837.51/1544a: Telegram

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

9. Morgan, of the Chase Bank, telephoned this morning that the Bank had reliable information that President Machado was planning to declare a moratorium on the foreign debt, alleging that the banking situation in the United States made it impossible for Cuba to continue foreign debt payments. Morgan points out that there is no relation between the two situations, that the banking moratorium in this country does not affect Cuba’s ability to continue foreign debt payments, that arrangements with the Federal Reserve have made it possible for the banks in Habana to receive ample currency, that the American banks have recently assisted Cuba in meeting her foreign debt service, and that such action by Cuba now would be without justification and a blow to her credit.

Please cable whether you have information which would bear out this report.