File No. 837.156/250

Minister Gonzales to the Secretary of State

No. 471

Sir: Referring to your cable instruction of June 12, 6 p.m., I have the honor to enclose, as the first result, the translation into English of a message from President Menocal to Congress, accompanied by the Spanish original as it appeared in El Mundo of June 30.

When I presented the matter to the President he again expressed himself as anxious to get a settlement, and several days afterwards the British Minister also spoke to him on the same subject. Last Saturday, June 30, the President said that he had sent for a number of Congressmen and urged the importance of his being given authority to get a settlement with the Ports Company; that he also sent to Mr. Truffin to come to Habana and aid in getting action by Congress; that Mr. Truffin was, he thought, personally interested in the passage; that it seemed to him more probable that Congress would act favorably on this matter than on any other important proposal on the administration’s program, but it was impossible to predict whether action would be taken before the adjournment on July 13.

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I urged the necessity of an early settlement, and the President said that if Congress refused to act he would have to consider some plan for proceeding independently.

I have [etc.]

William E. Gonzales

message of the president of the republic

To the Congress: An unavoidable duty obliges me to recommend anew with all urgency to the honorable Congress the settlement of the serious matter referring to ports duties and improvements and claims of the bona fide holders of bonds of the Cuban Ports Company.

In the message referring to the same matter, which I sent on January 21, 1916, to both houses of Congress, I explained the status of this question and the convenience of deciding same, in view of the public necessity and of the repeated representations made by the Governments of the United States and Great Britain, regarding said claims.

The company referred to having been illegally constituted, it was nevertheless, recognized as legal by the Government of this Republic which granted it the concession for the works of dredging and improving the ports of the island, for the time and with the conditions and extraordinary advantages of the law of February 20, 1911, and showed it every measure of favor and confidence. Foreigners who, in good faith, and protected by those acts of the Government of the Republic, and in view of its reiterated assurances and of the reports of reputable entities, invested their savings or their capital in those Cuban bonds, are claiming indemnity for the loss they have suffered, and this, in my judgment, must be examined with a view to equity, even if not with strictest justice, as my Government has with solid and positive grounds constantly maintained.

By my decree No. 522 issued on August 4, 1913, it was stated that said company was not constituted in accordance with the laws of the country, as required by the law of February 20, 1911, already cited, and that it was not, nor could it continue to be the concessionaire of the said works; and that statement is supported and confirmed by repeated decisions of the Supreme Court against the company and in favor of the State, in all the suits brought against the said decree. There can be no doubt therefore, that the Government of the Republic acted legally, with right and justice, in issuing the Decree 522.

But the case of the bona fide holders of the bonds that the said company managed to sell abroad, taking advantage of the above-mentioned favorable circumstances and relying on the integrity of the Cuban Government, is not morally decided by those important judicial decisions, inasmuch as they rest on grounds of equity, grace and high international comity which can not escape the enlightened mind of the honorable Congress.

Founded on analogous considerations, a bill was approved by the Senate some time ago, which is still pending before the House, as to which I said in my message of January 21, 1916, and now repeat, without intending, as I did not then, to anticipate opinions which must constitutionally be reserved for the moment when the proposed law is presented to me for approval, that it was without any doubt, inspired by motives and reasons of justice on one hand, and of equity and grace on the other hand, which are fundamental and must not be lost sight of, it being my opinion that upon the ample basis of the general lines of that bill, an efficient settlement could be reached, which would foresee and satisfy the twofold necessity which must be considered, that is, that of continuing the port improvements which the law of 1911 desired should be assured, giving definite application for the tax which it imposed for that purpose, as well as that of indemnifying, in the proper time and manner, the bona fide bondholders.

If it were always just and prudent to consider these necessities for the reasons indicated, it is even more so now that it behooves us to lay aside completely all differences and arguments or disputes with the Governments of the United States and Great Britain in circumstances such as those created by war with the Imperial German Government, which strongly unite our three nations together in the defense of the same ideals of liberty, of international justice and of progress.

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On the other hand, the definite settlement of this vexatious matter, which is used without reason against the credit of Cuba, would contribute in no little part to the better and more expeditious accomplishment of the important bond issue of thirty million dollars which the Republic needs for effecting the high and unavoidable objects which I had the honor to set out in the messages of April 18 and May 26 of this year.

I confidently expect that for the reasons expressed, the honorable Congress will, before the present session closes, vest in me the necessary authority in accordance with the proposed law referred to, or in the terms that its prudence and wisdom may dictate, in order that the important and urgent measures may be carried out.

M. G. Menocal