File No. 837.51/319
The Assistant Secretary of the Treasury ( Leffingwell) to the Counselor for the Department of State ( Polk)
Dear Mr. Polk: Your letter of the 7th instant addressed to the Secretary of the Treasury1 has been duly received together with the enclosures: viz., copy of the letter of March 6 from the Cuban Minister to the Secretary of State and translation of the authority given the Cuban Minister by the Republic of Cuba.
This authority is apparently limited to negotiations for a sale to the United States Government of certain bonds and the receipt of the proceeds resulting from such sale. The contemplated transaction with the Republic of Cuba is quite different. A credit in the amount of $15,000,000 has been established in favor of the Republic of Cuba and it is intended that cash advances be made therefrom upon the receipt of demand obligations of the Republic of Cuba secured by the hypothecation and pledge of the Cuban bonds authorized by the act of the Cuban Congress of July 31, 1917.2 The authority of the Cuban Minister above mentioned appears to be insufficient to give such obligations or to receive the proceeds thereof. In explaining the situation to the Cuban Minister I suggested either that he obtain a new authority in the same form as the old authority (with appropriate change in dates), except that there be added an additional power in substantially the following words:
or in his discretion to negotiate and conclude a loan from the Government of the United States of America for not exceeding $15,000,000, to receive the sums from time to time advanced on such loan, to execute obligations therefor in such form as he shall approve and to hypothecate and pledge as security for such loan all or any of said 15,000,000 pesos of bonds of the Treasury of the Republic of Cuba,
or that he obtain a new authority from his Government to execute the obligations in the form proposed by this Department (of which a copy is enclosed), to receive the advances and to pledge the Cuban bonds as security therefor. The form of obligation to be taken from the Republic of Cuba was handed the Cuban Minister. The Cuban Minister stated that he would advise with the State Department in regard to communicating with his Government in relation to the matter. I understand that the Cuban Minister is anxious to have some portion of the proposed credit made available in cash to the Republic of Cuba as soon as practicable and the Treasury Department is prepared to act when advised by the State Department that the Republic of Cuba has power to incur the indebtedness and the Cuban Minister is duly authorized to execute the obligations and to receive the advances.
Very truly yours,