837.51 Public Works Debt/154
Memorandum of Conversation, by the Assistant Chief of the Division of the American Republics (Briggs)
Mr. Duggan and I called on the Cuban Ambassador on October 29 seeking certain assurances regarding the intentions of the Cuban [Page 487] Government toward liquidating the debts of Warren Brothers and Purdy and Henderson.
The Ambassador assured us that the entire bloc of bonds remaining of the $85,000,000 issue ($9,899,300) would be utilized for the liquidation of these debts, Warren Brothers receiving $8,718,600, and Purdy and Henderson $1,180,700. (See Mr. Brownson’s letter of October 15, 1938, to the Cuban Ambassador, transmitted as an enclosure to the Embassy’s despatch no. 1128  of October 13 , 1938).28
As to the mechanics of making these bonds available, the Ambassador said that assurance had been obtained from congressional leaders that a bill would be enacted authorizing the President to utilize the remaining bonds in connection with the settlement of the Public Works Debt, without mentioning any creditors by name, and that the measure would probably likewise provide for negotiation of a settlement with the (Cuban) creditors. The Ambassador continued that, having obtained that authorization, which he reiterated that he believed would be granted by Congress at a very early date, the President would then immediately turn over the bonds to the two American creditors.
The Ambassador further explained that he envisaged a junior issue of not exceeding $6,000,000 to take care of the contratistas29 (between $4,000,000 and $5,000,000), the Fred A. Morris claim,30 and certain minor items.
Mr. Duggan inquired as to whether the Ambassador had estimated the percentage basis represented by the proposed Public Works Debt settlements, and the Ambassador promptly replied that he had, stating that he was naturally anxious for the Cuban Government to be able to present to its people a picture of a settlement along lines as favorable as possible to Cuba, and that since the total obligaciones,31 pagarés32 and accrued interest was in the neighborhood of $30,000,000 and since the proposed settlement totaled around $15,000,000 (approximately $10,000,000 to Warren Brothers and Purdy and Henderson and not exceeding $5,000,000 for the contratistas) the settlement could legitimately be described as on a 50 percent basis. This he thought would render the settlement considerably more palatable in Cuba.
Mr. Duggan likewise took up with him a paragraph in a recent confidential memorandum prepared by the Ambassador (no. 12) in which reference had been made to the SEC.33 Mr. Duggan pointed [Page 488] out that the implication of the paragraph was that the Commission had approved the allocation of the remaining bonds of the February issue to liquidate the Public Works Debt, whereas it was his understanding that the primary interest of the Commission was in obtaining the assurance of the Cuban Government that if the bonds were to be disposed of through an underwriter, an amendment to the registration certificate would be signed with the SEC. After considerable discussion on this point, the Ambassador professed to understand the situation; he pointed out, however, that the memorandum was intended for the confidential information of a small number of Cuban officials, and that it was not anticipated that it would be made public. Mr. Duggan stated that he had emphasized this point because he felt that, should the paragraph in question be used in the preamble to any Cuban legislation, for example, the SEC might take immediate issue therewith.