817.516/171: Telegram
The Secretary of State to the Minister in Nicaragua (Eberhardt)
123. Your 217, August 26, 3 p.m. The Guaranty Trust Company and Seligman and Company inform the Department that they feel that they will have to withdraw their representatives from the directorate of the National Bank because of President Moncada’s attitude, and particularly because of his withdrawal from membership in the Advisory Board and the statement which he made in withdrawing. They state that the bankers have no interest in the National Bank sufficient to lead them to continue their connection therewith at the risk of a controversy with the Nicaraguan Government which would react unfavorably on the large interests of both institutions in other Latin American countries.
The Department is interested in this situation only because it feels that the economic welfare of Nicaragua and the stability of her finances are dependent upon the efficient management of the National Bank. It has no interest in seeing this management remain in the hands of any particular group, but it feels that the withdrawal of the present management because of differences of opinion regarding the soundness of particular loans or banking policies would make it extremely difficult for the Government of Nicaragua to find another equally strong and reputable group which would be willing to take over the management. The danger of placing the bank in the hands of less experienced and reliable directors is too evident to require discussion. A false step of this sort might do irreparable injury to Nicaragua’s credit and financial stability in a very short time.
I should like to have you bring my views as expressed above to President Moncada’s attention in a most informal and friendly manner, telling him that I personally am so deeply interested in the welfare of Nicaragua and the success of his administration that I cannot refrain from pointing out the possible danger which might result from any ill-considered step in connection with the National Bank, which is the keystone of Nicaragua’s whole financial structure. I am also informing the bankers that the Department would very much regret the withdrawal of the present group from the management of the bank.
Tell the President that I am sending him a personal letter dealing with this subject.69
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