Memorandum of Conversation, by the Chief of the Division of Caribbean and Central American Affairs (Cochran)

Participants: Mr. John L. Harrison, Assistant Chief of the Inter-American Regional Office of the Public Roads Administration.
Mr. William P. Cochran, Jr., Chief, Division of Caribbean and Central American Affairs.
Mr. Robert Newbegin (CCA).

Mr. Harrison adverted to conversations which the Nicaraguans had had in the Department approximately a year ago with regard to [Page 171] our possible unfulfilled financial obligations resulting from the construction of the Inter-American Highway and the Rama Road.10 Mr. Harrison explained that the Nicaraguans did as we do in that they established a single fund for all road work and charged all expenditures to it. Total expenditures from this fund had amounted to $4,500,000. Work on the Inter-American Highway under the inter-governmental agreement and project statements had amounted to about $1,500,000, of which we had reimbursed Nicaragua in the sum of $1,000,000 as our ⅔ portion of the agreement, Nicaragua putting up the other The Nicaraguans took the attitude that we also owed them ⅔ of the remaining $3,000,000. We tried to explain to them that this obviously included work on the Rama Road (for which we are wholly responsible11) and all kinds of work done on the streets and highways of Nicaragua and chargeable wholly to Nicaragua. However, the accounts were in such bad shape that we were unable clearly to segregate these various items. An audit was undertaken and has now been completed.…

. . . . . . . . . . . . . .

It was made clear by Mr. Harrison that the Rama Road is an entirely separate project and that figures with regard to it are not included above. I asked him whether he thought it would be possible to complete the road for $4,000,000. He said that he doubted it. He intimated that 100 kilometers were already in very good shape and vaguely hinted that it might be possible to complete only 150 of the total of 280 kilometers with the funds at present available. I expressed concern and pointed out that we were committed to the Nicaraguan Government to build a highway to Rama and I thought that it should be completed, although not necessarily to standards used in the United States, emphasizing that the point was to get a through road rather than to build it to any particular standards. Mr. Harrison said that while it might be possible for them to work to lower standards than they were using, this would be an unsatisfactory method of operation, in that they were using the lowest standard possible from the point of view of future maintenance. The implication was that, were construction standards further reduced, the road would deteriorate rapidly, bridges possibly being washed out, etc., so so that it would be of progressively decreasing utility and greater expense to the Nicaraguan Government.

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I expressed concern at the possiblity of having to go back to Congress for additional funds to carry out this commitment to the Nicaraguan Government and asked Mr. Harrison if he felt that he could defend the use of his present standards and failure to complete the road within the sum of money allocated by President Roosevelt, in seeking additional funds from Congress. He stated that he felt it would be quite possible to do so and discussed at some length the increased labor and other costs with which PRA has been faced since the original estimate was made.

W[illard] P. C[ochran, Jr.]
  1. On April 1, 1945, President Anastasio Somoza’s instructions had been issued to the Nicaraguan highway department to cease work on the Inter-American Highway unless an agreement were reached with the United States on reimbursement of Nicaragua for work done on the highway. The Nicaraguan Embassy had informed the Department on February 21, 1945, that this Government was $1,600,000 in arrears on such reimbursements.
  2. Some $400,000 had been spent on the Rama Road.