of disagreement among them.
It should be noted that the language quoted is practically identical with that suggested by the Secretary of State of the United States.
By a letter from the Cuban Ports Co. addressed to the American Minister at Havana, dated May 15, 1913, the Department of State was informed of the compliance of the Cuban Government and the Ports Company with the Secretary of State’s instructions above quoted from. Receipt of this letter was acknowledged by the American Minister under date of May 26, 1913, and the request was made at the same time for a copy of the original Spanish text in order that it and the translation might be forwarded to the Department of State for its information.
It clearly appears from the foregoing that the Government of the United States intervened in the matter of a contract between the Cuban Government and the Ports Company; that this intervention was specifically based upon the terms of the permanent treaty between the United States and the Republic of Cuba—usually referred to as the Platt Amendment; that, as a result of such intervention, the original contract, or concession, was modified to comply to the letter with the demands of the American Government.
Shortly after the facts above related, it transpired that President Menocal (the present incumbent) was elected as President of Cuba. By Decree 246 under date of June 8, 1913, he purported to cancel and annul the terms of the amendment to the contract between the Cuban Government tad the Ports Company; which amendment had been adopted (as above stated) at the special instance and request of the United States Government.
Subsequently, and on August 4, 1913, the President issued his Decree 522 declaring that the Cuban Ports Co. was never legally organized, and purporting to cancel and annul the agreement then existing between the Cuban Government and the Ports Company. The terms of this latter decree have been the subject of much correspondence [Page 441] between ourselves and the State Department, and its terms are so familiar that it is unnecessary here to specifically refer to them.
Since that time, the Government of Cuba has continued to collect a port tax as provided by the law of February 20, 1911; but the proceeds of the tax have not been applied for the purposes provided in that act. It is the contention of the stockholders and bondholders of the Ports Company that this action on the part of the Government of Cuba, as represented by its President, amounted to a “taking over of the operations of the Cuban Ports Company” by the Government of Cuba, and that this was done in total disregard of the terms of the contract of May 1913 and the decree of May 12, 1913.
On behalf of our clients (the bondholders and stockholders of the Cuban Ports Co.), we respectfully request the Secretary of State to inform the Government of Cuba as follows:
That the terms of the amendment to the original contract with the Cuban Ports Co., as set forth in Presidential Decree of May 12, 1913, were adopted at the special request of the United States, based upon the language of the permanent treaty known as the Platt Amendment.
That it is the right and duty of the Government of the United States to insist, upon the same grounds, that the terms of that amendment be complied with.
Accordingly the Government of the United States must insist on the carrying out of the said agreement. In order to do this, and that the Government of Cuba may legally complete the taking over of the assets and operations, including the concession granted to the Ports Company, which is evidently the purpose of the Cuban Government, the Government of Cuba will, within thirty (30) days from the receipt of this notice, nominate one of the three appraisers, as provided for in the said agreement, who shall fix a just and equitable valuation of the outstanding stock of the Ports Company to be purchased and paid for by the Government of Cuba. The bonds and other obligations of the company to be assumed by the Cuban Government as in said agreement provided.
We believe that the above correctly confirms the conversation of yesterday between Mr. Paul Fuller, Jr. and Mr. J. Butler Wright, and beg [etc.]