837.51/873
The Representative on Special Mission in Cuba (Crowder), temporarily in the United States, to the Secretary of State
Dear Mr. Secretary: I have read the note of the Cuban Government of the 18th inst., making formal application for approval by the Department of the Fifty Million Dollar Loan authorized by the Law of the Cuban Congress of October 9th, 1922, and beg leave to submit the following comment thereon:
The single question for determination arises under Article II of the Permanent Treaty between the two countries, in which Cuba stipulates with the United States that it will not assume or contract any public debt to pay the interest upon which, and to make reasonable sinking fund provisions for the ultimate discharge of which the ordinary revenues of the Island of Cuba, after defraying the current expenses of the Government, shall be inadequate.
The note of the Cuban Government states that the national expenses have been reduced by reason of successful readjustment to the annual sum of $54,852,102.11 authorized by the Budget in force. It is pertinent to invite attention to the fact that since the enactment of that Budget the national expenses have been increased by special laws until at the present time they approximate $56,000,000.00, and there will be undoubtedly some further increases to supply omissions in the present Budget to take care of vitally necessary services of the State. We may, however, I think, contemplate that the liquidation of the Budget at the end of the fiscal year will show a substantial surplus, but not in itself sufficient to take care of the service of the proposed new loan. However, in view of the enactment of the Sales Tax and the minimum estimate of the revenue which can be raised under it, namely, Fifteen Million Dollars, I have no hesitancy in saying that the ordinary revenues, which, of course, include the Sales Tax, are sufficient for the two purposes specified in Article II of the Permanent Treaty, to-wit, defrayment of current expenses of the Government and payment of the interest and sinking fund charges on the public debt; and for the further purpose of providing a surplus of receipts over expenses which will enable a substantial amount to be set aside at the end of each fiscal year for the more rapid amortization of the outstanding public debt, as provided in the Loan Statute.
Sincerely yours,