817.51/1890: Telegram
The Chargé in Nicaragua (Munro) to
the Secretary of State
[Paraphrase]
Managua, January 21,
1928—4 p.m.
[Received January 22—9:41
p.m.]
40. The following is from Dr. Cumberland in reply to Department’s 16,
January 14, 6 p.m.:
- “(1) In reply to a question from President Diaz regarding
the probable cost of new loan for Nicaragua I said that such
cost would depend in large measure on the attitude of the
United States toward the proposed financing, but what that
attitude might be was not discussed with President Diaz or
with other officials of Nicaragua, although it is obvious
that the attitude of the United States determines the rate
of interest and the proper amount of the proposed loan, and
until I am advised on this point no sound recommendations
can be made.
- (2) In his letter of November 29, 1927, the Secretary of
State instructed me to make a comprehensive economic and
financial study of Nicaragua, and to present
recommendations.62
This study has already convinced me that the financial plan
proposed by the bankers is merely a revision of the
financial plan which has shown its inadequacy, that such
revision does not serve the best interests of Nicaragua,
would form no basis for permanent financial expansion and
development, and would not be accepted by the Government of
Nicaragua. The proposals in the bankers’ plan for the
settlement of claims are particularly unacceptable and
unjust. Therefore, in order to present concrete
recommendations to the Department, I am preparing an
alternative financial plan in addition to my report. Such a
plan can only be intelligently prepared in Nicaragua where
the views of the responsible officers of the Government of
Nicaragua may be secured on different points as they arise.
Otherwise, a program unacceptable to Nicaragua would almost
be certain to result, as is the case with the bankers’ plan.
A well-considered project is necessary, with special
emphasis on administrative efficiency, budgetary
responsibility, allocation of treasury resources to
constructive purposes, payment of any foreign obligations,
and provision for future financial requirements in orderly
fashion over a considerable number of years.
- (3) My estimate of 2 or 3 months as the time necessary for
a study of the finances of Nicaragua, as I stated when I
received my appointment, still seems to be accurate. A
shorter study would be dangerous and a waste of time and
money.”
Dr. Cumberland and I both had understood, from our conversations with the
officials of the Department and from the Department’s instructions to
Dr. Cumberland, that the Department desired Dr. Cumberland to recommend
changes in the existing system which would rid it of its defects and
make possible the most effective utilization of the resources of the
country. Such changes could only be brought about by a new financial
plan—one more comprehensive than the plan proposed by the bankers. I
believe that the bankers’ plan would be wholly unacceptable to the
Government of Nicaragua because it affords little real hope for opening
communications with the east coast, and because it makes no real
provision for the payment of claims. Dr. Cumberland and I feel that the
bankers’ plan does not meet the present situation in Nicaragua. I have
made no attempt to report in detail on the situation recently because it
was my understanding that the Department would take no action until it
was in possession of the Cumberland report, which would be much more
useful than any report I could make.
