837.51/498: Telegram
The Representative on Special Mission in Cuba (Crowder) to the Secretary of State
[Received 9:54 p.m.]
81. Reference my number 78, June 20th, and concluding paragraphs of preliminary financial report June 21st.31 American expert accountant, Mr. Field, after extensive conferences with Secretary of the Treasury Gelabert and subordinate Treasury officials, reports in agreement with Gelabert that statement shows deficit in round numbers of $36,000,000; that such statement is incomplete as to outstanding current obligations which will probably increase deficit by $10,000,000; that there should be offset against the total deficit of $46,000,000 the relatively small amount of which the Government may realize in liquidation of its credits in the Banco National and also by selling or applying on current obligations $5,000,000 of bonds of the interior loan of 191732 now held in the Cuban Treasury. President Zayas in conference with me yesterday expressed the view that these figures were substantially correct, but that a report by skilled foreign accountants will be necessary to determine the actual deficit; and added that the financial situation was in his judgment very grave.
To meet that situation he suggests tentatively new foreign loan of $70,000,000 with rate of interest and period of loan so adjusted as to produce an effective sum of $65,000,000 to be paid in quarterly installments as follows: first installment of $35,000,000 at once and the remainder in three equal tri-monthly installments of 10,000,000. [Page 700] Of the first installment $25,000,000 to be applied in case of necessities on sugar production under crop-lien law now pending before Cuban Congress, at rate of interest slightly in excess of that which the Government will have to pay; and the remaining 40,000,000 to supplement the ordinary revenues in meeting current obligations and extinguishing deficit. Of course Zayas recognizes that a loan in aid of the existing “ordinary revenues” may not be liquidated by them and therefore proposes the creation of new revenues to be determined by Congress but adequate for interest and sinking-fund charges on the proposed new loan thus bringing any application which may be made for such loan under the terms of Article 2 of Platt Amendment.33
As I have heretofore informed the Department the budget now governing and which will continue to govern during the ensuing fiscal year is the last duly enacted budget, namely that of 1918 and 1919. Zayas further proposes that the Cuban Congress pass a law suppressing certain items of this budget, modifying others and delegating to him authority to reorganize several executive departments on the basis of reduced personnel and greater economy, helping in this way to make receipts for ensuing fiscal year even as [exceed?] revised budgetary expenses by $7,000,000. As at present advised I seriously doubt the ability of any Cuban administration to establish with requisite good feeling the necessary drastic economies and to enact the necessary revision upwards of Cuban tax laws both of which are indispensable measures to the raising of the additional revenues for adequately securing proposed new loan.
My analysis of the Zayas loan proposition, budgetary legislation and financial statement with my recommendation will follow by cable or mail as may be expedient after I have completed further conferences with him and after work of the American accountant is further advanced. The Department may well regard the financial situation here as serious.
- Latter not printed.↩
- See Foreign Relations, 1918, pp. 284 ff.↩
- Foreign Relations, 1904, p. 243.↩