837.51/1210
The Secretary of State to the Cuban Ambassador ( Ferrara )
Excellency: With reference to the note addressed to my predecessor by the Cuban Chargé d’Affaires on October 19 [18], 1922,24 stating that the Congress of Cuba had voted and the President had approved a law signed October 9, 1922, by which the President of the Republic was empowered to issue bonds for a foreign loan in a sum not to [Page 529] exceed $50,000,000 for the solution of the economic difficulties of the Cuban Government, and inquiring whether, under the provisions of Article II of the Permanent Treaty of Relations between the United States of America and Cuba dated May 22, 1922 [1903]25 this Government had any objection to make with respect to that public debt, and to this Department’s reply of November 1, 1922,26 stating that subject to certain considerations set forth therein the Department had no objection to the negotiation by the Cuban Government of the loan described, I have to inform you that I am now in receipt of a letter from Messrs. J. P. Morgan and Company27 stating that the Government of the Republic of Cuba has been discussing with their representative, who recently went to Habana at the suggestion of the Cuban Government, the question of funding approximately $9,000,000 principal amount of Cuban certificates of indebtedness which Messrs. Morgan and Company said they understand are held by contractors or their assigns. The letter of Messrs. Morgan and Company adds that these certificates of indebtedness arose out of contractual obligations assumed by the Cuban Government during the last Menocal Administration and that when the $50,000,000 five and one-half per cent loan was issued in 1923 a certain portion thereof was set aside to liquidate certain claims against the Government, the amounts of which were then subject to determination by Commission. It appears that the actual amount of claims against the Government exceeded the amount of the loan segregated for such purpose and the excess amounts awarded were settled partly in cash and partly by the issue of these certificates of indebtedness. Messrs. Morgan and Company state that they understand the total amount of the certificates of indebtedness so issued was $14,000,000 and each year a portion thereof has been paid off out of the ordinary tax budget, but that the Government desires to fund the amount now remaining because it is finding difficulty in taking care of the remaining certificates out of current revenue, and also that the Cuban Government contemplates that by borrowing in the form of a serial obligation payable in equal annual installments for a period of ten years, the Government will effect a saving in interest as the present certificates bear interest at the rate of six per cent per annum.
Messrs. Morgan and Company requested the Department to advise them whether it offers any objection to the proposed loan and, in reply, the Department has informed them that, in the light of the information before it, it offers no objection to this financing.
The Government of the United States, as Your Excellency is aware, has the utmost concern for the welfare of the Republic of [Page 530] Cuba and has, on many occasions, shown its desire to help that Government out of economic and other difficulties. It is for that reason that after a careful consideration it answered on November 1, 1922, the inquiry of the Cuban Government of October 19 [18], 1922, made pursuant to Article II of the Permanent Treaty, that the Department, in view of the information furnished by the Cuban Government, had no objection, to the negotiation by the Cuban Government of the $50,000,000 loan. This Government hoped that with the proceeds of the $50,000,000 loan of 1923 it would be possible for the Cuban Government to liquidate its outstanding contractual obligations but, as this unfortunately has not been the case, this Government has been glad, in order to be helpful to Cuba, to offer no objection to the conversion of this public debt of $9,000,000 in order to carry out the purposes for which it gave its consent to the $50,000,000 loan.28
Accept [etc.]
- Foreign Relations, 1922, vol. i, p. 1044.↩
- Ibid., 1904, p. 243 ↩
- Ibid., 1922, vol. i, p. 1047.↩
- Not printed.↩
- Telegram No. 76, July 1, 10 a.m., from the Chargé in Cuba, informed the Department that the Cuban Government had sold to J. P. Morgan & Co. $9,000,000 of ten-year serial 5½ percent bonds (file No. 837.51/1213).↩