The Minister in Nicaragua (Long) to the Secretary of State
[Received 8:10 p.m.]
3. I have today received official note dated January 7 from Foreign Office saying in brief: On the basis of law of June 30, 1933 (See Legation despatch No. 1304, March 5, 19361) and monetary law of March 20, 1912, Nicaragua intends to increase exchange rate for payment of customs import duties “fixed in the legal cordoba, equivalent to the dollar of the United States”. (In other words, Nicaragua, following the procedure described in Legation despatch No. 724, November 17, 1937,1 wishes to consider unit for customs duty payment as equivalent to the American dollar and to require the payment of this unit in cordobas at official rate of exchange for dollars. A duty of 5 “customs cordobas” would require (at 400 percent today’s official rate of exchange) the payment of 20 paper cordobas.) The Foreign Office writes that, in its opinion, this action does not contravene the trade agreement2 (consequently, it is to be assumed, not requesting modification of the agreement.) The Foreign Office states that the Government intends to place this new disposition into effect within a few days.
This approach to the matter came as something of a surprise since the President and Minister of Hacienda3 had spoken with me informally regarding the possibility of getting quick action by the State Department should they propose modification of the trade agreement.
I am sending copy of the note with Wednesday’s air mail.1