837.51 Cooperation Program/59

The Cuban Secretary of State ( Cortina ) to the American Ambassador in Cuba ( Messersmith )83

[Memorandum—Translation]

I.

In view of the present state of the economic negotiations proceeding between the Government of Cuba and the Government of the United States and after a detailed study of all of the antecedents, the Government of Cuba believes that it is desirable, in order to assure a rapid and satisfactory accord, to simplify the questions raised in [Page 789] the negotiation in a manner to avoid the development of unnecessary confusion and delays.

We believe that aspects having no direct relation with the credit or loan which is requested should not be mingled with this negotiation.

The other questions of interest to both countries may be studied and considered in separate negotiations in the spirit of mutual cooperation within the field of political relations of the good neighbor and of the reciprocal friendship between the Government of Cuba and the Government of the United States.

To this end the following bases are suggested to the Government of the United States of America:

The Export-Import Bank will open an advance credit to be called a credit for agricultural development (fomento) which, according to the views exchanged, may reach as high as 10,000,000 pesos. This credit will be used by the Cuban Government for the specific purposes of agricultural development in undertakings which the Cuban Government considers necessary and useful for the progress and diversification of agricultural and stock raising activities in Cuba.

The Government of Cuba, on the basis of the credit granted for the purposes of agricultural development to which the preceding paragraph refers, will select the undertakings or activities which it considers best for these purposes. The study which is effected will include an estimate of the cost of the undertaking or activity in question, and will be made by the technical delegates designated by the Government of Cuba and by those whom the Export-Import Bank may designate.

Once the project is approved, the corresponding credit will be made available for each specific undertaking within the general credit authorized.

With regard to what may be denominated general public works which are not included within the concept of agricultural development, the Export-Import Bank will open an advance credit the minimum amount of which we desire to see determined. This credit will be used for the payment of the works which may be studied between the technicians of the Government of Cuba and the technical delegates who may be named through the medium of the Export-Import Bank and which are found to be of positive value to Cuban economy and useful to the development and transportation of production and for communication with the ports and mining zones, consideration being also given to works which increase strategic facilities of communication and defense.

In these public works consideration shall also be given to those which, owing to their importance and their social, economic, and hygienic results, should be carried out in certain cities.

[Page 790]

The payment of these works should be carried out through employment of a procedure analogous to that relating to agricultural development.

A method of certification of each work will be established to serve as a basis for the corresponding payments.

II.

During the current negotiations mention has frequently been made of self-liquidating works by which are understood those which on being completed produce from taxes or income sufficient capital to pay a part or all of the cost of the work.

The Government of Cuba considers that this point cannot be generalized because there are many works which produce a notable increase of wealth which is returned to the State by the ordinary channels of taxation and which nevertheless cannot directly produce sufficient receipts for their own amortization.

There are others which by their nature can produce income for their total amortization.

This indicates that it is impossible to adopt a general criterion and that it is necessary to have it understood that within the field of public works there will be some which are self-liquidating, either wholly or partially; and others which should be liquidated by means of special funds producing taxes which have been created for this purpose.

Cash Credit

In regard to the opening of a direct cash credit for the Government of Cuba, the latter considers that the immediate establishment of a central rediscount bank and of an agricultural credit bank connected with the said bank is fundamental for stabilizing currency, financing crops, and stimulating the circulation of wealth.

For these two purposes the Government of Cuba considers necessary the opening of a credit which shall be fixed in accordance with the elementary and primary necessities of both banks within the usual practices for the creation of organs of this kind.

The Government considers that the creation of these credit institutions facilitate the stabilization of currency and give a permanent value to all the projects of agricultural development and public works of a general character in view of the fact that they permit taking advantage of the favorable economic reaction which these works produce through the means of adequate employment of properly managed credit.

Form of Payment

The liquidation of the credits which the Export-Import Bank opens for purposes expressed above will be made from the permanently and [Page 791] completely guaranteed fund which is formed from the taxes created by the Law and from the product of the self-liquidating works, the several ways of payment to be established according to the particular work and the special cases.

In respect of the immediate credit of 4,000,000 pesos at the interest rate fixed by the Law of September 18, 1940, the Government of Cuba is undertaking the necessary legal studies to determine its position in this problem.

J. M. Cortina
  1. Copy transmitted to the Department by the Ambassador in his communication of December 26, 1940; received January 22, 1941.↩