837.51/610: Telegram
The Representative on Special Mission in Cuba (Crowder) to the Secretary of State
[Received October 10—1:56 a.m.]
123. J. P. Morgan and Company yesterday made following propositions to Cuban Government.
- 1st.
- To purchase immediately $5,000,000 one year 7 percent notes of Cuban Government at 99½ guaranteed by pledge of 7,000,000 internal and other bonds. Proceeds to be applied as follows: (a) payment of amounts due United States on postal order balances; [Page 738] (b) allocation of amounts necessary to pay interest and sinking fund on all exterior debts for next six months; (c) balance for payment outstanding checks, estimated about 1,000,000 and other governmental purposes.
- 2d.
- This loan shall be part of more comprehensive measures which shall include: (a)budget for present year shall be 59,000,000 plus additional appropriation of 6,000,000 for contingencies; (b)budget for 1922–1923 shall be 55,000,000 plus additional appropriation of 5,000,000 for contingencies; (c)revision of customs and revenue laws to provide income of 10,000,000 in excess of Government expenditures; (d)loan of $50,000,000 described below.
- 3d.
- This $50,000,000 loan shall be contracted for following purposes: (a) repayment of $5,000,000 loan; (b) liquidation of floating debt; (c) balance for public works.
- [4th?]
- This loan shall be repaid: $20,000,000 in 1, 2 and 3 years and $30,000,000 in 20 to 30 years. Guaranties and other conditions to be arranged in subsequent negotiations. There is nothing in the proposition which would oblige Cuban Government to make this loan necessarily with Morgan and Company.
Zayas in answer to Morgan approves proposition in general, except refrains from definitely committing himself: (a) to budget reductions indicated above; (b) to revision of customs and revenue laws saying he will try to accomplish it but cannot answer for action of Congress, and (c) to repayment of $20,000,000 of $50,000,000 loan in brief periods of 1, 2 and 3 years, which both bankers and myself regard as a means of enforcing rigid economy.
Zayas has transmitted whole of this correspondence to me with letter in which he failed to give the definite commitment to budgetary reduction mentioned in your number 161, September 30, 1 [2] p.m., paragraph two, respecting budget for the year for current fiscal year and makes no commitments with regard to future budgets. Taking correspondence as a whole Zayas is not thereby committed to that constructive financial program which would justify the Department in sanctioning the loan. Have appointment with him Tuesday when I will discuss further the essentials of such a program and endeavor to secure from him more definite commitments.
Morgan bankers show every desire to conform to Department’s policy and have done effective work. Weinberger of Blair and Company who arrived Friday and Bollard of Dillon, Read and Company, who arrived yesterday, had long conferences with me today and will see Zayas soon regarding loan.