Foreign Relations of the United States Diplomatic Papers, 1938, The American Republics, Volume V

837.51 Public Works Debt/150: Telegram

The Chargé in Cuba (Beaulac) to the Secretary of State

Habana, November 1, 1938—1 p.m.
[Received 3:40 p.m.]

130. Mr. Crafts told me that at a conference he and Mr. Brownson had last night with the Cuban Ambassador and Montoulieu³⁴ it was tentatively agreed that Purdy and Henderson would be paid according to previous agreement, entire payment being made in unallocated bonds of the series exchanged for public works bonds.

With reference to the other creditors Cuban and foreign there will be a new issue of bonds bearing 5% interest with 15–year maturity and sinking fund sufficient to retire bonds at maturity, not to exceed $10,000,000, with a first lien on revenues derived from a tax on petroleum products other than gasoline to be created by the law authorizing the issue and with a junior lien second only to the lien of the bonds of the series exchanged for public works bonds on the revenues pledged to the service of those bonds. This new issue and the remainder of the unallocated bonds of the series exchanged for public works bonds will be divided pro rata among Warren Brothers and all other holders of obligations and port notes. Such creditors will be paid in those bonds at their par value at the rate of 80 percent of the principal of their claims. Full interest without discount or deduction of any kind for the 6 months’ period ending December 31, 1938, will also be paid in those bonds. Messrs. Gow and Powers³⁵ have approved in principle.

Mr. Crafts is not clear as to the character of the tax to be created on petroleum products. In this connection see Department’s instruction No. 1321 of July 3, 1937³⁶ and related correspondence.

Beaulac

34. Eduardo I. Montoulieu, of the Cuban Treasury Department.
35. Walter Powers, member of Boston law firm of Sherburne, Powers & Needham, agent for the United States District Court, Boston, in the Warren Brothers case.
36. Not printed.