The Secretary of State to the Chargé in Cuba (Cable)
126. For General Crowder.
Your 81, June 25, 11 a.m.
The Cuban Minister left, yesterday, with the Department, by instruction of his Government, a memorandum34 containing suggestion of the Cuban Government referred to in your telegram for flotation of new foreign loan of $70,000,000. Together with that suggestion [Page 701]was conveyed a project for the establishment of a central bank of issue. The latter project, as outlined, appears to be unsound and does not call for immediate consideration.
The Department is advised by a group of New York bankers that the maximum Cuban loan which it is believed could now be floated in the United States is $50,000,000. In view of the provisions of Article 2 of the Platt amendment, it is believed that additional revenue to secure such a loan is required. Furthermore, in view of the very grave financial situation of the Cuban Government, it is not thought that American bankers will be willing to advance the said amount to the Cuban Government unless provision is made for the appointment of a Commission satisfactory to this Government and to the American bankers, empowered to administer the proceeds of said loan and to control that portion of the revenues necessary to meet the service of this obligation. In the opinion of the bankers, approximately half, or perhaps a larger portion of the loan, should be advanced to the Cuban Government for the purpose of meeting current obligations and extinguishing the deficit, the remainder to be utilized to pay up the capital stock of a Cuban Finance Corporation modeled upon the War Finance Corporation of the United States, this Corporation to have power to extend credits to purchasers of Cuban sugar, to make advances on sugars in warehouses, and to purchase sugars in an amount not exceeding the estimated surplus of the present sugar crop at the lowest practicable price.
The Department has not yet received your recommendations upon the loan proposition as suggested by President Zayas and is desirous of receiving, at the earliest possible date, your analysis of the proposed budgetary legislation and the financial statement of the Government. In the meantime, in order to expedite matters it desires you to send, by cable, your views as to the suggestion communicated to the Department by the New York bankers, and to convey the same to the Cuban Government, transmitting, as soon as possible, the opinion of the Government regarding it. The Cuban Minister has informed the Department that the Government of Cuba will be willing to send a delegation to the United States to confer with the Department and with the banking interests in order that an agreement regarding the loan proposition might be reached here in the United States. The suggestion was made that such a delegation would be composed of the Secretary of the Treasury, a senator and a deputy. The Department believes that if such a delegation were to receive full powers from President Zayas to negotiate a loan in the United States, matters would be expedited and the result would be beneficial. Please communicate this opinion of the Department to the President.
- Not found in Department files.↩