837.154/103

The Ambassador in Cuba (Guggenheim) to the Acting Secretary of State

No. 75

Sir: Referring to my telegram No. 15 of today’s date,22 I have the honor to submit the following report of a conversation which I had with President Machado on January 23, regarding the proposed flotation of a Cuban loan, in the course of which he agreed to furnish me facilities for obtaining such information concerning Cuban Government finances as will, I feel, enable me to formulate definite recommendations as to the desirability of the financing in question.

. . . . . . . . . . . . . .

I told him that I wished to discuss with him the pending Cuban government loan. Various bankers had talked with me, in the fullest detail about the proposed financing for the Government, and I had encouraged these bankers to open negotiations with the Cuban Government, as it seemed to be essential that Cuba should have its finances put on a better basis. Inasmuch as the President was about ready to close a loan transaction with the Chase Bank, under normal circumstances, the Chase representatives would request the Department of State for its approval and the Department would undoubtedly ask me for advice and recommendations. In order that I might be in a position conscientiously to make final recommendations on this subject, [Page 687]there was certain information that I would like to have. I suggested, as agreeable to the President, that Mr. Jones, whom he knew was here as my personal economic adviser, be placed in contact with some appointee of his in the Treasury Department so that he could thus informally get the information that I needed. I told him incidentally that the information desired would be of the same character as that which any Cuban citizen might request from Washington and which would be available in our many published reports.

The President replied that it would be unnecessary to go to the trouble of such an arrangement inasmuch as he personally would give me the information and tell me all about the matter now. I explained to him that I was thoroughly familiar with the terms of the proposed loan, but that I wanted certain fundamental data in regard to the financial status of the Government. I told him that I had not come to him on instruction from my Government, but that I felt we could make very much better progress if these matters could be studied in the informal way that I suggested. The President replied that, in the first place, he did not consider this loan an exterior loan, but, regardless of all that, he would give me any information of any character that I desired. In regard to the Platt Amendment, he wished to pursue the course that had been pursued before; it was not his intention to write to the State Department asking permission to contract for this loan; the bankers would ask permission of the State Department and after permission had been granted, we should address a note to him advising him of our decision. I told him that I would be glad to communicate this information to the State Department and to get their instructions, and that, in my opinion, the matter of real importance was to preserve the spirit of the Platt Amendment; that quite obviously the excellent credit which Cuba enjoyed at the present moment was due to the Platt Amendment. For example, the fact that her bonds were selling on a like basis with those of Denmark and very much higher than those of most Latin American republics was a result of the Platt Amendment. The President agreed with this and volunteered the suggestion that the way the Platt Amendment would lose its force would be through lack of need for its use. I told him that that was certainly the state of affairs that everyone desired and was interested in reaching.

The President said he was very pleased that I had brought an economist here on my staff; that he had a love for his country which was greater than any other sentiment and that my action was an indication of a desire to help his country and he appreciated it, and that I would see he was making every effort to improve the financial situation. He was working night and day to accomplish this, and he sincerely hoped I would study these questions so that he could have the benefit of my advice in regard to them. He proposed to apply the [Page 688]new loan partly to reimburse certain special funds for money advanced for Public Works accounts and the balance would be devoted to specific limited Public Works appropriations which could not be overrun. First consideration would be given to the Central Highway. I assured him that my only desire was to be of assistance to him and that the fruits of our studies would be entirely at his disposal.

From the foregoing it would appear that President Machado no longer has any lack of confidence in our desire really to be helpful and such reservations as may have been in his mind since my arrival seem to have disappeared. He said that he would instruct the Secretary of the Treasury to get in touch with me and to arrange a method for getting the desired data.

I have [etc.]

Harry F. Guggenheim
  1. Not printed.