417.00/321a: Telegram

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

57. Your despatch No. 917 of February 16. It would apparently be impossible for this Government to designate a new American member of the Claims Commission until the law of December 3, 1926 is amended so as to remove the requirement that the President of the Commission be the American member of the High Commission. Certain further amendments in the law seem desirable to meet present conditions:

1.
The salary of the American member should be increased. The Department believes that $10,000 would be an appropriate salary, since it will be necessary to find some good man to go to Nicaragua for this work.
2.
The present law and the amendments made in March, 1928, apparently do not extend the jurisdiction of the Commission to include losses caused by the outlaw raids in Rio Grande and Prinzapolka. Furthermore, the language of the law of March 19 does not clearly cover all claims by persons or companies who suffered losses in the other Departments where the outlaws were operating as it refers only to inhabitants of these Departments. It would seem desirable that new legislation should clearly authorize the Commission to deal with the losses occasioned by the operations of the outlaws in the north up to the date of the reconvening of the Commission.
3.
The Department understands that the Commission at its previous sessions received and classified all claims against the Nicaraguan Government up to June 30, 1927, acting under the authority of the Presidential Decree of November 10, 1927. The existing laws limit the authority of the Commission to passing upon claims for war exactions, requisitions and war damages to property. It would seem that the jurisdiction of the Commission might well be extended to cover all other pending obligations of the Nicaraguan Government arising since October 25, 1925 as the result of the civil strife.

President Moncada may also wish to have the law amended so as to give the American member the veto power in accord with his opinion as expressed at the time of the Tipitapa Conference and during his visit to Washington.85 The Department believes that this matter should be left to his discretion after it has been brought to his attention.

The Department has hitherto suggested that the jurisdiction of the Commission be extended to include personal injury claims and [Page 676]the Nicaraguan Government in its note to you of June 14, 1927,86 promised to initiate legislation to this end. The Department is not, however, disposed to insist on such an amendment.

Since President Moncada apparently contemplates reconvening the former Commission I assume that any new appointments of Nicaraguan members will be made in the manner contemplated by the Tipitapa Agreement—that is upon the nomination of the central authority of the political party to which the outgoing member belongs. Please ask him to confirm this understanding.

The Department’s experience with other claims commissions in Nicaragua and elsewhere has indicated that the settlement of claims and the acceptance by claimants of the awards is greatly facilitated if definite provisions for payment are made before any claims are adjudicated. It would appear desirable, therefore, for the Nicaraguan Congress promptly to enact a law covering the method of payment. The Department sees no objection in principle to the plan for payment in internal bonds but believes that any legislation on this subject should be discussed with the High Commission and the bankers before final adoption, in order to make certain that no difficulty arises by reason of conflict with the Financial Plan. With respect to the specific project transmitted with your despatch No. 917 the Department desires to point out that there would be a great saving to the Nicaraguan Government and probably a more rapid amortization of the bonds if the High Commission were required to purchase bonds for the semi-annual amortization at market price if below par, and to resort to drawings only if the market price were above par.

Past experience has also shown the desirability of paying a part of the awards and especially the very small awards in cash. The special taxes will doubtless provide a considerable sum during the interval before the new internal bonds are issued in payment of the Commission’s awards and it is suggested that this sum might be used for cash payments.

You may suggest to President Moncada the advisability of presenting the legislation above outlined to Congress at its forthcoming special session. You may say that the Department views with sympathetic interest the project for reconvening the Claims Commission and will be most glad to cooperate by appointing an American member as soon as the existing law is changed so as to make such an appointment possible.

Stimson
  1. See telegram No. 168, October 28, 1927, 6 p.m., from the Chargé in Nicaragua. Foreign Relations, 1927. vol. iii, p. 466.
  2. Not printed; but see despatch No. 429, June 15, 1927, from the Minister in Nicaragua, Foreign Relations, 1927, vol. iii, p. 463.