The Nicaraguan Minister of Finance (Guerrero Montalván)97 to the Assistant Secretary of State (Caffery)


The Minister of Finance of Nicaragua presents his compliments to the Honorable Jefferson Caffery, Assistant Secretary of State, and in compliance with his promise made at the conference he and Doctor Henri De Bayle the Chargé d’Affaires of Nicaragua had in the State Department, on October 28 last, is pleased to transmit the two memoranda A99 and B which contain:

  • First, the ideas of the Government of Nicaragua concerning the desirability of reaching agreements between the Governments or between commercial institutions of both countries to stimulate commerce between Nicaragua and the United States, and
  • Second, information concerning the proposal to extend to certain institutions, created originally at the suggestion of the Department, the reduction in expenditures under the fiscal budget imposed by the present economic difficulties.

At the same time he is pleased to transmit to him the copy he requested of the document setting forth the agreement for the emergency issue of C$1,500,000 córdobas recently decreed.99

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Memorandum B

Nicaragua has not been able to avoid the influence which the special circumstances afflicting the world have necessarily introduced into the economic life of the country and its fiscal organization. Its Government budget has been out of balance since 1931, to such an extent that during the single calendar year 1932 the deficit increased by more than C$1,158,000, a figure much too high for a total of C$3,300,000 provided for the purely administrative services of the Government. The total income available for these services during that year, including a little more than C$508,500 in customs revenues which the creditors having a lien on the revenues permitted the Government to dispose of, and C$508,684 additional which although assigned to special purposes were applied under temporary legislation to the payment of the general budget, barely reached the sum of C$2,193,551.16.

President Sacasa, from the beginning of his term and despite the natural resistance against this kind of effort, has been endeavoring to reduce all expenses for the purpose of balancing the budget. Little by little, as far as his constitutional powers have permitted him, he has progressively reduced the expenditures of various administrative services, suppressing posts which have not appeared to be strictly necessary and making a reduction of approximately 20 percent, in addition to another 20 percent which had been applied in 1931, in salaries of Government employees. Continuing in this endeavor, he proposes to extend the reductions to all the other services.

Of the fiscal income of 1932, C$1,248,757.93, that is to say almost two-thirds, were absorbed by the maintenance of the Guardia Nacional, which received a total of C$1,344,568.23. This institution continues to merit all the attention and support necessary for the maintenance of public order and tranquillity, and it is the Government’s plan to impose upon itself whatever sacrifices are necessary to insure the Guardia’s efficiency and prestige, but the inevitable reduction in the cost of this institution because of various circumstances has only been carried out to a very slight degree. Nevertheless, the fact that it was created by an agreement with the Government of the United States,2 although this agreement did not receive the sanction of the American Senate, impels the Government of Nicaragua as a matter of courtesy to inform the Department of State of the great need, in so far as the maintenance of order and public security in consonance with the economic possibilities of the country will permit it, to make a reduction in the personnel of the Guardia Nacional and in the salaries assigned [Page 577] to its members, which were fixed as is well known without any appreciable reduction having been made since the year 1929, one of the most prosperous years, and perhaps the year the income of the Government reached its highest point.

For the fiscal year which began July 1, 1933, there can be no doubt that income will be even lower than the figure reached during the year which ended June 30 last. The Government will be unable to apply to the maintenance of this institution two-thirds of the total of its income with manifest injury and neglect of the other branches of the administration in which, as has been stated, the personnel employed, and their salaries, have been reduced to the point that circumstances in the country have permitted.

The office of Collector General of Customs was also instituted in accordance with contracts which the Government of Nicaragua made with bankers of the United States following recommendations of the Department of State. This circumstance, although the obligations contracted by the Government with those bankers have terminated, induces the Government of Nicaragua to comply with the duty of informing the Department of State of the Government’s intention to proceed to a general revision of the expenses and remuneration, likewise fixed at times of prosperity and when the State had more funds available, in order to reduce them all in the just proportion which corresponds to present circumstances, and which is related to the sums which the Government also necessarily must apply to the other services of the administration.

  1. Salvador Guerrero Montalván was in the United States from June 17, 1933, to December 18, 1933, on a financial mission in connection with a loan of C$1,500,000 to the Nicaraguan Government from the National Bank (817.51/2473).
  2. File translation revised by the editors.
  3. Not printed.
  4. Not printed.
  5. File translation revised by the editors.
  6. Signed December 22, 1927, Foreign Relations, 1927, vol. iii, p. 434.