File No. 417.00/248
The Minister in Nicaragua ( Jefferson) to the Secretary of State
Replying to the Department’s March 21, 5 p.m. The following reasons are given by the commission for each rejected claim, all of which appear to have had due consideration:
J. Adler duplicated in claim of Stern Foundry & Machinery Co. which had been awarded $2,500.
W. R. Burt ex-officio claim based on letter to State Department. On investigation found to be external debt which was arranged at the time of Ethelburga settlement and with Brown Bros, in 1912. Pertains to New Orleans loan of 1904, and according to advice from Brown Bros, has received payment on bonds matured.
New Orleans National Bank, New Orleans, and Central American Trading Co. on the verge of bankruptcy in 1911 and, alleging moral and material support to revolution, persuaded Government to make accommodation paper for $90,000 in return for Manager A. V. Beer’s notes aggregating $100,000, both accommodation signatures. Beer also agreed to execute mortgage in favor of Government on store building and contents, which was not done. Commission has these notes of Beer. There was no legal consideration to contract and both parties understood it as only paper transaction. Afterwards company had fire and went into bankruptcy. Is improbable present holders gave value for documents or are ignorant of incidents concerning their origin and acquisition by Beer. When issued in November 1911 Government did not even set up debit and credit transactions on its books.
Pacific Mail Steamship Co. only American steamship line on West Coast for several years and no competition, therefore, could obtain subvention from Government. Contract of 1902 provides for annual payment of $9,000 silver in quarterly installments but contract practically lapsed through action of both parties. Company broke contract through failure to grant contract rates on Government fares and cargo, did not live up to provisions of providing regular service. Government did not pay its subvention. Exemption of port dues on behalf of this Government and mail service on the part of company about equal. In addition, the Government has erected modern and expensive lighthouses at Corinto and San Juan del Sur, and by facilitating receiving and clearing of company’s ships has materially reduced cost of operation in Nicaraguan ports. Other steamship companies performed same service and received no subvention. Provisions of contract call for arbitration, but no demand made by company. Company did not answer letter of commission.
Weinberger Bros.
- (a)
- Prescription. These documents of credit which are not on books of the Government, a fact suspicious in itself, had in part matured in time for Mixed Claims Commission. If owners had confidence in their validity, would have presented them. A favorable decision of commission on early notes would probably have validated [Page 844] later ones. Solomon and Weinberger cannot claim either ignorance or carelessness.
- (b)
- Claims are solely from onerous concessions. All concessions of this sort held by these claimants canceled by Mixed Claims Commission. This is one of a series of transaction in which Zelaya, Irias, Solomon, and the Weinbergers participated. The latter two exploiting concessionaries. It has required two commissions to arrange these matters: the Mixed Claims Commission on the ice and purchasing agency concessions, and the present commission to squeeze the water out of the claims recognized by the Republic in Zelaya régime.
- (c)
- The only property involved, wharf at Bluefields, according to trustworthy official information in hand, already amply paid for to Solomon. Lindberg has personal knowledge of property.
- (d)
- No proof offered that Weinberger gave value to Solomon for documents. Presumption is to contrary.
- (e)
- The commission is unanimous in its assertion that this claim is one of the weakest, both from view of legality and equity, that has come to its notice. No other claims have so discredited Americans in eyes of just men.
- (f)
- Another creditor in Managua, one of the ablest and best posted Nicaraguan creditors holding similar documents with exactly same printed conditions, was so convinced of their fraudulent nature that he did not even present them among his other claims.
- (g)
- Claims fully examined by all three members of the commission. Opinion is unanimous against it.
Jacob Weinberger. The transaction of the Central American Commercial Co., Jacob Weinberger and Mr. Gutierrez Peña, both the latter having been managers, are so interwoven that the commission included any possible equity in this claim in its award to the company which has been accepted verbally by Peña, leaving the two managers to settle their equities among themselves. The company did make cash loans to Government and also included a lot of documents which were not cash, not forgetting always to take a profit on exchange.
American Investment Corp. Although this claim was not rejected in toto, reduction is so great as to produce the same effect. Prescription per law on presentation of customs bonds followed as case was adjudicated by the Government in 1913 and commission has followed rule of not reopening such cases. Absence of reliable proof that value was really given in exchange for these bonds as required by rules of commission. Amount of award only demonstrating enough to secure delivery of documents, if possible, or if refused, to form basis of proper legal proceedings by the Nicaraguan Government to get amount of award. Balance of documents acquired through misuse of position of president—graft from foreigners in their enterprises and control over Government fiscal operations.
The commission is in existence but is not accepting new claims. Its work is so dovetailed with the High Commission that not until payments are finished will it cease its functions.
Total amount of awards of the commission is as follows: cash $1,426,696.79; bonds $3,800,000; total, $5,226,696.79.
[Page 845]Amount of cash available: customs revenues, in the hands of Collector General of Customs $1,092,695.96; funds in the United States as per advices from financial agent $334,000.83; total cash $1,426,696.79.
Authorization by Congress for the issue of guaranteed customs bonds in an amount not to exceed $4,000,000.
Customs revenues on hand with Collector General of Customs pertaining to last half November and December 1917, $66,992.94.
General Chamorro upon learning that payment could not be made at once by the commission showed great disappointment and informed me that he had formed the commission at the request of the Department for the purpose of settling all claims and that he hoped that the Department would insist upon all accepting the awards of the commission, thereby avoiding any unnecessary embarrassment for the Government of the United States as well as for himself.