817.51/1958: Telegram

The Minister in Nicaragua ( Eberhardt ) to the Secretary of State

[Paraphrase]

269. The draft financial plan transmitted in instruction No. 383, June 16,76 seems to be very satisfactory, especially with the incorporation of the amendments indicated in the right hand column. This Legation offers the following suggestions:

(1)
The fiscal agents should retain some control over the expenses of the customs collectorship of the Auditor General and of the Engineer in Chief. Otherwise, there will be friction between these officials in apportioning the amount allowed them jointly for expenses, and there will be danger of abuses in fixing salaries of [Page 547] subordinate officials. The salaries of subordinate customs officials in Nicaragua are considered too high at the present time.
(2)
It is unnecessary to make provision for the expenses of the election from the loan because sufficient funds have already been turned over to General McCoy.
(3)
Experience has demonstrated that the amount provided for the Guardia Nacional by the agreement of December 22, 1927 is entirely inadequate. It will be necessary to conclude either a supplementary agreement or a new agreement when the status of the Guardia Nacional is regularized by Congress. It is preferable that subdivision 3 of article 3 read: “The Collector General shall provide sums sufficient to assign the minimum requirements of the National Guard as established by agreement between the Government of Nicaragua and the Government of the United States.”
(4)
There will be much opposition to the financial plan if it creates the impression that the construction of the Atlantic railroad is doubtful or that it will be delayed by further surveys and studies. Of course such surveys and studies will be necessary, but a better impression would be produced if section 1 of article 8 made it the first duty of the Public Works Commissioner to prepare estimates and plans for the construction of a railway to the Atlantic Coast. This would not prevent the Public Works Commissioner from recommending a road later on, if it should appear advisable. It is believed that with the rapid increase of automobile traffic, insistence upon a railroad as opposed to a road will become less in the near future. Possibly the new administration will be less insistent upon a railroad than the present administration.
(5)
It is very important that there be retained in section 2 of article 7 the new provision requiring the countersignature of checks by the Collector General. Unless the new plan contains very definite and effective provisions it will be extremely difficult to stop the spending for one purpose of sums appropriated for another. This is the principal abuse under the present financial plan.
(6)
In view of the unfortunate experiences with the Claims Commission, Corinto wharf, etc., it would be advisable to insert a provision prohibiting any official serving under the plan from undertaking functions outside his regular duties and from receiving any compensation beyond his salary without the express permission of the fiscal agents. We have been able to learn the views of President Diaz and General Chamorro respecting the principal features of the Cumberland plan through discreet inquiries by Rosenthal. They approve almost all of those features which reappear in the bankers’ plan, but they insist that the construction of an Atlantic railroad is essential, especially for political reasons. They also feel that a real provision must be made for the payment of claims, but [Page 548] they think that partial payment in cash and the remainder in well-secured bonds would be satisfactory. If the National Bank is taken over by American bankers, they would like to see a mortgage department established. I think they have hoped for a much larger loan than the present plan provides. If one of only $3,500,000 is obtained, I believe they and the investors in general will be much disappointed.

Eberhardt
  1. Not printed.