The Chargé in Cuba ( Wright ) to the Secretary of State

No. 9449

Sir: I have the honor to refer to the Embassy’s despatch no. 8543 of January 5, 1945, entitled “Claims of United States Nationals,” and to report that, after an extended series of conversations with President Grau and Minister of Finance Supervielle, a modus operandi seems to have been achieved for the gradual payment of recognized claims accruing since the adoption of the Constitution of 1940.

According to the constitutional interpretation of the present Government, claims accruing prior to the adoption of the Constitution have become a fixed part of the floating debt, which can only be fiscalized or liquidated after the Congress has complied with the constitutional mandate to establish a Tribunal of Accounts. As reported in the Embassy’s despatch no. 9050 of March 27, 1945,25 entitled “Prospective Establishment of a Tribunal of Accounts to Regulate Cuban Government Expenditures,” legislation to this end has now been introduced with full administration support, and final enactment may occur during the current year. Since the Tribunal, however, would consider claims of Cuban as well as foreign nationals, the task of securing prompt and full payment of valid United States claims prior [Page 964] to 1940 may be one of considerable complexity, despite President Grau’s confident assurances in this matter.

As regards the claims accruing since 1940, however, the Government takes the position that the constitutional limitations described above do not apply and that current surplus funds may be used to effect payment. In the specific case of the Isle of Pines Steamship Company, whose claims go back to 1924, the Treasury has just given a check for some $30,000 to cover 1944 and 1945 charges and has promised the balance of some $90,000, embracing the years 1940–43 inclusive, by September next. This case was strongly supported by the Embassy both as a hopeful precedent and in order to avert the possible financial collapse of a 100 percent American-owned utility serving the vital transportation needs of the Isle of Pines.

Cuban budgetary legislation theoretically prohibits payment of accounts accruing during the previous fiscal year after the budget for that year has been liquidated, but in practice this restriction is not always observed. The assurances given by Dr. Grau and Dr. Supervielle indicate that they intend to disregard this restriction in the case of the post-1940 claims of United States nationals. The President is not sure whether all such claims can be paid by September but he has definitely stated that they would be met just as quickly as cash on hand permits.

In order to avoid discrimination in favor of any one claimant, the Embassy a month ago proposed to the American Chamber of Commerce that it make use of its facilities to secure complete and up-to-date figures from each member who may have claims against the Cuban Government which have been sustained by the courts or admitted as valid by an administrative agency. The Chamber committee has acted in this matter without mentioning the Embassy’s interest, but will provide the assembled data for official use in future representations to governmental authorities. Under the Constitution no disbursements by executive decree may be made while Congress is in session, but it is hoped that a series of specific commitments may be concluded on the basis of the Chamber’s figures during the summer recess.

I believe that President Grau is entirely sincere in his desire to reach an early settlement of the whole claims issue, and that the constitutional formula suggested by Supervielle for post-1940 claims is welcomed by him as a means of liquidating at least one segment of the problem. The present records of the Embassy would indicate that these more recent claims do not amount to more than a quarter of the total due to United States nationals, but this conclusion may be modified by further study of the exact statements received from the Chamber [Page 965] of Commerce. In any event, I feel that a profitable and practicable approach to the question has been found, without any compromise or quid pro quo on our part.

In this connection, an interesting insight into President Grau’s motivation was revealed when he observed to Ambassador Braden in the course of the recent conversation that former President Estrada Palma26 had invited revolution by amassing a current surplus of some twenty million pesos. In order not to put undue temptation in the way of his “gangster” compatriots, Dr. Grau continued, he would utilize accumulating funds for the payment of just debts and for constructive public works. It will be to our interest to assure that he does not forget this very sagacious observation.

Respectfully yours,

James H. Wright
  1. Not printed.
  2. First President of Cuba, May 20, 1902, to September 28, 1906.