837.51/560a: Telegram

The Secretary of State to the Chargé in Cuba ( Cable )

145. For General Crowder.

The Department desires you to inform President Zayas immediately that it has given consideration to the projects of law providing for the flotation of an interior bond issue and an external loan, the former of which it is advised has now passed the House and is now pending action by the Senate. In the opinion of the Department, the former project is insufficient, particularly because of its failure to pledge specific revenues to secure interest and amortization, and there would appear to be considerable objection to Article V of the said project because of the possibility that its execution may result in much bargaining.44

You may further advise the President that the Department concurs in your views as to the inadvisability of an interior loan as stated in your despatch of July 31.45 You should likewise make it entirely plain to President Zayas that the Department sees no distinction between an interior bond issue and a foreign bond issue in that both constitute the increase in the public debt contemplated in Article II of the Platt Amendment.

The Department has further noted that the project for the external bond issue provides for a partial revision of the tax laws of the Republic. In the Department’s opinion, only a comprehensive revision of the tax laws of the Republic can guarantee the excess of receipts over expenditures required for the service of an additional increase in the public debt and the Department desires you to convey to the President its regret that it has not yet been advised that a comprehensive revision of the tax laws is being undertaken. For the above reasons, the Department hopes that the President will cause action on these two projects to be deferred pending the outcome of the conferences now being undertaken in Washington between the Department and the Cuban Delegation headed by Secretary Gelabert.

  1. Article V provided for the establishment of a commission to examine and verify all claims against the State, the payment of these claims being the purpose of the proposed internal loan (file no. 837.51/555).
  2. Not printed.