837.51 Public Works Debt/134

The Undersecretary of State ( Welles ) to the Chargé in Cuba ( Beaulac )

My Dear Mr. Beaulac: In response to the request contained in your telegram number 114 of October 12, I may say in general that my talks with Dr. Martinez Fraga in Washington followed along the lines indicated to you in my recent telephone conversation with you.

I think it is unnecessary, therefore, for me to review the general statements of policy which I made to him, since you have already conveyed—I think very effectively—to various members of the Cuban Government those same views. To summarize I may merely state that I told him I felt his Government should know that if this Government were to continue the policy of intimate and close cooperation with the Cuban Government which it had been pursuing for these past four years, it must have concrete evidence from the Cuban Government that it was prepared to cooperate in the same effective and [Page 484] practical manner which the Government of the United States had pursued. I said that at the present moment there were various matters which had given me very great concern: (a) The unwillingness of the Cuban Government, notwithstanding repeated assurances, to meet its just obligations to American creditors and specifically to two remaining groups of public works obligations holders. (b) The apparent intention of the Cuban Government to enact revalorization legislation which in certain instances would amount to confiscation of capital pure and simple, and which would fatally undermine confidence in Cuba at the very moment when Cuba needed all the confidence in her future and in her stability that she could obtain, (c) The apparent intention of the Cuban Government to break down Decree Law No. 52225 which gave confidence and stability to the sugar industry. I said it seemed to me that if Cuba desired to pursue a truly reciprocal policy of cooperation with the United States the points I had mentioned must be corrected. I said that so far as the United States Government was concerned, it was anxious and desirous of continuing the policy of cooperation with Cuba but that its ability to do so depended solely upon Cuba herself. I said that if Cuba gave practical evidence of her desire to do so, there were various steps which could be taken by this Government to be of benefit to Cuba. I mentioned the fact that it was notorious that the Cuban Government was losing between ten and eleven million dollars a year as a result of faulty organization in the Cuban Treasury Department and in the Cuban internal revenue system as well as through inefficiency and corruption. I said that if the Cuban Government desired to invite the services of outstanding experts of this Government in order that they might cooperate with Cuban officials in drawing up a program which would correct this situation, we would be glad to lend such experts. I said I thought that such a step on the part of the Cuban Government would undoubtedly make it easier from the standpoint of Cuban public opinion to undertake the economies required in the existing budget. I said further that this Government would be prepared immediately after Election Day to undertake a revision of the Trade Agreement.

I want to emphasize the fact that once again there was no question of a quid pro quo. I made it very clear that the question at issue was the question of whether the two Governments desired sincerely to cooperate to their common advantage, and that while we would be willing and disposed to take certain steps such as those I have indicated for the benefit and advantage of Cuba, neither the Congress nor public opinion in this country would enable us to do so if Cuba showed no practical signs of doing her share.

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This, in essence, constitutes the chief points in my conversation with the Ambassador. Other possibilities were touched upon, but in no positive manner. I did state that if the Cuban Government so desired, it would seem to me desirable that the plans so long under discussion between the Cuban Treasury Department and the United States Treasury Department with regard to banking reform in Cuba be determined upon at an early moment and be taken up vigorously by the Cuban Government with their own Congress. That, however, obviously was a matter for Cuba to determine.

It is, of course, entirely impossible for us to make any announcement of intention to revise the Trade Agreement until after Election Day and the Ambassador is quite familiar with that situation. I assume that he will already have made this clear to the President of Cuba.

With my kind regards [etc.]

Sumner Welles
  1. Approved January 18, 1936, Gaceta Oficial, January 20, 1936.