417.41/10: Telegram

The Minister in Nicaragua (Jefferson) to the Secretary of State

In reply to Department’s April 3, 5 p.m., the Commission wishes to reiterate that it considers offer of £9,000 cash and £1,000 bonds on [an] extremely liberal offer in view of the situation of the Government of Nicaragua, an ally of the United States. The percentage of cash is much higher than other foreign diplomatic claims which they allege are equal in standing and equity to British claim. It should not be overlooked that about 800,000 cash was not [sic] paid from canal funds to English bondholders and that this sum included interest on unpaid interest coupons. On all Nicaraguan claims all interests, even on cash loans to Government, have been eliminated.

Confidential. The British Government received no official information from the Commission as to its appraisal of the bank claim, but Minister Young told Commission unofficially that an offer of £10,000 would probably be accepted. Martin, British Vice-Consul and former manager of this same bank, has never advocated claim; [Page 666] offer on all other claims was tentative, and made liberal in order to obtain acceptance of claim as a whole. Young was not satisfied with proposed bonds, and Commission feels that to pay all in cash, even if claim is considerably reduced, would have bad effect upon bonds in eyes of other foreign diplomatic claimants. Bank is in better position to take bonds than other individual claimants, and it was idea of the Commission that British Government would itself scale other claims in order to give bank more. Bank claim is extremely weak in proof and in equity. Commission is not willing to consent to splitting up of claim, nor does it wish to leave bank claim pending for future difficulties and it believes that if matter again is referred to British Government, it will accept.

The Commission, acting upon my suggestion, finally has agreed in case the Department finds it absolutely necessary to bring about a final settlement of British claim to make a final offer of £9,000 cash, and £2,000 bonds, but under no consideration to give increase in cash.