837.51/1568: Telegram

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

37. Your telegrams Nos. 54 and 67. The Department has given most careful consideration to your suggestions. It fully appreciates the advantages as set out by you of a moratorium on sinking fund charges during the next fiscal years and the fact that this would relieve tension in Cuba and make for greater stability which would probably in the long run be in the interest of the American bondholder. The Department is likewise not unaware of the dangers inherent in the situation growing out of the alarming salary arrears to Cuban Government personnel. The Department feels, however, and the President shares this view, that it cannot take the initiative with the bankers in suggesting a suspension of amortization payments due on bonds held by the American public.

As a practical matter the Department is convinced that the bankers having legal or moral responsibilities towards the bondholders would not be disposed to suggest any move towards a suspension of sinking fund payments.

Phillips