The Chargé in Nicaragua (Dennis) to the Secretary of State

No. 302

Sir: Referring to the third paragraph of the Department’s telegram No. 120, of November 22, 6 p.m., in regard to the formation [Page 459]of a Mixed Claims Commission,57 I have the honor to transmit herewith a copy of my letter of today to President Diaz together with a memorandum attached thereto of various conversations between the President and myself in regard to the Mixed Claims Commission.

As soon as the law providing for the Commission is passed by Congress, the Legation will transmit a copy thereof to the Department.

I have [etc.]

Lawrence Dennis

The American Chargé (Dennis) to President Diaz

My Dear Mr. President: Completing the memorandum of our conversation of November 17, transmitted to you with my letter of the 18th, I am enclosing a further memorandum embodying some of the points discussed with you in that conversation and further elaborated in subsequent conversations.

I should greatly appreciate any corrections which you may see fit to make to this memorandum, in the absence of which I shall consider the impressions I have set down as substantially accurate.

With the assurance [etc.]

Lawrence Dennis

Memorandum of Certain Points Discussed in Informal Conversations of November 17th, 18th, 23rd and 24th Between His Excellency President Adolfo Diaz and the American Chargé d’Affaires, Mr. Lawrence Dennis

With regard to the settlement of the claims arising out of the revolution of 1926 in Nicaragua, President Diaz discussed with Mr. Dennis the plans contemplated by the Nicaraguan Government for the determination of these claims and their subsequent payment. President Diaz understood, naturally, that as there would be many foreign claimants, this subject would be of special interest to the American representative.
The President expressed the desire that these claims be settled on a fair basis for the Government and the claimants. He therefore contemplated the creation of a Special Commission for the adjudication of the claims. This Commission, he thought, should be composed of three members; one Conservative, one Liberal, and one American. It seemed highly desirable that these members, in addition to being reputable individuals, should possess special competence for this work, but they need not be attorneys at law. For the technical part of [Page 460]the work it seemed necessary to have the services of an American, experienced in handling such matters. It also seemed desirable to give this American a special vote on the Commission in order to secure the maximum protection for the interests of the Nicaraguan Government. A foreigner, who was entirely detached from local influences and interests, would seem to offer the best guarantee of impartiality and fidelity to the interests of the Government. Two Nicaraguans, even of different parties and unquestioned honesty, might unconsciously favor reciprocally the interests of claimants to the detriment of the Government, the Liberal member favoring an excessive Conservative claim in return for a corresponding concession and vice versa.
Mr. Dennis expressed his concurrence in the views of the President and offered the suggestion that, inasmuch as it would prove most costly for the Government to bring down to Nicaragua a thoroughly competent American for this temporary work, lasting probably not more than a year, it might seem desirable for the Government to seek the services of the present High Commissioner, Mr. Hill,58 who has had much experience with the settlement of claims in Nicaragua, and whose present employment with salary in this country would allow him to take on the extra duties of the new claims commission for a small additional compensation. Mr. Dennis thought that a suitable American Claims Commissioner would cost the Government not less than $12,000 for a year’s work, counting his traveling and other expenses, whereas Mr. Hill would probably be glad to undertake the extra work for some $3600 for the year. Mr. Hill would also have the advantage of knowing conditions in Nicaragua better, by reason of his six years’ residence here, than an American, however expert otherwise, who came to the country for the first time.
President Diaz stated that he felt that were a large salary or fee to be paid for the work of the American Commissioner, it would be preferable to secure another expert for this work, but that if Mr. Hill’s services could be obtained at only a nominal addition to his present salary, this arrangement would be indicated.
With regard to the settlement of the amounts awarded by the Claims Commission the President expressed the belief that the only practicable way would be to issue bonds guaranteed by a second lien on the customs. This issue of bonds might be made on more or less the same basis as that of the First Customs bonds except that the Government might enjoy the option of purchasing bonds for amortization at market prices at any time. Such purchases of bonds could be most conveniently effected through the agency of the Government owned National Bank, which has special facilities therefor.
Mr. Dennis saw no objection whatever to such a plan.
The President stated that the necessary legislation for the proposed Claims Commission was now under advisement by the National Congress.
  1. Telegram not printed; it contained the Department’s approval of a plan to form a Mixed Claims Commission as previously outlined by the Legation.
  2. Roscoe R. Hill.