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

No. 345

Sir: Supplementing my despatch No. 336, of May 28, 1940,54 I have the honor to report that a revised transitory provision covering the [Page 770] moratorium was approved, as a whole, by the Constituent Assembly at about a quarter of three this morning. A copy of the new provision as taken from the press is enclosed.55

It will be noted that amortization periods have been slightly lessened—10 years for obligations not exceeding $10,000; 15 years for those between $10,000 and $20,000; 20 years for those between $20,000 and $50,000; 25 years for those between $50,000 and $100,000; and 30 years for those exceeding $100,000.

Interest rates have been increased slightly in the small categories. Up to $10,000, the new rate will be 3½%; between $10,000 and $20,000, 3¼%; between $20,000 and $50,000,3%; between $50,000 and $100,000, 2¾%; between $100,000 and $200,000, 2½%; between $200,000 and $400,000, 2%; between $400,000 and $600,000, 1½%; between $600,000 and $800,000, 1¼%; and above $800,000, 1%.

With reference to sugar mill debts contracted between August 15, 1934, and September 4, 1937, as a concession to the theory that such debts should not receive the same treatment as debts now subject to moratoria, Article 10 provides that the amortization period for such new debts shall be reduced by one-third.

It will thus be seen that the transitory provision approved by the Assembly last night has slightly modified the previous draft, in the three directions suggested in the Department’s telegram No. 60, May 28, 6 p.m.

Otherwise, the project is very much the same as that transmitted with my despatch No. 323, of May 24,55 including the special cases, or what are known locally as “pictures.” In the latter connection, I am enclosing a translation of a memorandum55 which the Embassy considers reliable and which identifies certain of the private cases included in the present project. It will be noted that Assemblyman Cortina, Carlos Manuel de la Cruz, and Carlos Miguel de Céspedes are especially favored.

It is understood that now the proposed transitory provision must be voted upon, article by article. This will furnish an opportunity for amendments.

The debate in the Assembly last night was very lively. Quintín George and Martínez Sáenz eloquently opposed the draft which was finally approved, maintaining that it was being railroaded through the Assembly without proper study and without proper consideration and that, far from being intended to protect the masses, it was devised to enrich the few.

Discussion of the proposed transitory provision will be continued today.

Respectfully yours,

George S. Messersmith
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