817.516/173: Telegram

The Chargé in Nicaragua (Hanna) to the Secretary of State

222. Department’s telegram 123, September 3, 6 p.m. I have brought your views to President Moncada’s attention. He expressed appreciation of your interest and wished me to assure you that he is in complete accord with you in the matter. He said he withdrew from the advisory board because he thinks that in view of the limited authority of the board it is not appropriate or desirable for the President of Nicaragua to have membership in it. He said the refusal to grant the … loans was not the reason for his withdrawal, but he added that his opinion concerning the soundness of that loan has been confirmed by the action of a local bank in granting the loan on less security than was offered the National Bank.

He insists that he wants the bank under American management and says he hopes the present banking group will continue its management. By way of emphasizing this he told me he had given Rosenthal full power to negotiate a loan of $3,000,000 with the existing management and that his wishes in this connection have not changed. He insists, however, that the Government of Nicaragua should have more influence in shaping the policy of the bank and said, by way of illustration, that there are serious objections to the bank engaging in the purchase and sale of coffee and that he desires to present this matter for consideration.

The President thinks the situation is largely the result of misunderstandings and that they would disappear and a satisfactory arrangement be reached if the subject were submitted to a representative of this Government, a representative of the bankers and a representative of the Department for adjustment, and he requested me to submit this proposal for your consideration. He mentioned Doctor Sacasa as his representative in such a conference but told me in the course of our conversation that neither Doctor Sacasa nor Carazo Morales is favorably disposed toward the present banking group.