817.51/2220: Telegram

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

18. My telegram No. 12, January 14, 7 p.m. The manager of the National Bank has just told me that the Government today received advice from its Legation in Washington that the International Acceptance Bank would grant the million dollar loan at the maximum rate of $75,000 per month to be expended as follows:

Ten thousand on each of the two railway projects, 25,000 on the Atlantic Highway, 15,000 in the Segovias and 15,000 on other public works. He told me that he thinks this Government has telegraphed its acceptance of this proposition.

A loan on that understanding furnishes no guarantee that the situation in the bandit region will be materially improved. The existing situation here demands that at least 15,000 monthly shall be expended on increasing the Guardia strictly in accordance with the Guardia agreement and 20,000 monthly on road construction in the bandit area and that these amounts shall be specifically allocated for the purposes mentioned. Anything less than this will be a regrettable failure to meet the existing crisis and might have dire results.