The Ambassador in Nicaragua (Warren) to the Secretary of State
[Received December 17.]
Sir: I have the honor to refer to the Embassy’s despatch no. 1215 of November 22, 1946, entitled “The Rama Road”23 and in that connection to report further developments in Managua.
In order that the persons chiefly concerned might know the results of my conversation with President Somoza as reported in the despatch under reference, I requested Mr. Milton J. Adams, P.R.A. representative in Managua, Mr. E. F. Heyler, P.R.A. auditor in Managua, Engineer Constantino Lacayo Fiallos, Nicaraguan Government representative in charge of construction on the Rama Road, and Mr. P.E.P. Marshell, American employee of the Nicaraguan Departamento de Carreteras, to meet with me in the Embassy residence at Las [Page 179] Piedrecitas to discuss the status of the Rama projects. They met at the residence because I was too ill with a cold to go to the Chancery. They all had seen copies of the memorandum quoted in Despatch No. 1215.24 I repeated to them the additional information contained in the despatch. Explanation was given for the need of the closest cooperation of all present if the work on the Rama Road were to be continued until the United States Congress has the opportunity to consider granting funds to complete the Road. I appealed to all to work together to that end. During the course of the discussion I referred to my interview with President Somoza on November 21, 1946, and, speaking directly to Mr. Marshell, suggested to him that he go to President Somoza for the instructions which the President had said he would give to the Nicaraguan Departamento de Carreteras.
After the group had left Las Piedrecitas Mr. Marshell, without my knowledge, requested Mr. Adams to draw up a memorandum of the discussion and to supply each person present with a copy. Mr. Adams complied with the request by drafting the following memorandum:
“Memorandum of Discussion at Piedrecitas
“November 29, 1946
“Present: Ambassador Warren, Sr. Lacayo Fiallos, Mr. P.E.P. Marshell, Mr. E.F. Heyler, Mr. M. J. Adams.
“When Ambassador Warren returned recently from the United States he brought with him the results of a discussion between State Department and Public Roads Administration officials regarding Rama Road finances.
“He also brought a personal message from Mr. Thomas H. McDonald to President Somoza.
“Ambassador Warren upon his return to Nicaragua had gone over the whole situation with President Somoza and they had arrived at a complete understanding regarding the procedure to be followed.
“The discussion of November 29 was held by Ambassador Warren in order to give those present the results of his discussions in Washington and with President Somoza.
“With the full knowledge and approval of President Somoza the following special understandings concerning Rama Road work are to be put into effect.
- “(A) Beginning November 1, 1946 the Government of Nicaragua is to earmark $30,000 per month or, its equivalent in cordobas, as a donation toward continuing the work on the Rama Road. No claim will be made by Nicaragua for reimbursement of any part of this $30,000 per month.
- “The $30,000 will be used first to pay for labor but in any month after all labor charges have been met, from the $30,000 fund, if there [Page 180] remains a balance that balance will be used to liquidate other than labor charges. The idea is that in any month the $30,000 will be spent to liquidate current charges and that no attempt shall be made to carry part of it ahead to meet future charges.
- “(B) President Somoza has agreed to forego any and all claims for expenditures on Rama Road Project No. 2 in excess of the amount now under agreement which is $970,000.
- “(C) So that the Public Roads Administration may intelligently plan a program of work, with full knowledge of the financial situation; and so that Nicaragua may receive the fullest benefit from the expenditure of the entire $4,000,000, in the actual construction of the Rama Road, President Somoza has agreed that claims for reimbursement must be submitted within 30 days.
“This is to take effect on December 1, 1946. That is after that date accounts for reimbursement must be submitted within 30 days.
(signed) “M. J. Adams”
Upon receipt of his copy, Mr. Marshell asked Mr. Adams if he could send copies to the Minister of Fomento and other Nicaraguan officials. Mr. Adams replied that he had no objection but recalled that I had told Mr. Marshell to go to President Somoza for his instructions. Mr. Marshell, however, ignored the advice of Mr. Adams and proceeded to circulate the memorandum to various officials. The memo is much more categoric and directorial than I would have written. However, it was already in circulation and the harm done before I knew of its existence. Needless to add, the Minister of Fomento, General Jose Maria Zelaya, did not like or understand the communication. Engineer Lacayo Fiallos learned about the Minister’s displeasure and after several interviews got the Minister to understand what I was trying to do and that I had definitely told his subordinate, Mr. Marshell, that he should go to President Somoza for his instruction in the matter. Minister Zelaya did not mention the incident to me and I let it take its course.
I am now in receipt of a copy of a letter dated December 5, 1946, written in Spanish by Minister Zelaya to Mr. P. E. P. Marshell. That letter reads:
. . . . . . . . . . . . . .
The enclosure to Minister Zelaya’s letter is a revised copy of Mr. Adams’ memo mentioned above. The enclosure is in English and reads:
[Here follows text of memorandum of discussion at Piedrecitas, November
29, 1946, identical with the text of Mr. Adams’ memorandum, with
exception of the two following paragraphs:
It will be seen that Minister Zelaya’s memo in effect confirms the information in Mr. Adams’ memo. The only essential difference is a proviso that, “No claim will be made by Nicaragua for reimbursement of any part of this $30,000 per month unless there is a remaining balance of the original four million dollars appropriated by the U.S.A. Government for the Rama Road.” A similar proviso under (B) reads, “Providing there are no more funds available to reimburse out of the $4,000,000.”
The effect of these provisos would be to put on record the intention of the Somoza Government to seek reimbursement of any part, of the $30,000 to be advanced monthly or of any sum beyond $970,000 spent on Rama Road project in case the U. S. Government does not spend all of the $4,000,000 on the Rama Road. Of course, the total expenditure of the four million dollars is what we are now trying to effect.
I believe that Mr. Marshell’s mistake has turned out to the advantage of the Rama project.
Not printed; a memorandum of December 10, 1946, by Mr. Fred G. Heins, Political Economist, Division of Caribbean and Central American Affairs, summarized this despatch and telegram 593 of December 9 from Managua as follows:
“Pursuant to a conference in Washington on November 1 between Ambassador Warren and PRA officials, the Ambassador saw President Somoza on November 21 and again on December 6. The President concurred in the decisions reached at the November 1 conference as follows: (1) Nicaragua will not submit back accounts in excess of $970,000 on Rama project No. 2 (this eliminates the presentation of back accounts amounting to approximately $128,476). (2) Nicaragua will contribute $30,000 a month from November 1, 1946, to be used for labor on the Rama Road; and (3) Nicaragua will submit future Rama accounts, for reimbursement by the United States, within 30 days after the close of the month in which the expenditures are incurred.
“Mr. James of PRA indicated in a telephone conversation that the above arrangements are satisfactory, and that PRA work on the Rama Road will continue at the present reduced pace.” (810.154/12–946)↩
- The quoted memorandum concerned a meeting in the office of Commissioner Thomas H. MacDonald, Public Roads Administration, on November 1, and the conclusions reached with respect to Ambassador Warren’s prospective conversation with President Somoza.↩