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

No. 499

Sir: Reference is made to your despatch No. 513, dated July 20, 1942, concerning the establishment of a central bank and stabilization fund in Cuba.

As you are aware the Cuban Government has long been interested in terminating the dependence of Cuba on dollar currency and in establishing in Cuba an independent monetary system and appropriate institutions for the control of money and credit. The Department has recognized not only the need for such institutions in Cuba but also that the wishes of the Cuban Government with respect to these matters represented the legitimate aspirations of an independent country. In response to the request of the Cuban Government, the Department was accordingly glad to use its good offices in obtaining for Cuba the services of highly competent experts of the Treasury Department and the Federal Reserve System to study Cuba’s monetary and credit needs and to make appropriate recommendations to the Cuban Government.

The report of the American Technical Mission to Cuba has been carefully studied in the Department and the Department was given an opportunity to express its views to the members of the Technical Mission before the report was submitted in final form to the Cuban Government. As the Embassy knows the report was transmitted through this Department to the Cuban Government and presumably therefore had the general approval of the Department.

The basic policy of this Government toward the establishment of the Cuban central bank and stabilization fund has thus already been determined; namely, to assist Cuba in every appropriate way, particularly by the providing of technical advice and assistance. It would not be in accordance with the fundamental policies of the Department with respect to Cuba and to the other American republics in general to attempt to delay the establishment of the Cuban central bank and stabilization fund merely because of the possibility that such institutions, however well designed, might not be properly managed. Were this not the case it should be apparent that the Department would have long since advanced its objections rather than wait to make such objections until a technical mission composed of officials of other agencies of this Government had submitted their report through the Department to the Cuban Government and that Government had prepared draft legislation on the basis of the recommendations contained therein.

It is the view of the Department that the appropriate course for the Embassy to follow with respect to the legislation under reference [Page 308] would be for the Embassy to support informally and as occasion may arise the basic recommendations of the American Technical Mission, particularly when the proposed legislation is in conflict with the specific recommendations of the Technical Mission and where such departures from the Mission’s recommendations would appear likely to work undue hardships on American banks and indirectly on Cuba’s own basic interests. In this connection the Department refers you specifically to the Fourth Report to the Cuban Government under date of July 15, 1942, “Comments on the Draft Banking Legislation.” The Embassy might on suitable occasion, for example, draw the attention of appropriate Cuban officials to the views of the Mission with respect to the powers granted to the Inspector General of Private Banking in Titles 4 and 5, (see page 19), and to the comments of the Mission with respect to Title 5, chapter 2, article 16, requiring 40 per cent of the profits of commercial banks to be turned into a contingent reserve, (page 21). Similarly, your attention is called to the provisions discussed on pages 22 and 23 relating to restrictions on investment abroad and measures which in the opinion of the Mission would impede unduly the use of dollar deposits.

The Department shares your hope that the proposed legislation will be carefully considered by the Cuban Congress and that opportunity will be given by public hearings for interested parties to express their views.

There is enclosed for your information a copy of a memorandum prepared in the Financial Division of the Department65 commenting point by point on the views expressed in the Embassy’s despatch under reference.

Very truly yours,

For the Secretary of State:
Sumner Welles
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