837.51/503: Telegram
The Representative on Special Mission in Cuba (Crowder) to the Secretary of State
[Received July 1—2:03 a.m.]
84. Replying to your number 126, June 29, 6 p.m., just received. Work of American expert accountants on statement of National Treasury not yet completed but sufficiently advanced to enable me to advise that the Department should assume in all negotiations for a loan that the deficit in the National Treasury will not be below what is stated in my 81, June 25th, paragraph one. It follows that the loan proposed by New York bankers would be little more than sufficient to extinguish the national deficit.
You will recall that Zayas loan proposition, communicated in my number 81, was tentative only. At a conference between us yesterday he offered the substitute plan of two loans, one foreign and the other interior; the interior loan to be under terms and conditions similar to the interior bond issue of 1917 and to be exclusively available for the extinguishment of the national deficit. He believes that such bonds would be received by the holders of current obligations at their par value and that a great saving could be effected in this way. The foreign loan, under Zayas’s plan, would be exclusively available for extension of credits to purchasers of Cuban sugar and for making advances on sugar in warehouses as proposed in your telegram 126, June 29th.
At this same conference with Zayas we discussed the most expeditious procedure that could be followed to advance the enactment of the necessary budgetary and revenue legislation to meet the existing financial crisis. He has asked Congress to adjourn the regular session, but before doing so to appoint a mixed committee of the Senate and House to advise with him as to a legislative program for an extraordinary session of Congress to be called by him at an early date and which, under the terms of article 57 of the Constitution, may consider only the express objects for which it meets. It is contemplated that the mixed committee will, in addition to submitting a legislative program for the extraordinary session, undertake to draft a revision of the budgetary laws and of the revenue laws of the Republic, based upon prudent calculations conducted by experts which would demonstrate the adequacy of the revenues to provide, not only for defraying current expenses of the Government but also the necessary interest and sinking fund charges on the entire public debt of Cuba including any new loan or loans that may be negotiated.
[Page 703]I am requesting an audience with the President this afternoon and will take up with him the offer of American bankers as set forth in your telegram 126 and hope to communicate the results of this conference in a further cable tonight.