Office of the Historian

837.51/836: Telegram

The Representative on Special Mission in Cuba (Crowder) to the Acting Secretary of State

Habana, September 11, 1922—7 p.m.
[Received September 12—10:05 a.m.]

61. Reference to my despatch of September 5th49 and its enclosures. Have just returned from important conference with President, Secretary of the Treasury and Public Works and the mixed committee of Congress appointed to consider the Ferrara bill. Both President Zayas and Representative Ferrara expressed the view that the issue of the proposed interest-bearing certificates under Ferrara bill would cause an increase in the public debt within the meaning of article 2 of the permanent treaty and that therefore the sanction of the United States was necessary. I was then invited to discuss said bill and presented the following objections thereto.

  • First: that the four revenues pledged for the payment of interest and redemption of said certificates were special and temporary and did not for that reason meet the requirements of article 2 of said treaty, that interest and redemption charges should be met out of the ordinary revenues of the Island, citing in that connection article 59, paragraph third of the Constitution of Cuba and criticisms expressed in paragraph third of the memorandum of Bureau of Insular Affairs, dated Washington, September 4, 1917,50 upon application of Cuban authorities for approval of the $30,000,000 loan of that year. This argument was not combatted.
  • Second: that the four revenues pledged could not be certainly relied on to produce within two years more than $50,000,000 of additional revenues necessary to meet interest and redemption charges [Page 1041] and that at the end of the prescribed period the Cuban Government would in every probability be confronted by another serious default in the payment of its obligations.
  • Third: that for the reason stated in preceding paragraph the Ferrara project would not have the effect of restoring public confidence.
  • Fourth: Ferrara plan made no provision for extinguishing the temporary Morgan’s loan five millions nor for discharging the accumulated arrears on the interior debt.

I added that my friends would be gratified if the solution finally adopted by the Cuban Congress would permit more liberal provision to be made for the much neglected services of public works and sanitation.

The conference lasted four hours and adjourned to give Dr. Ferrara an opportunity to amend his draft to meet my objections. I anticipate that he will bring in a compromise measure providing for the settlement of the most urgent part of the floating debt, including the Morgan loan and the arrears on the interior debt, by a public loan and for liquidating the remainder through certificates of indebtedness to run for two years, both the public loan and the certificates to be guaranteed by permanent rather than temporary revenues.

Crowder
  1. Not printed; see telegram no. 58, Sept. 5, 3 p.m., p. 1038.↩
  2. Foreign Relations, 1918, p. 304.↩