Memorandum by the Acting Economic Adviser (Livesey)

Ambassador Judah on his recent visit to the Department left for its files the attached copy of the Cuban Department of Public Works’ statement of November 19278 showing the revenues collected on account of the Public Works Special Fund by months and years from July 1925 through November 1927. The total collections are shown as $36,038,724.14, a monthly average of $1,315,330.60 and an annual average of $14,997,228.80. The statement shows the detail of the collections of each revenue created for the fund. These details do not appear to have been previously available to the Department as the accounts of the Special Fund are not included in the Cuban budget accounts of which the Department receives detailed monthly extracts.

It is notable that the law of July 15, 1925, establishing the fund included a provision that:

“The Executive will adopt the methods and procedures it may deem most effective; but at no time shall they be contracted in such a manner [Page 643] that the total annual amount to be paid, in whole or in part, can not be covered within each fiscal year, from the nominal income calculated for that year, from the special fund created by this Law for such works in order that it will not be necessary to issue certificates of indebtedness or other documents of a similar nature for the payment of obligations contracted, it being understood that the Executive shall be authorized to enter into all contracts deemed convenient, within said four years, provided that in carrying same out the above-mentioned conditions are strictly adhered to, even it the mentioned contracts have to be fulfilled after the four years.”

In February, 1927, however, the Republic of Cuba contracted for the issue of certificates representing and constituting

“the irrevocable and incontestable contract obligation of the Republic to pay the principal amount hereof and interest thereon …,8a without right of reduction or counter claim for any reason whatsoever, such payments being secured … by a first preferential right to 90 per centum of the normal revenues … to be derived from the taxes and economic resources specified in the Public Works Law of July 15, 1925.”

On March 31, 1928, the embassy reported that the Government of Cuba was negotiating for a $20,000,000 revolving credit similar to the credit extended by the Chase National Bank. On April 16 it reported that the Government had increased the amount of the proposed credit to $25,000,000 and a day or two later proposed a further increase of $7,000,000. On May 2 it telegraphed that the Secretary of the Treasury had requested bids for a credit of $40,000,000 to $50,000,000 to be submitted May 12.

F[rederick] L[ivesey]
  1. Not printed.
  2. The omissions in this paragraph are indicated in the original memorandum.