837.51/580
The Representative on Special Mission in Cuba (Crowder) to the Secretary of State
[Received September 3.]
Dear Mr. Secretary: I have transmitted to President Zayas your 148 of August 25, 6 P.M. in the form attached hereto.
I handed him the paraphrase in a conference yesterday which lasted about two hours. The main topic of the discussion was the budget. I asked him if the special laws of Congress carrying appropriations were included in this project of a budget which he had prepared aggregating $65,000,000, and he replied that some of them were but not all of them. I asked him if those not included were expressly repealed and he replied, “No”, and intimated that in his view the obligations of the Government arising out of those special laws not repealed would be carried forward to next year’s budget; that in any event damages resulting to contractors under these special laws arising out of contracts commenced but not completed would have to be carried forward into another budget.
I then told him that I had seen a long list of outstanding contracts of the State, and that the aggregate of considerations in these many contracts ran well into the millions. I asked him if provision had been made for all or any of these contracts in his $65,000,000 project of a budget. I invited his attention to the fact that under a recent decree issued by him he had rescinded some of these contracts and annulled others, but that in either event damages to contractors were certain to follow and constitute an obligation of the National Treasury. He was unable to tell me to what extent they had been included in his project of a budget. He thought that certain of them had been included and others not.
I then asked him for further conference when we would discuss these special laws and outstanding contracts in connection with his project of a budget, and I pointed out to him that the $11,000,000 surplus which he claimed to have brought about in his project of a budget would not be surplus if he ignored the obligations against the Government arising out of laws not included in the project and not repealed and out of outstanding contracts undergoing execution. I emphasized the very grave importance of getting a matter so vital to the negotiations now pending between the two countries settled in a definite form.
I invited his attention further to Article 3, Section 11 of the Speyer Loan Statute for $35,000,000; also to the Loan Statute of 191748 and [Page 725] to the pending Exterior Loan project. I pointed out to him that said Section 11 laid down a rule that during the life of the Speyer Loan the objects upon which special taxes were levied to secure that loan should not be made the basis of any new taxes; and that the Interior Loan Statute of 1917 violated this provision in the additional tax laid upon sugar and that the Exterior Loan Statute now pending before Congress would infringe this provision in respect of the additional tax laid upon mineral water etc. He could not explain how this infringement had happened, and said he was ignorant of this provision of the Speyer Loan Statute, but that he would inform himself fully in respect to it before our next conference.
It will not be until the conclusion of the next conference that I can report definitely upon whether the surplus of revenues which Zayas claims to have established ignores the obligations arising out of the special laws and outstanding contracts, and is therefore not a surplus in the amount he claims and quite probably, in view of the large considerations which many of the outstanding contracts carry, is not a surplus at all.
Very respectfully,
- See despatch no. 488, Aug. 8, 1917, from the Minister in Cuba, Foreign Relations, 1918, p. 294.↩