817.51/1913: Telegram
The Secretary of State to the Minister in Nicaragua ( Eberhardt )
105. In reference to your 187, April 25, 9 a.m. The election is our primary immediate concern. This must be free, fair and honest. General McCoy cannot be expected to certify to a result which has been purchased by either party. The considerations which were set forth in your despatch No. 608, February 7, and reemphasized in your telegram No. 187 suggest a practical problem of the first importance. It may be granted that a comprehensive financial plan, coupled with a loan, would be the ideal solution. It would constitute at the same time the first logical and necessary step toward the economic and financial rehabilitation of the country, which we are vitally interested in promoting. Nevertheless, we do not find very much encouragement in your report for the suggestion that the election difficulty as a practical matter can be effectively met by the [Page 538] financial plan formula. In order to carry the guaranties which seem to be an urgent requirement, the plan would have to be agreed to by all interested parties and put in force without delay. This means an immediate and united action by the Government of Nicaragua, the Congress, the Conservative and Liberal Parties, and the bankers. We are apprehensive that even with the finest spirit of cooperation in all quarters, it might take months to work out this solution. We are quite ready to support a sincere effort on this line. Meanwhile, the dangers and risks which you state are already imminent would not be eliminated, and much of the damage would be done before the essential safeguards provided in the financial plan come into play. The situation might be immediately clarified if the Government of Nicaragua and the Conservative and Liberal Parties, without further discussion and leaving the details to be worked out over a period of a very few weeks, should voluntarily commit themselves in principle to a program along the broad lines of Dr. Cumberland’s report, and at the same time take measures to establish, as a provisional measure, to be effective immediately, the American controls over the collection and expenditure of the revenues, the National Bank, and the railroad, as contemplated in the Cumberland plan. In the absence of any such arrangement, we should have to revert to temporary expedients and halfway measures, such as those set forth in the numbered paragraphs of your telegram, and which do, not appear to be sufficiently far reaching and reliable. The sale of the National Bank and a contract committing the railroad surplus to expenditure for necessary repairs would still leave the treasury surplus available …
In short, the problem is to place all the public funds and revenues under American control for the next few months at least, in order that they cannot constitute any temptation so far as the election is concerned. Since there is no financial plan in force calling for such control, and since there is no immediate prospect of getting things in that shape, the end must be accomplished, if at all, either by a provisional arrangement ancillary to the eventual elaboration of a plan, or by direct action to be taken by the President of Nicaragua himself quite regardless of a financial plan. We do not feel that it is at all impossible to solve this difficulty if the President will in good faith courageously use all the power at his disposal. A few men designated by General McCoy and appointed by the President of Nicaragua to key positions in the Finance Ministry, the railroad, the National Bank and the revenue service might be all that is required. Simple action by the President in this sense will place General McCoy in a position practically to know exactly what [Page 539] is going on and check abuses. We do not see any more objection to this course than to the Executive decree establishing supervision of the election in its more technical aspects. Subject to your discretion and judgment, we should think that the time had come for a very frank and full discussion of the entire situation along those lines with the President.