Papers Relating to the Foreign Relations of the United States, 1918

File No. 837.51/285

The Secretary of the Treasury ( McAdoo) to the Secretary of State

Washington, December 14, 1917.

Sir: I have the honor to acknowledge the receipt of your communication of the first instant, in reference to financial assistance for Cuba. I note that the Cuban Government, upon the recommendation of the State Department, made a commitment to establish a credit in favor of the Cuba Railroad to possible extent of $3,000,000, and that from the correspondence between the State Department and the Cuban Government it appears that a certain moral obligation exists to give financial assistance to Cuba. For your further information on this subject, I beg to enclose copy of a letter written by Mr. Davis, at my request, to Mr. Gonzales, our Minister in Cuba.

I am [etc.]

W. G. McAdoo

[Enclosure]

The Adviser to the Secretary of the Treasury ( Davis) to the Minister in Cuba ( Gonzales)

Washington, November 23, 1917.

Dear Mr. Gonzales: In regard to the proposed loan to Cuba, I have had a talk with the Navy Department, as suggested by Secretary McAdoo, from which the following information, in substance, was obtained:

As a result of conferences at the Navy Department with the Military Committee sent up from Cuba, the Navy Department agreed to obtain for the Cuban Government certain guns and ammunition, to repair the Cuban gunboats, and to obtain for Cuba 16 wooden submarine chasers as soon as the more pressing needs here had been taken care of and the chasers could be spared. The Cuban Government has already deposited with the Navy Department something like $500,000 to cover the cost of the guns and munitions and the repairs to the gunboats. The estimated cost of repairs to the gunboats was $200,000 and the estimated cost of the 16 submarine chasers is $1,600,000, but as the submarine chasers can not be delivered for some time yet, and even then only through the Navy Department, there appears to be no pressing need for money for that purpose.

I was informed by the Navy Department that a total of $2,500,000 would more than cover everything agreed upon to be purchased by Cuba in this country for the above purposes.

I was further informed that the Cuban Government had turned over the German ships which were seized in Cuba without cost, and that the Cuban Navy is patrolling the coast of Cuba and cooperating most enthusiastically, and that it was considered advisable to encourage their enthusiasm.

The Navy Department is to write to the Treasury Department confirming the above statements, and a letter is expected also from the State Department. I am simply advising you in advance, because it now appears that besides the $2,500,000 which the State Department was desirous of having the Cuban Government advance to the Cuba Railroad, $2,000,000 additional would be about all that Cuba would require in this country. Of course, Cuba’s expenses will increase on account of her increased military activity, but I imagine the increased tax will easily take care of that. From the information thus far obtained, it seems that $5,000,000 would be sufficient to meet all pressing needs and prevent any financial embarrassment to the Cuban Government. However, it would no doubt be advisable to ask Cuba to furnish a statement of her requirements over and above her estimated income.

Secretary McAdoo is very anxious to assist Cuba in every possible way, but as it is necessary to limit as much as possible the calls on the Treasury, he naturally wishes to avoid making any advances which may not be absolutely necessary.

Very sincerely yours,

Norman H. Davis