The Secretary of State to the Minister in Nicaragua ( Lane )
Washington , January 10, 1936—noon.
2. Your telegram No. 3, January 6, 10 a.m. You may inform the Nicaraguan Government as follows regarding the points raised in your despatch No. 1081 of October 3:
- A matter for the Nicaraguan Government to decide.
- Noted; no reply seems necessary.
- The exception in favor of coconut oil was inserted solely to take account of differential in United States internal tax on such oil in favor of Philippines. Since this is also covered by language of fourth paragraph of Article XIV, you can omit last sentence of Article IV.
- Dr. Castro might also consult Section 522 of the Tariff Act of 1930.4
- Last paragraph of Article VI can be omitted altogether (since presumably covered by second paragraph) or altered to avoid reference to specific laws of either country.
- Last paragraph of Article VII does not pertain to importation of sugar into the United States since import licenses or permits are not required therefor.
- With regard to foreign exchange control, you may point out that this Government is not asking for arbitrary exchange treatment but merely desires assurance that it will receive a fair share of available exchange, such share to be no less than the share employed during a previous representative period. Consult in this connection the Department’s instruction No. 282 of June 27, 1935.5 The distinction between this Government’s attitude toward allocation of foreign exchange and the bilateral system based on importations (apparently espoused by Dr. Castro) is of course clear-cut and fundamental, and no compromise in principle will be possible. The Department hopes however that a fuller explanation of our policy will enable Nicaragua to accept the principle embodied in Article IX.