837.51 Chase National Bank/13

The Ambassador in Cuba (Judah) to the Secretary of State

No. 320

Sir: Referring to your telegraphic instruction No. 107 of June 20, 1928 in connection with the new Chase Bank financing, and after further consideration of the last paragraph thereof in regard to what I may communicate orally to the Secretary of State and to the President, I have the honor to state that I have come to the conclusion that it is better not to make this oral communication at this time, unless you wire me to the contrary.26

In the first place, we have not sought to attach any conditions to our approval of the new loan, and we are now in the position of having supervised but not having interfered. In the second place, the budget as submitted to Congress by President Machado with permission to him to use general funds or funds from the Public Works taxes up to $7,000,000 for general budget expenses was approved by the Senate last week prior to the receipt of your telegraphic instruction No. 107. If the budget is amended as to this $7,000,000 in the House, it would give rise to considerable talk and our interference at least guessed at.

There is no question in my mind but that the Cuban Government will be forced to use at least a large part of $7,000,000 of Public Works taxes to cover its $83,000,000 budget for the next fiscal year. It will have to do it either directly or indirectly because the general revenues will certainly not meet the budget. In such case our verbal objection made now would be tacitly ignored and Cuban finances would probably be in such shape that we would not want to make formal objection.

It is true that the Cuban Government is going to start at once to finance its public works program under its agreement with the Chase National Bank but the Chase Bank has no lien upon the Public Works taxes until the fiscal year of 1930–1931. If prior to the making up of the budget for the next fiscal year you think the situation is such that there should be a strong objection made to the Cuban Government using Public Works taxes for its general expenses, we could make either a formal or an informal objection prior to the making up of the budget in April and May, 1929.

I have [etc.]

Noble Brandon Judah
  1. No such instruction was sent.