837.51 Cooperation Program/66

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

No. 1914

Sir: I have the honor to refer to the series of despatches in which I have reported on the conversations of an informal and exploratory character which I have had with President Batista, and with the Minister of State, Dr. Cortina, with reference to possible economic and financial cooperation between the United States and Cuba, and to transmit herewith a copy of a Memorandum, dated April 15, 1941, together with a translation thereof, which the Minister of State handed to me yesterday, in which the Cuban Government makes a request that as immediate consideration as possible should be given by our Government to the opening of credits for public works and agricultural diversification projects in Cuba. In delivering this Memorandum, which has the specific approval of President Batista and the members of the Cabinet, Dr. Cortina made certain observations with respect to these credits which will be of interest to the Department, but which time does not permit me to convey in this despatch. I am leaving for Washington this evening for consultation and I shall, on my arrival in the Department, give further appropriate background with respect to the observations made by the Minister and with respect to the informal conversations during the past three months.

I confine myself at this moment to saying that it is my considered opinion that the Cuban Government has made adequate progress in the fulfilment of the observations which, under the Department’s instructions, I made to President Batista and to the Minister of State, to warrant our proceeding without delay with a determination of the amounts of the credits to be extended. It would not, in my opinion, [Page 148] be wise to delay concrete and formal action with regard to these credits.

Respectfully yours,

George S. Messersmith
[Enclosure—Translation]

The Cuban Minister of State ( Cortina ) to the American Ambassador ( Messersmith )

Memorandum

1.
—The opinion of the Government of Cuba with regard to a possible economic agreement with the Government of the United States of America, through the Export-Import Bank, was expressed in the note from this Ministry dated December 24, 1940.64
2.
—We consider that these conversations are held on the basis of the repeated expression of good will and economic cooperation offered by the Government of the United States of America, in an explicit manner; and therefore we believe that the time has come to concrete the real and practical possibility of said cooperation.
3.
—To this end, we reiterate the necessity and convenience of not discussing prior questions, of a nature distinct from the financing, so that this may be brought about. Any other method, in addition to being complicated of itself, would lead us to extended delays and to an evident confusion of problems.
4.
—We are desirous of negotiating and discussing the possibility of a loan, a financing or a credit, to be used for agricultural development and public works. We believe the essential point of this operation is to agree on the form of payment and the security which the Government of Cuba should give in order that the Export-Import Bank may grant it the said credits. This is the method that has always been followed in negotiations between Cuba and the United States, and we see no special reason for the abandonment of this method, through which, up to the present time it has been possible to agree satisfactorily, between the Government of Cuba and that of the United States of America, upon all matters of this nature.
5.
—However, we see no objection in declaring that we are willing to have the Cuban Ambassador to the United States proceed to get in contact with the representatives of the so called Morris claim, in order to reach with them an agreement as to payment that may be satisfactory to both parties. We do this because it is the criterion of this Government at all times to liquidate such obligations as have [Page 149] been properly clarified and fixed by the Courts of Justice, and there is no doubt that this is the case with regard to the Morris claim.
6.
—We believe that the matter of the reduction of budgetary expenditures is a very complex problem which the Government of the United States cannot fail to appreciate is closely connected with the European war, with deep social problems and with local circumstances and special conditions of each country, that cannot be judged hastily and easily through the negotiation of a loan, but that these matters should be left to the initiative of each Government itself according to a better knowledge of its interests and with the upright intention, which every honest Government should have, of properly administering its affairs. Naturally, the Government of Cuba, as is the case with the Government of the United States itself, has the intention of eliminating every expense that it may be possible to eliminate or which may be unnecessary, and to reduce the amount of the budget in the measure and form that the national needs may permit.
7.
—To this end the Government of Cuba has already taken and will continue to take every action of a fiscal nature or administrative character which it might consider necessary for its purpose of good administration. The recent activities of the President, Colonel Fulgencio Batista are well known, whose energetic action to eliminate high officials and correct deficiencies in the administration of the State have received international cognizance and have merited the warm congratulation of the Government of the United States of America. We believe that in this respect there is absolute proof of the firm purpose of the Government of maintaining and carrying forward an efficient, upright and competent administration.
8.
—With respect to the possibility of appointing a commission to convoke all the possible claimants of the Government of Cuba that there might be among American citizens, we believe this to be absolutely unnecessary, because we have no information with regard to any appreciable or important claim made upon the Government of Cuba by any American citizen, that has not been settled, with the exception of the Morris claim.
9.
—The Government of Cuba can take pride in saying that it figures among the first of Spanish-America, in so far as regards the satisfactory solution with the Government of the United States of all pending claims, and it cannot be possible to forget that Cuba was the first nation to pay the total of its war debt to the United States of America; as well as that the so called Public Works bonds and obligations have already been the subject of full and satisfactory liquidation, that they are earning their respective interest and are in a completely normal state.
10.
—This Commission would be the basis for the creation of difficulties and its international effect would place Cuba in a position of inferiority, making it appear as a constant field of claims which do not exist; a situation that is not reasonable, due to the foregoing arguments.
11.
—At any time that a concrete and just claim, properly recognized by the courts, is presented to the Government of Cuba by an American citizen, this Government will give it immediate consideration. We believe, therefore, that any project calling for special commissions for the purpose of convoking claimants, should be abandoned.
12.
—With respect to the treaty of residence and navigation the negotiation of which was started some time ago, the Cuban Government will, in turn shortly, formulate the remarks that it deems proper, within the spirit of good friendship that exists between both countries. It is our intention to handle the discussion of this negotiation in a relatively rapid and effective manner.
13.
—With respect to the problem of the quotas of the American mills, with regard to the so called refined or direct consumption sugar, the Government of Cuba has no inconvenience in assuring that it will maintain the American mills in the same proportion in which they have been enjoying this advantage. And with reference to the other sugar problems, in the Law for the financing of the 400,000 tons, the Government and Congress of Cuba, heeding the wishes of the Government of the United States, has indefinitely extended the life of Decree-Law No. 522 which regulates the quota system and the Sugar Institute. This has been done to the complete satisfaction of the American and Cuban sugar producers and of the Government of the United States, and we are pleased to advise that this extension and provision has been requested on repeated occasions by the Government of the United States, which has given extraordinary importance to the same and has expressed, that once these were in force, the pending economic problems would find an easy and rapid solution. This has been done by the Government of Cuba in strict fulfilment of the promises exchanged by the Foreign Offices.
14.
General consideration. From the above statements the position which the Government of Cuba adopts and maintains with regard to the possible financing may be very clearly observed, and the evidence that there exists no problem which due to its magnitude should be considered a prior requisite for something as important as is the definition and fixing of the limits, the manner and form in which the Government of the United States will fulfil the promise that it has repeatedly made to this Government, of economic cooperation.
15.
—It is our purpose, in accord with the reasons expressed above, to carry forward all the intentions that have been heretofore stated, and the acts of the Government, up to this time, are evidence of the [Page 151] fact that our words are confirmed by our deeds. For this reason we believe that the negotiation with the Export-Import Bank should be made, in a concrete and direct manner, with regard to the financing and its payment, and with regard to the works and constructions that should be carried out.
16.
—Before making our definite proposition, after the statement of ideas we have just made, we cannot fail to express to the Government of the United States the appreciation of the Government of Cuba for its friendly and valued cooperation in making possible the financing of 400,000 tons of sugar, as was requested by the Government of Cuba, which cooperation we appreciate greatly because it has very specially benefited the working classes of Cuba in view of the serious crisis caused by the reduction of the exports of sugar from this country to Europe.
17.
Proposition. Having made the above points clear, we are ready to repeat the propositions which we formulated with regard to the financing in our memorandum of December 24, 1940. These propositions are the following:
a)
The Export-Import Bank will open a credit for the Republic of Cuba up to ten million dollars, to be used for the payment of the execution of projects of agricultural development.
b)
The Export-Import Bank will open another credit of twenty million dollars, to be used for the payment of general public works not included within the item of agricultural development.
c)
In connection with the Habana Waterworks, the Government of Cuba repeats that said aqueduct belongs to the Municipality of this capital and that, in accord with the Constitution of the Republic, the Government of Cuba has no authority, intervention nor direct action as regards said Waterworks or its financing, but the Government of Cuba, greatly appreciating the good will of the Government of the United States, has no objection to lend its good offices to the end that the Habana City Council carry out, within adequate legal methods, a negotiation with the Export-Import Bank, leading to the financing of that important and necessary sanitary work, although it does not wish that the credit granted therefor be charged to the general amount of the financing, since these being different matters and responsibilities foreign to the Government, it is not logical to have the payment for this work, which is amply secured, be deducted from the credit that is directly granted to the Government of Cuba.
18.
Method of carrying out the work. The Government of Cuba believes that once the Export-Import Bank has definitely accepted the opening of the credits for the financing of works of agricultural development and of public works of the kind mentioned in our above mentioned memorandum of December 24, 1940, the method of execution of these works and of using said credits shall be regulated on the basis that the technicians of the Export-Import Bank, together with the technicians of the Government of Cuba, shall select on the ground [Page 152] the works of agricultural development and the public works of a general nature that are considered most advantageous and useful to the economy, the development of the country, the sanitary improvement and strategic preparation.
19.
—The Government of Cuba accepts this prior requisite in order that use may be made of the respective credits that may have been opened by the Export-Import Bank, to be used for those purposes. In this way, all the difficulties and objections which might arise in practice and in the execution of said works, are met.
20.
Method of payment. It is difficult to understand, in connection with the payment of the credits requested from the Export-Import Bank, that any other method should be followed than that of the creation of a general amortization fund, to which shall be charged the payments which, with respect to each one of the works executed, shall be made.
21.
—Mention has been made of works of different kinds, those of a general nature as well as those known as of agricultural development, and they have been classified, some as self liquidating and others, as of a general character. This, as an explanatory denomination, is a good method, but which can have no direct relation with the payments.
22.
—It is not possible to establish a good financial system of liquidation if each work, separately, is to have a separate loan, with its own maturity. This would lead us to an economic confusion absolutely beyond every financial rule in this kind of operation.
23.
—The way or method which we consider feasible is to establish or devote a series of sufficient taxes, properly guaranteed, for the formation of an adequate fund for the payment of amortization and interest, of the securities that may be issued.
24.
—Through the use of this method, the contracting of the financial operation of credit would be simplified. The problem consists in fixing the interest and the periods of amortization within the proportion and the estimate of the fund created for this purpose.
25.
—The Republic of Cuba has at no time failed to fulfil its obligations of an international character and its loans. The public securities of the Republic of Cuba have at the present time the highest quotations in the market of Spanish-American securities, and their issues are freely accepted in the Exchanges and by investors of all countries. They enjoy, therefore, a guaranteed credit, which permits us to undertake a new loan negotiation in the assurance that we will have the necessary funds and the due and constant will of paying the same off.
26.
—With respect to the special credit of $4,000,000 which has been referred to in notes and conversations, the Government of Cuba believes that it is best not to treat it as an isolated negotiation, but to [Page 153] include it as part of the general financing, in the form and under the terms that may be agreed upon.
27.
—Having expressed our viewpoint with regard to the method that we consider most practical and rapid to bring about the payment of the obligations that may be contracted by the Government of Cuba, this Government is willing, in turn, to hear the suggestions which, in the same sense and as counterproposals to our ideas, the Export-Import Bank may consider it convenient to make.
28.
—We have summarized in this exposition the viewpoint of the President of the Republic and of this Ministry, with regard to the best method for reaching a practical conclusion in the negotiations which we have been carrying on already for some time. Naturally, due to the urgency of the matter and to the serious problems with which the country is faced, we desire to know, with all the possible haste, the good disposition which the Government of the United States may definitely have, through the Export-Import Bank, in connection with these negotiations, and we have no objection in ratifying that all matters foreign to the financing, which have been discussed incidentally, shall be properly attended to by the Government, within a program of good administration.
J. M. Cortina