817.51/1944a: Telegram
The Secretary of State to the Minister in Nicaragua (Eberhardt)
132. The Department has been much disappointed at the attitude of the bankers as shown by their draft of a proposed Financial Plan of 1928 (copy forwarded to the Legation on June 9).74 This Plan departs rather radically from the Cumberland plan with especial reference to the amount and allocation of the loan, the duties of the Auditor General, the safeguards of the National Bank, et cetera. While little progress was made in the conference yesterday in reconciling the conflicting views of the bankers and the Department, Department is still hopeful that a satisfactory agreement will be arrived at. It will be [Page 545] helpful to the Department in its negotiations with the bankers to know how the Cumberland plan was received by President Diaz and any other Nicaraguan political leaders to whom he may have shown it. Please cable Department your personal views based on information already in your possession and such comments as you may have heard, but without making direct inquiries from the Nicaraguan leaders and officials, whether the Cumberland plan is acceptable to them or whether they would desire substantial modifications, and whether you think there is reasonable possibility that the Nicaraguan Congress would enact this plan as a law coupled with an enabling act permitting the Government to ask the bankers for bids.
The bankers’ plan provides for a total loan of $3,500,000 of which not more than $2,000,000 would be allotted for claims. They are satisfied to take a second lien on the customs duties and allow the 1909 and 1918 bonds to remain outstanding. The Department of course is in accord with this latter provision. In yesterday’s conference, however, the bankers stated they wish to leave claims out of the Financial Plan and make no provision for them from the loan. They wish merely to provide for public works, preferably the Atlantic Railroad. In their plan there are no assurances when or to what extent further series may be issued but presumably not in any substantial amounts until after final payments of the 1909 and 1918 bonds. Department would like also to know your personal views as to whether a plan along the lines of the bankers’ proposal above described would be likely to be acceptable to the Nicaraguan Government and the high officials of both parties.
- Not printed.↩