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

Participants: Mr. E. W. James, Chief, Inter-American Regional Office, Public Roads Administration.
Mr. William P. Cochran, Jr., Chief, Division of Caribbean and Central American Affairs.
Mr. Fred G. Heins, Political Economist (CCA)
Mr. Murray M. Wise, Desk Officer (CCA)

Mr. James called this morning and let me read the first draft of his memorandum of his conversation with President Somoza.12 Mr. James had just returned from Nicaragua, having gone there to discuss the outcome of the recent audit of the road accounts. The report stated in brief that by approving certain expenditures in excess of agreement amounts, and bringing other accounts up to date, we were in the position of owing approximately $500,000 to the Nicaraguan [Page 176] Government. This figure was apparently accepted by the Nicaraguan officials present.14

Mr. James then adverted to certain purchases made by Nicaragua of private firms in the United States, the PRA having urged the American firms to supply the equipment desired. These accounts amount to some $154,000 and Somoza agreed that it would be entirely satisfactory to have PRA pay these American exporters from the amounts due from PRA to Nicaragua. Mr. James said that what he would do would be to take the 13 principal items and have them billed direct to PRA, which would then be able to pay them out of the funds due to Nicaragua.

During the meeting, the question arose of Nicaragua’s being in arrears in its payments on its loan from the Eximbank 15 and President Somoza also expressed a desire to have this sum paid out of the half million dollars available. The question of how this could appropriately be done was raised and Mr. Cochran suggested that Mr. James discuss this carefully with his legal advisers. It was pointed out that it might be possible to make the check payable to the Nicaraguan Embassy here, which would then endorse it over to the Export-Import Bank. This would leave some $250,000 available to the Nicaraguan Government.

While in Guatemala, Mr. James met a Colonel MacNamara of the United States Army Engineers, who was attempting to collect some $167,000 due to the USED for supplies and parts turned over to the Nicaraguan Government when USED abandoned its Pioneer Road project. This is the first Mr. James had heard about the matter. Mr. James mentioned this account to Ambassador Warren, but the latter did not feel that we should press President Somoza to pay it out of the remaining $250,000 mentioned above, since he equally had heard nothing of the case up to this point.

The memorandum of conversation also indicated that President Somoza had expressed interest in pressing work on the spur section of the Inter-American Highway from Matagalpa to Jinotega16 and that Mr. James agreed to do so.

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

We then discussed PRA’s activities as regards the construction of the highway to and the runways of the new airport in Panama.17 (Reference: Despatch no. 1250 of April 2, 1946 from Panama.18) [Page 177] Mr. James read the despatch and agreed that the matter could be worked out on the basis suggested therein. However, he suggested that this should be discussed with Captain Curtis of PRA. He expressed his personal opinion that Mr. Humbard was motivated somewhat by his desire to continue in his present employment in Panama. He was informed that our concern sprang from two reports which we received of recent newspaper attacks upon PRA for its construction activities in Panama.

W[illard] P. C[ochran, Jr.]
  1. Not printed.
  2. A copy of the completed audit was transmitted to Mr. Cochran by Mr. James in a letter of June 20, 1946 (810.154/6–2046).
  3. See airgram A–58, March 5, to Managua, p. 1085.
  4. For documentation on this route agreement, see Foreign Relations, 1944, vol. vii, pp. 187 ff.
  5. For documentation on this subject, see pp. 1167 ff.
  6. Not printed.