837.51 Cooperation Program/109
The Ambassador in Cuba (Messersmith) to the Secretary of State
[Received June 30.]
Sir: I have the honor to refer to previous correspondence with respect to the credit for $25,000,000 extended by the Export-Import [Page 185] Bank to the Cuban Government for agricultural diversification and public works projects. It will be recalled that in my despatch No. 2196 of June 17, 1941, I reported fully on the conversations which took place between Mr. Pierson of the Bank and his associates who accompanied him, and the Cabinet Committee of the Cuban Government which is handling this matter. Mr. Mersereau, an attorney of the Bank, remained in Habana after the departure of Mr. Pierson in order to collaborate with officials of the Cuban Government, at their request, in the preparation of a draft of the authorizing act which must be voted by the Cuban Congress. Mr. Mersereau worked principally with Dr. Oscar García Montes in the preparation of the draft, but I understand that they were in more or less communication with the Prime Minister, Dr. Saladrigas, and Mr. López Castro.
At about 10 o’clock in the evening on June 24, Mr. Mersereau called me on the telephone to say that he had had a message over the telephone from Dr. García Montes to the effect that President Batista had raised certain objections with respect to the final draft.
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I had an appointment to see the Minister of State on June 25 which appointment he could not keep as he was taken ill. I saw him yesterday afternoon and he took up with me the matter of the draft bill for the credit. Dr. Cortina stated that he, Dr. Saladrigas, Mr. López Castro and Dr. García Montes had made excellent progress in going over the draft bill with the President on the afternoon and evening of June 24. The President raised objection to the ten-year amortization period which is provided for in the law on the following basis.
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Dr. Cortina said that he thought the attitude of the President was justified and that in the conversations with him and the President I had indicated that one-half of the loan would have to be paid in ten years and the Bank would favorably consider an extension of the second half of the loan if amortization and interest charges had in the meantime been met promptly. I had spoken of this extension as for another ten years. I reminded Dr. Cortina in this connection that he was correct in his recollection of most of what I had said, but that I had not mentioned a period of a further ten years. I had said that at the end of ten years the Bank would be prepared to consider an extension of the second half of the loan but I had not indicated any specific time, but that we had generally spoken of a possibility of a period of ten years for the second half.
I asked Dr. Cortina whether the President and the Committee had any major objections to raise to the draft bill prepared by Mr. Mersereau and Dr. García Montes in other respects. He said that [Page 186] they had no such objections to raise to his knowledge. They considered that the draft bill on the whole was an excellent piece of work. There were two principal points, Dr. Cortina said, to be cleared up:
1. Whether it was in the opinion of the Bank necessary that the taxes should be sufficient to cover the amortization and interest of the whole credit in ten years;
I told Dr. Cortina I would consult the Bank immediately about this but that I could naturally not give him a responsible answer now. It was my personal opinion, however, that the Bank had in no sense insisted that the taxes cover the amortization and interest charges on the $25,000,000 during the first ten years. Mr. Mersereau was familiar with the letter dated May 2, 1941,84 which Mr. Jesse Jones, the Federal Loan Administrator, had addressed to me. It was my understanding from Mr. Mersereau that it was Dr. García Montes who had insisted in the drafting of the law that the taxes provided should cover full amortization and interest during the ten-year period, including the 52 percent instalment at the end of ten years. Dr. García Montes had stated that this was necessary under the Cuban Constitution even though the twentieth payment would not have to be made in full at the end of ten years. I ventured the personal opinion that so far as the Bank was concerned it would consider the taxes provided in the authorizing act satisfactory if they provided amply and liberally for covering the amortization and interest payments for one-half of the loan during ten years and if the taxes voted would be permanent in the sense that they would apply exclusively to the amortization and interest of the loan until it was fully repaid under any extensions which might be granted by the Bank.
I would very much appreciate a statement from the Bank as to what may be said to the Cuban Government in this respect.
2. Dr. Cortina said that, at the request of the President, he wished me to consult my Government as to whether I could address a Note to the Cuban Government quoting the text of the letter of Mr. Jones to me dated May 2, 1941, and stating that at the end of the ten-year period our Government would recommend to the Bank, or its successor, the extension of the second half of the loan as provided in the letter of Mr. Jones.
Dr. Cortina said that the President was of the opinion that if such a Note were addressed to the Cuban Government, it could be kept in confidence and would not have to be given any publicity whatever, but it would provide the protection which the President felt he must have.[Page 187]
I told Dr. Cortina yesterday afternoon that I would consult my Government and the Bank immediately with respect to the two points above mentioned. I said that I believed it would be possible to get a favorable answer in both respects. With regard to the question of the taxes, this was a question, according to my understanding, which had been raised by Dr. García Montes and not by Mr. Mersereau. I myself was of the opinion that the taxes provided should liberally cover the repayment of the first half of the loan in ten years and be voted in the law in such a way that they would continue and be reserved for the payment of amortization and interest for the second half during the period of extension which would be granted.
With respect to the desire of the President that there should be a Note from the Embassy, I quite understood his position on this point. I did not see any reason why my Government should not authorize me to address a confidential Note to the Minister of State quoting, or conveying, the contents of the letter of Mr. Jones to me of May 2, 1941, and conveying at the same time the assurance that my Government at the end of ten years would support the request of the Cuban Government for an extension of the second half of the loan provided interest and amortization charges had been met.
Dr. Cortina said that he would take up this matter with the President and get in touch with me. He communicated with me this morning to say that he had had a long talk with the President this morning and he felt quite confident that if we worked out these two points along the lines above mentioned there could be agreement on the draft law very quickly. The President was going out of town today for the week-end, and that he, the Minister of State, Dr. Saladrigas, Mr. López Castro and Dr. García Montes would have a meeting with the President on Monday, June 30, after which he would communicate with me. In the meantime he would ask Dr. García Montes to take the draft law and change it in the sense that the taxes voted would only have to cover one-half of the loan during the first ten years. The taxes voted, however, should be “amply liberal” to provide for adequately meeting of all amortization and interest charges on the first half of the loan during the first ten years. As soon as Dr. García Montes had completed the draft in this sense he would see that copies would be made available to our Government and to the Bank.
On my side, Dr. Cortina said that he would ask that I communicate immediately with my Government to determine whether it will authorize me to address a confidential Note to the Minister of State quoting or giving the text of Mr. Jones’ letter, above referred to, and giving the assurance of my Government that it would favorably [Page 188] support an extension of the second half of the loan at the end of ten years.
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As no action with respect to the credit may be undertaken until this authorizing act is completed, and as the President is awaiting calling the Congress into session, after the draft bill has been agreed upon, it will be very much appreciated if action on this despatch can be facilitated. …
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- Not printed.↩