837.51/756

The Chief of the Division of Latin American Affairs, Department of State ( Munro ) to the Secretary of State

Dear Mr. Secretary: In the attached despatch25 and telegram,26 General Crowder requests authorization to present two memoranda, which he regards as equivalent to an ultimatum, to the Cuban Government. The first memorandum discusses very frankly the bad results of the failure of the Cuban Congress to enact a budget during the last four years and suggests to the President that he bring pressure to bear upon Congress to compel that Body to perform its duties under the Constitution. The second memorandum outlines the reforms which General Crowder considers indispensable in any budget which the Congress may enact. These reforms would reorganize the Diplomatic Service, the Department of Communications, and the Army and Navy, and would reduce the fixed budget in the Legislative and Judicial Departments so as to make possible an economy of nearly $4,000,000 annually in each of the services affected. General Crowder would also advise the suspension of the Civil Service Law, to permit reductions and improvements in the personnel of the Government Departments. He proposes to insist upon the elimination of all sinecures and the reduction of expenditures to a maximum of $55,000,000. He would conclude his memorandum with an unmistakable threat that the failure of the Cuban Congress to enact this legislation would force the United States Government to consider intervention.

I believe that General Crowder should be authorized to submit the first memorandum as it stands and to amplify it by a second memorandum embodying the reforms which he deems indispensable. I do not believe, however, that this Government would be justified in giving the communications referred to the character of an ultimatum or in threatening intervention if the Cuban Congress fails to pass the revised budget. It is not evident that the results of such a failure would be sufficiently disastrous to justify intervention. President Zayas has demonstrated that he himself has the power, if he wishes to use it, to reduce the expenditures of the Government to a point where they would be covered by the revenues. The budget of 1918–19, which has remained in force from year to year through the failure of the Congress to enact a new budget, provided, with subsequent increases, for an annual expenditure of $77,888,000. By executive action, President Zayas reduced the budget for the [Page 1023] current year beginning July, 1921, to $65,000,000 and subsequently to $59,000,000. At the present rate, the revenues for the current fiscal year will amount to $56,851,000. It is not clear that President Zayas could not by his own action make still further reductions in the budget applying to the next fiscal year if Congress failed to act, although action by Congress is necessary to effect certain economies, amounting to four or five million dollars a year, in the services where fixed expenditures are established by law. A continuation of the present financial situation, where the President has made economies without effecting a general reorganization of the Government Departments, would be deplorable, but it would not, in itself, justify intervention by this Government. There is no immediate prospect of default upon the foreign debt, or of a marked aggravation of the disorganization of public finances.

It must be remembered that these memoranda cover but one aspect of the comprehensive program of reform which General Crowder believes to be indispensable to enable Cuba to recover from her present desperate situation. He is planning to submit subsequent memoranda also in the form of ultimata dealing with the national lottery, the need for Constitutional reform and other matters. He has been pressing for reforms along these lines for several months, without any results, and he now feels that they can be secured only if this Government adopts a very decided attitude. The desirability for such reforms is obvious, and if, after full discussion and after continued insistence by the United States Government, the Cuban Government definitely failed to take steps adequate to relieve the political and financial demoralization of the Island, a situation would be created which would force this Government to consider very seriously whether or not some form of intervention was advisable. I do not believe that matters have as yet reached this point, and I consequently do not believe that the threat of intervention should be used in connection with a recommendation that the Cuban Congress make reductions in the budget.

Munro
  1. Despatch of Apr. 9, supra.
  2. Telegram of Apr. 8, 4 p.m., p. 1019.