817.51/1833: Telegram
The Chargé in Nicaragua (Munro) to the Secretary of State
[Received 7:37 p.m.]
252. The economic situation of Nicaragua and the financial situation of the Government are remarkably good considering the events of the past two years. Except in the relatively unimportant northern [Page 411] departments, and to a less extent in those departments where the appointment of Liberal jefes politicos and the consequent division of authority has caused administrative confusion with resulting disorder, conditions are practically normal. Heavy rains have assured good crops and the prospects for coffee and sugar are especially promising. The customs receipts have been good and the internal revenues fair despite the decline in the receipts from the Liberal departments. The million dollar loan from the New York bankers is being reduced with astonishing rapidity and will probably be paid off by July 1st, 1928.23 The Government is seriously inconvenienced financially by the fact that so large a part of its income goes to amortize this loan but it nevertheless has enough money for current expenses and even to continue the paving of Managua and the road work. Hill24 informs me that he believes that the expenses of the constabulary and of the elections can probably be met out of ordinary revenues although the money now in sight will not permit so rapid an expansion of the constabulary as the Marine officers consider desirable.
Under the circumstances there is no real necessity for a loan in the near future except to pay the war claims which may amount to from four to five million dollars after adjudication. The time limit for the submission of these claims expires December 31st and it will not be possible until then to estimate their amount with any accuracy. Prompt payment of these claims would undoubtedly have a good economic and probably a good political effect but a loan for this purpose is not so urgently necessary as it would be if the general economic situation were less satisfactory.
There is little apparent interest in the loan question here at the present time. The Government has no plans of its own and is awaiting information regarding the intentions of the bankers and the Department. There is little discussion of the matter in the press.
While I do not feel qualified as yet to express an opinion as to the probable political reaction here to any loan proposal, I think that it would be advisable to proceed very slowly in approving or recommending any new financing.
At least two factions of the Liberal Party would probably carry on propaganda against such financing both in Nicaragua and in the United States.
It seems advisable to send the above by telegraph because the next mail will not reach the Department for about a month. It would be [Page 412] very helpful if the Department would inform me by telegraph of any important developments in connection with any proposed new Nicaraguan financing.