837.51 Public Works Debt/295
The Ambassador in Cuba ( Messersmith ) to the Secretary of State
[Received March 21.]
Sir: With reference to conversations recently held on the subject of certain financial obligations of the Cuban Government, and their settlement, through action by the Cuban Congress, I have the honor to inform the Department that immediately after I had presented my [Page 746] Letters of Credence to the President of Cuba, it seemed desirable, in view of a number of important factors, to discuss with the Secretary of State and with the President of Cuba certain factors of importance in the economic situation which have a direct reference to Cuban welfare. I presented my Letters, as the Department will recall, at a moment when the political situation in Cuba was particularly tense and when active conversations were in progress between General Menocal, Colonel Batista and Dr. Grau San Martin. The objective of these conversations was to determine whether General Menocal would turn his political strength to Colonel Batista or Dr. Grau San Martin—it being apparent that General Menocal had come to the conclusion that it would serve him and his party no useful purpose for him to be a candidate himself.
Almost immediately after my arrival and already before I had presented my Letters, I was approached by a number of the political leaders indirectly who expressed the desire that they might have an opportunity to discuss the political situation with me, and it was quite clear from the nature of the inquiries that the objective of such conversations was to learn to which party or persons the Government of the United States was prepared to give preference. It was quite obvious that it was impossible for me to see any of these persons before I had presented my Letters and, as will be indicated later, it has been equally difficult to form any contact with any of them up to this time, desirable as such contact in some respects may be. It was quite clear that any conversations which I might have with any political leaders would be misinterpreted, perhaps by them, and certainly misunderstood generally. I therefore made it clear courteously, but effectively, that much as I wished to learn to know the leaders of political, business and cultural life in Cuba, it would be preferable for me to meet them after I had presented my Letters.
As there were so many misunderstandings as to the attitude of our Government with respect to the internal political situation in Cuba and the approaching electoral campaign, it seemed to me desirable for this and for other reasons that I should have an opportunity to see the President and the Secretary of State as soon as possible after I had presented my Letters. I thought that it should be made clear to the President and to the Secretary of State that our Government did not intend to intervene in any way directly or indirectly in the electoral situation and this seemed the more important as there were very serious misapprehensions current. It seemed to me also important that certain factors in our own domestic economic and political situation should be made clear to the responsible officers of the Cuban Government in order that they might better be able to appraise their own position.[Page 747]
There was particular urgency, I felt, in my seeing the President and the Secretary of State in view of the fact that I had reliable information that the Judge of the District Court in Boston, who is acting as the receiver for Warren Brothers, was under such pressure that he would have, within the next few weeks, to reopen the hearings for the revaluation of the assets of Warren Brothers. The attitude of the bondholders, whose patience has become exhausted, was such that it was quite clear that if such hearings were recommenced, and this seemed certain, that the rather sordid story of delays and broken promises in the settlement of certain claims would be told in Court. It is reasonable to believe that if this story should be told in the Court it would have a very unfavorable repercussion in our own Congress and increase the difficulties of our Government in holding the situation with respect to the present quota for sugar allotted to Cuba under the Sugar Act of 1937.26
Although it had been my intention to mention to the appropriate Cuban authorities at the earliest possible opportunity the desirability of reaching an arrangement with respect to these and certain other obligations of the Cuban Government, this situation which arose with respect to the hearings to be reopened in Boston made it necessary for me to make a frank statement of the situation. I therefore sought conversations with the Secretary of State and with the President and presented this matter to them in its broad outlines. I made it clear that the question at issue was much broader than the issue of the payment of certain individual obligations, but that the question was one of the maintenance and re-establishment of Cuban credit and the confidence of the American business community here and in the United States in the Cuban situation. I emphasized that without such collaboration in the present juncture of world events, and for the foreseeable future, the Cuban economy would be the one to suffer the most.
There is appended hereto a statement27 of the conversations which I had with the Secretary of State and with the President. There is no question that both of them understand the importance of action being taken by the Cuban Government without delay and before the present Congress expires on March 31, 1940. In view of the Easter holiday which intervenes, it is quite obvious that unless some action is taken before Friday of this week it is doubtful whether any action can be taken by the Congress on these obligations before the end of the month and the closing of the Congress. The President and the Secretary of State are fully alive to the desirability of settling this matter on which there is such a long record of broken promises and failure to meet acknowledged obligations. The President has been [Page 748] holding conversations with various Senators, and yesterday had the hope that he had convinced a sufficient number of them to vote the bill now before the Cuban Senate which would bring about a settlement which represents an agreement between the creditors and the Cuban Government. A meeting of the Senate was called therefore last evening to discuss this matter and to pass the bill. No action was taken as a quorum was not present, although there were sufficient Senators in the lobbies to make up a quorum. …
I am reliably informed that the President and the Secretary of State have been very much concerned over the failure of the Senate to pass this bill last evening, and I understand that the President is today holding further conversations with individual Senators to impress upon them the importance of the passage of this bill and a settlement of these obligations as a step towards the reestablishment of confidence in the Cuban economic and financial situation. There is reason to believe that Colonel Batista and General Menocal are both interested in the passage of this bill. It seems clear that General Menocal has requested the Senators who follow his leadership to vote for it. It seems equally clear that Colonel Batista has expressed the same wish to the Senators of the Coalition, but it is equally clear that some of them have failed to follow his wishes …
The appended memoranda of conversations28 will indicate to the Department that I have presented this matter to the President and to the Secretary of State in such a manner as not to bring to bear any pressure of any kind, but to show how important such action is at this time for the maintenance of the Cuban economy and financial situation. I have used every appropriate effort in order to make it clear that this step is one which should no longer be delayed because of the importance which it has and of the unfortunate results which the reopening of the hearings in the Warren Brothers’ receivership in Boston may have. I have tried to make it clear that, while procrastination and a certain degree of irresponsibility in meeting promises given may have been undesirable in the past, a point has now been reached where failure to take appropriate action may have serious consequences and may make it exceedingly more difficult for our Government to maintain the sugar situation.
There is reason to believe that the President and the Secretary of State are fully alive to the situation and are making every effort in order to secure the passage of this bill covering the Public Works obligations before the end of this week by the Senate and then by the House during the early days of next week. Whether they will be able to convince a two-thirds majority of the Senators remains to be seen. I think the most that can be said is that there is at least now a greater [Page 749] prospect for the passage of this legislation than there has been at any time in the past. Whether this means that the legislation will actually be passed before the end of the month remains to be seen. I have wished to make it clear to the Department that I have done everything which I properly could to present this matter to the appropriate authorities of the Cuban Government.
It would have facilitated the situation if I could have had direct conversations with political leaders, which would ordinarily be quite proper for me to do. It was my hope until yesterday to be able to do this and my intention to do it. In view of the intensive conversations which have been in progress between the three principal persons concerned in this situation it has, of course, been quite impossible for me to follow out this line of action. Anything which I would have done toward seeing such leaders, and anything which I might have said to them, would unquestionably have been misconstrued or misused by some of them or by others for their own purpose. Now that it appears that Colonel Batista and General Menocal may have reached a definitive agreement with regard to cooperation in the approaching elections, it may develop that this impediment to my contact with leaders of Cuban opinion may be removed. In spite, however, of the importance of this legislation being passed by the end of the month, I still believe that it is too early for me to run the risks of engaging in direct conversations on any subject with leaders of political opinion. The risks involved in the misinterpretation which might be placed on my action are still too great.
I shall not fail to keep the Department informed as to further developments in this situation.