837.51/504: Telegram
The Representative on Special Mission in Cuba (Crowder) to the Secretary of State
[Received 10:40 p.m.]
86. Further replying to your number 126, June 29, 6 p.m. After conference Zayas asks me to submit for consideration of the Department the general plan for an interior loan, in the amount necessary to liquidate the duly ascertained National Treasury deficit and exclusively available for that purpose, as suggested in paragraph two of my urgent 84 of yesterday.
Zayas authorizes me to say further that he accepts in principle the plan of American bankers for a foreign loan, proceeds to be administered by a Cuban finance commission with personnel satisfactory to the United States Government and bankers making the loan but with the understanding that its powers and duties would parallel those of our own War Finance Corporation in the following regards:
- 1st.
- The entire capital stock to be subscribed by the Cuban Government out of the proceeds of the foreign loan to be authorized, which amount should be adequate for and exclusively applicable to Government loan purpose; that the capital stock should not be less than $50,000,000, the minimum that would enable the corporation to meet the existing crisis; and that as the proceeds of the loan are to be used as a revolving fund to amortise itself, the amount of the loan authorized might well be fixed at a larger sum, say $75,000,000 to be utilized in the amounts deemed necessary by the Cuban finance commission to accomplish the purposes of the loan.
- 2d.
- The Cuban finance commission to be vested with the powers given by statute to the War Finance Corporation, to issue, at prescribed rates of interest and for prescribed periods, and to have outstanding at any one time, its bonds, the amount thereof to bear a prescribed relation to the capital stock and to be secured by a first and paramount lien upon all the assets of the corporation; the transactions of the commission to be, in the main, limited to liquid securities.
- 3d.
- The said finance commission to be vested with the power to control that portion of the revenues necessary to meet the services of the foreign loan with the understanding that such control would [Page 704] be limited to the amount set aside by the loan statute for interest and sinking fund charges and would not extend to outside supervision of the collection of this portion of the revenue, which collection would be left in the hands of Cuban officials. Zayas further asked me to state that he had not authorized the Cuban Minister to suggest the sending of delegation to the United States to confer with the Department and with banking interests at this time; that he is of the opinion that there would be no proper basis for loan negotiations until the mixed committee referred to in my number 84 of yesterday had framed such a revision of the budgetary law of 1918 and 1919 downward and of the public tax laws of the Republic upward, as would afford convincing proof that the ordinary revenues had been made or would be made adequate, not only to defray the current expenses of the Government, but also interest and sinkingfund charges upon the total public debt including the new loans. He is willing, however, to send commission at an earlier date if the Department desires.
I am of the opinion that the revision of budgetary laws downward should include adequate provisions for abolishing botellas as heretofore constituting such a severe drain upon the Cuban Treasury and probably also the abolition of private colecturías of the lottery, saving only such as are in the nature of pensions and stand in the name of persons who have a claim as pensioners upon the public Treasury.