The Under Secretary of State (Welles) to the President of the Export-Import Bank of Washington (Pierson)

My Dear Mr. Pierson: Reference is made to discussions between officers of the Department and of the Export-Import Bank regarding the procedure to be followed in financing the rehabilitation of the Habana waterworks.

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As you know the residents of Habana are most anxious that this project be carried out as soon as possible, and the Department believes that it would represent a very useful and worthwhile civic improvement. The Department is therefore pleased to learn that officers of the Bank in their recent conversations with the Mayor of Habana and Dr. José E. Gorrin8 have been able to work out a tentative plan under which the project can go forward.

The Department has carefully considered the proposed plan, which provides in brief for the extension of a credit to a local Cuban nonprofit corporation to be organized by the Municipality of Habana, all the stock of which would be endorsed in blank and delivered to the Export-Import Bank, and to which the Municipality would assign the present waterworks system and all appurtenances, as well as an irrevocable right to exclusive use of the revenues therefrom and to which the Municipality would grant an operating concession for the life of the credit.

In view of the political difficulties involved in attempting to secure the guarantee of the National Government to the credit, as well as the delay and possible indefinite postponement of the starting of the project which would result from any such attempt, the Department does not believe that it would be advisable to insist upon such a guarantee at this time, especially as the Department feels that the alternative procedure developed by the Bank provides a satisfactory solution to the problem.

Sincerely yours,

Sumner Welles
  1. Partner in the law firm of Rosales, Gorrin y Mañas.