817.1051/516: Telegram
The Secretary of State to the Minister in Nicaragua (Hanna)
103. Your 47, April 27, 2 p.m. The Department has ascertained by telephone from the President of the International Acceptance Bank in New York that the million dollar loan given by the National Bank of Nicaragua to the Nicaraguan Government is still in effect. The Nicaraguan Government asked the International Acceptance Bank to open a mail credit to the Bank of Nicaragua of $500,000. This was done. The credit was not used and after the earthquake the Bank stated that this credit had been withdrawn until it could examine the situation further and be satisfied that there is sufficient security for it. The Nicaraguan Government asked permission to use $100,000 of the million dollar loan for reconstruction in Managua. The bankers refused and said that the million dollar credit should be used solely for the purposes for which it was granted. The Bank did give them an additional temporary advance of $100,000 for reconstruction work but has insisted that the million dollar credit be used as agreed upon. The funds for the Guardia are therefore available as arranged in February.
Please call on President Moncada at once and tell him of this situation and say that this Government insists that the money be paid in full and promptly to General Matthews for the Guardia.
[Page 853]Tell President Moncada that he doubtless does not know of the severe criticism in the press of this country regarding the difficulties which the American officers in the Guardia have to contend with to get the necessary funds to keep that organization going. Our officers are in the Guardia by virtue of a series of agreements with the Nicaraguan Government, the last one of which is set forth in the memorandum of February 5, 1931, initialed by the Secretary of State and by President Moncada. This agreement contemplates the orderly and prompt payment of the funds specified. It is an intolerable situation where the Commander of the Guardia has to fight every month for the funds due for this organization and this Government expects that these funds will be paid promptly by the Nicaraguan Government or that instructions will be given to the Collector of Customs to pay over these sums each month out of his collections, after paying the expenses of the customs collectorship and the service on the outstanding bonds. Cable reply.