837.51/680
The Secretary of State to the Cuban Minister ( Céspedes )
Sir: I have the honor to acknowledge the receipt of your note of November 10, 1921,5 in which you advise me that in accordance with the program which the Government of Cuba has formulated for the solution of the economic difficulties with which it is at present confronted, and of which this Government is informed, the President of Cuba has obtained from the National Congress the necessary authority to negotiate a $5,000,000 loan. You state that this loan will be secured by bonds of the issue of 1917 and the stock pledged as security of the National Bank, aggregating $7,000,000 par value, securities which are now held in the General Treasury of the Republic. I am likewise advised that the proceeds of this proposed loan would be applied to pending liabilities of the Cuban Government such as postal money orders, interest and amortization of the public debt of the Republic of Cuba, and the payment, so far as may be possible, of the outstanding cheques of the Cuban Government; likewise, that the security for such loan, as above listed, would not be disposed of, but would merely be pledged as collateral until a foreign loan of $50,000,000 might be obtained by the Cuban Government for the payment of its floating debt and other liabilities, the present loan of $5,000,000 to be repaid from this larger loan of $50,000,000.
You state that the Cuban Government proposes to negotiate this larger loan of $50,000,000, with the authorization of the Cuban Congress, as soon as the national taxes and customs duties now in force are revised in accordance with the financial program which the Cuban Government is carrying out at this time. In conclusion, you inform me that in order to complete the present negotiations and secure the desired $5,000,000 loan, the Government of Cuba wishes to know whether, under the provisions of Article II of the Treaty of May 22, 1903,6 between the United States and Cuba, the Government of the United States has any objection to raise to the contraction [sic] by the Cuban Government of this loan of $5,000,000.
In reply, I take pleasure in advising you that the Government of the United States has no objection to make to the obtaining by the Cuban Government of this loan of $5,000,000 for the purposes set forth and with the security stipulated in your note under acknowledgment, and with the understanding that the contracting of this loan forms the first feature of the program of financial reorganization described by you in your note of November 10th. I am gratified to note that one of the essential steps in this financial program was [Page 1006] taken by President Zayas in his decree published on January 10th, by which substantial reductions were made in the budget for the current fiscal year. I feel confident that the Cuban Government will appreciate the fact that the sanctioning by the Government of the United States of this temporary loan of $5,000,000 need not necessarily entail approval of the permanent foreign loan of $50,000,000 suggested by the Cuban Government. Any decision as to the advisability of the flotation of this larger loan by the Cuban Government must necessarily be postponed by the Government of the United States, in view of its obligations under Article II of the Treaty of May 22, 1903, until such time as this Government is advised by the Government of Cuba that the revision of its internal revenues and tariff schedules, now being undertaken, has been completed and that the total revenue of the Republic obtained as the result of such revision will be adequate to meet the service of this proposed addition to the public debt of the Republic of Cuba.
Accept [etc.]
- Ibid., p. 757.↩
- For text of treaty, see ibid., 1904, p. 243.↩