Office of the Historian

837.51 Public Works Debt/325

The Ambassador in Cuba (Messersmith) to the Secretary of State

No. 590
Habana, July 24, 1940.
[Received July 25.]

Sir: I have the honor to refer to my confidential despatch No. 572 of July 17, 1940, and my No. 577 of July 19, 1940, with reference to the obligations due Warren Brothers and Purdy & Henderson. I now have to transmit herewith a memorandum of a conversation34 which I had with President Laredo Brú on July 23, together with a copy of the aide-mémoire which I left with him. As these are self-explanatory, I am not making any further comment at this time.

It is my intention to see Colonel Batista today or tomorrow with respect to this matter.

Respectfully yours,

George S. Messersmith
[Enclosure]

The American Ambassador (Messersmith) to the President of Cuba (Laredo Brú)

Aide-mémoire

It has been reported that the Finance Committee of the House of Representatives will meet shortly to consider the two bills presented recently to that body providing for the service of the remainder of the Public Works Debt.

The American creditors, Warren Brothers, Inc., and the Purdy & Henderson Company, have furnished the Embassy with a draft, prepared by competent counsel, which would bring the so-called Casanova project, introduced into the Senate in November, 1938, and the so-called Grave de Peralta project, introduced in the House of Representatives recently, up to date so far as revisions are necessary to cover [Page 755] the lapse of time since the agreement between the creditors and the Cuban Government was reached. A copy of this draft, marked (a), is attached. The Embassy is informed that the principal changes from the so-called Casanova project are as follows:

The Casanova project was to be dated January 1, 1939, and was to be amortized by 1953.

Project (A) calls for an issue bearing date of January 1, 1940, to be amortized by 1954.

The Casanova project calls for cancellation of coupons 1–2 and 3 on the Bonds of 1977. Project (A) calls for cancellation of coupons 1–2–3–4 and 5.

The Casanova project gives the Cuban Government 180 days for issuance of new bonds. Project (A) reduces this period to 120 days, to keep the settlement in 1940.

Project (A) also provides that both interest payments for the year 1940 be made on December 31, 1940. This is done as the first semester has passed.

The Embassy is informed that the project, if approved in the form suggested, would represent a cancellation of an additional year’s interest (1939), representing a loss of $391,630 to Warren Brothers, Inc., and of $53,127 to the Purdy & Henderson Company. However, the Embassy is informed that these companies, as evidence of their willingness to cooperate in reaching an immediate solution, are prepared to accept these additional losses.

Habana, July 23, 1940.

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