837.51/534

The Representative on Special Mission in Cuba (Crowder) to the Secretary of State

Dear Mr. Secretary: Because President Zayas in his message to the Extraordinary Session of Congress used language which would leave it to be inferred that he contemplated but one loan—an interior bond issue—sufficient to extinguish the National Treasury deficit; and because articles appearing in the Havana press were confirmatory of reports that had reached me from other sources, that many members of Congress were of the opinion that an interior loan would not require the sanction of our Government, I decided to defer bringing to the attention of the President that portion of your cablegram Number 131, July 15, 6 P.M. in which you set forth the advisability of the immediate despatch to the United States of a Cuban delegation with full powers to discuss the bases and terms upon which a loan could be floated.

I immediately sought a conference with the President and asked him the direct question, if he contemplated only an interior bond issue to take care of the national deficit and had definitely decided to dispense with the foreign loan to which he had tentatively committed himself in the interview with him which I reported to the State Department in my Urgent No. 84. He replied that he himself [Page 708] realized the necessity for a foreign loan in addition to the interior loan, but that he had ascertained that Congress was assembling in a hostile mood toward a foreign loan and that this hostility, confined mainly to the Liberal Party, was shared to some extent by the Liberal members of the Mixed Committee. He said that, in view of this situation he deemed it inadvisable in his first message to the Extraordinary Session to urge the necessity for a foreign loan, but that he would do this later when he felt that he could rely upon the necessary majority in both Houses.

I then asked him, again very directly, whether it was true that many Members of Congress considered that an interior loan would not fall within the provisions of Article 2 of the Platt Amendment, and therefore did not require the sanction of the United States Government. He answered that a number of Members of Congress expressed themselves to that effect, but he authorized me to say that he himself did not so construe Article 2; that he recognized fully that interior loans, such as were negotiated by the Cuban Government in 1905 and again in 1917, were “public debts” within the meaning of said article and therefore required, equally with foreign loans, the approval of the Government of the United States. He advised me not to take too seriously the congressional debate on this subject, and predicted that we would hear more of similar import as the debate progressed, proceeding mainly from those members who are impatient with the restrictions which the Platt Amendment placed upon the sovereignty of Cuba.

I then took up with the President the propriety of sending at once a delegation to the United States to discuss with the Department and with American bankers the basis and terms upon which either an interior or exterior loan could be approved. The President will take this matter up with the Mixed Committee today and I shall see him tomorrow morning. I anticipate that such a delegation will be named at an early date. I attach great importance to the conferences at Washington with such delegation. I anticipate that there will be no insuperable difficulty in convincing the Department that a revision of the budget is under way which will provide the margin of receipts over expenditures necessary for the service of the public debt including new loans. I am not blind to the fact that when you come to discuss with said delegation the guaranty which Cuba can give that the said margin will be maintained, we shall come up against the real difficulty. Before such conference can take place I will advise the Department of certain conditions precedent to the sanctioning of any loan, either foreign or interior, that I think ought to be discussed with said delegation.

Very respectfully,

E. H. Crowder