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

No. 917

Sir: With reference to the Department’s telegrams No. 20 of February 1st (7 p.m.) and No. 25 of February 8th (5 p.m. [6 p.m]) and my despatch No. 910 of February [2]81 and telegram No. 41 of February 5th (11 a.m.), I have the honor to transmit herewith a copy and an English translation of a note from the Foreign Office81a in which it is stated that it is the intention of the Government of Nicaragua that the Claims Commission created by the law of December 3, 1926,82 resume its functions shortly, and therefore President Moncada formally requests that the United States Government designate the American member on that Commission.

Some weeks ago President Moncada informally expressed to me his desire that the Claims Commission which was created for the purpose of passing on claims for damages which arose from the recent revolution and which has been inactive since March 31, 1928, resume its activities at an early date. He therefore desired to take up the matter of the appointment of an American member designated by the United States Government to succeed Mr. Roscoe R. Hill who had resigned. In view of the fact that the Department felt that the question of reconvening the Claims Commission and providing for the payment of awards was one which required careful consideration and thorough study before any further steps were taken, I discussed with the President the subject of the re-establishment of the Commission and the preparation of new legislation if any seemed necessary. He informed me that he would submit his views on these matters in writing so that they might be transmitted to the Department for its consideration.

The result of my interview with him was the above-mentioned note, which is very indefinite and conveys no idea regarding his plans. Consequently it was necessary for me to again confer with President Moncada. He stated confidentially to me that it was his intention to [Page 673] wait until after the adjournment of Congress before actually reestablishing the Claims Commission, because he felt that the Legislature would display its usual strong opposition to the appointment of foreigners to official positions in the Nicaraguan Government, especially if the American member were given the veto power. He referred to the recent opposition on alleged legal and constitutional grounds to the appointment of General McCoy as President of the National Board of Elections. He therefore preferred to provide for the reconvening of the Commission by Executive Decree after the close of the present session of Congress when he would consider any suggestions regarding such amendments to the proposed decree as may seem necessary.

I specially mentioned to him three important points which had not been included in the law of December 3, 1926, and which should apparently be considered before the new Decree is promulgated: (1) Giving the veto power, to the American member of the Commission. It is understood that this feature appeared in the original draft of the law of December 3, 1926, but that it was eliminated by the Chamber of Deputies; (2) the inclusion of a provision that the proposed Commission would have jurisdiction over claims for personal injuries to noncombatants, as suggested in the Department’s instruction No. 228 of May 14, 1927;83 and (3) the extension of the authority of the Commission to include losses suffered since June 30, 1927, in the Departments where fighting and disorders have been going on since that date.

With reference to the first mentioned, General Moncada said that he was strongly in favor of granting veto power to the American member of the Claims Commission. In regard to the other two points, he stated that he was inclined to favor such amendments as they appeared to him very just, and that they would be studied before the issuing of a new decree. I explained to him that these matters were of such a nature that they should, if approved, be included in the law itself instead of being provided for in any Regulations which may be issued by the reconstituted Commission.

In regard to the method of payment of the awards of the Commission, the President stated that he was strongly opposed to the floating of a loan for this purpose at this time, and he believed that by the exercise of rigid economy in Government expenditures they could be met out of current revenues. He felt also that public opinion was very adverse to a loan. He asserted that his plan is to issue internal bonds the interest and amortization of which would be provided by using the funds produced by the re-enactment of the special tax law of January 21, 1927, approval for the continuation of which [Page 674] has now been granted by the bankers and the High Commission. The Government received from this source during the life of the tax approximately $300,000 annually, and it is his hope that the entire amount of the claims may be gradually reduced at this rate.

On February 10th there was published in the local press a project of law of the Minister of Hacienda which would provide for the authorization of an issue of internal guaranteed customs bonds up to a sum of five million dollars for the payment of the awards of the Claims Commission. A copy of this project is transmitted herewith.84 It will be seen that it follows closely the lines of the law authorizing the Guaranteed Customs Bonds of 1918, and that the funds to be provided as guarantee of the bonds are the revenues from the twelve and one-half per cent surcharge on import duties established by the law of January 21, 1927; the additional tax on import duties on liquors and tobacco created by the same law; by re-enacting the additional tax on coffee exports established by the same law, which tax expired on January 25, 1929; and in the absence of sufficient revenues derived from the above duties and surcharges, any part of the surplus revenues remaining after the expenses of the Guardia Nacional and the service of the Bonds of 1909 and 1918 have been met.

Immediately after the publication of this project, I saw President Moncada and expressed surprise that the Nicaraguan Government planned to enact such legislation at this time, since the question of the payment of awards of the Claims Commission required very careful consideration and thorough study before any definite steps were taken. He informed me that this project was published merely for the purpose of satisfying public opinion and that he had no intention of having such a law presented to Congress for enactment at this time. He stated that in any event he would not recommend the issuance of internal bonds for a sum larger than three million dollars.

President Moncada is of the opinion that the Claims Commission should begin as early as possible its work of adjudicating the claims arising out of the recent revolutionary disturbances, and desires that the United States Government designate the American member as soon as it can conveniently do so. I concur in his opinion, since it is important to have some idea of the total amount of the claims before the question of the payment of the awards can be intelligently considered. The Department’s views on the question of the re-establishment of the Claims Commission and the payment of awards are respectfully requested.

I have [etc.]

Charles C. Eberhardt
  1. Despatch not printed.
  2. Not printed.
  3. See despatch No. 310, December 9, 1920, from the Chargé in Nicaragua, and its enclosure, Foreign Relations, 1927, vol. iii, p. 461.
  4. Ibid., p. 463.
  5. Not reprinted.