817.77/258: Telegram

The Chargé in Nicaragua (Beaulac) to the Secretary of State

274. Department’s 160, November 22, 6 p.m. [Paraphrase.] I discussed frankly with the President the situation as outlined and your deep concern over recent developments. … [End paraphrase.]

He first stated that he had given no instructions regarding the dissolution of the railroad company but later stated that he desired that the company be organized in New York with headquarters in Nicaragua. He said that he was informed that the company had already been dissolved. I pointed out to him the embarrassing position in which this action placed you and he told me that I could state to you that he would send immediately instructions to the board of directors of the railroad not to dissolve the railroad company or take any further action with respect to the railroad or the bank without the knowledge and prior approval of the Department. He said that I could tell you that and at my request he consented to give me a copy of his instructions in that sense which I shall forward as soon as received.

[Page 660]

He stated that Soley Guell had no instructions beyond those he had furnished you in condensed form in personal letters. He insisted that he wanted the railroad to be an American company with American directors while still expressing his determination that headquarters of the company should be in Nicaragua. I pointed out the inconsistency in the two things but frankly can give no assurance that the President was impressed.

After I had referred to the difficulty which might be encountered in finding bankers to interest themselves in Nicaragua under present conditions, he stated that if this could not be done he would sell the bank. He repeated that everything was in your hands and I told him that they could not be in your hands while his agents acted independently of you and in a manner to create difficulties for you and for him. He said that he was not moved by passions but that he thought his representatives in the United States probably were. I reminded him that the responsibility in that case was his.

He said that any arrangement you made with any group of bankers would be satisfactory to him but immediately afterwards stated that he would rather sell the bank than permit it to buy and sell coffee. Still later he said that that was simply an objection he had and he would not insist upon it if you did not agree with him. He then referred to Nicaragua’s need of new banking laws to restrict the activities of all banks.

[Paraphrase.] I made no mention of the information which you had concerning the possibility of the Government’s issuing paper money.

… With the permission of the Department I should like to take Mr. Rosenthal to see the President next week and have a frank unofficial talk with him concerning the entire situation. [End paraphrase.]

Beaulac