837.51/504: Telegram
The Secretary of State to the Chargé in Cuba (Cable)
131. For General Crowder.
Your No. 86, July 1, 5 p.m.
The Department coincides in the opinion expressed by Dr. Zayas that there can be no definite basis for loan negotiations until there has gone into effect such a revision of the budget of 1918–19 downward, and of the national revenues upward, to be recommended by the Mixed Legislative Committee, as would give definite assurance that the ordinary revenues of the Republic would be adequate to provide for the current expenses of the Government and to meet the service of the total public debt, including any new loan which may be desired. Moreover, the Department of State would necessarily, in view of Article II of the Platt amendment, be unable to approve any increase in the public debt until such assurances were forthcoming. [Page 707] Nevertheless, the Department regards the Cuban financial situation, in view of the reports received from you, as being so grave that it believes all possible expedition should be used in providing remedies. It now appears that the flotation of a government loan will be a necessary portion of such remedies. The Department considers, therefore, that the immediate despatch to the United States of the Delegation referred to in its No. 126 of June 29, 6 p.m., with full powers to discuss with American banking interests the basis and terms upon which the Cuban Government loan could be floated in the United States, once the ordinary revenues of the Republic are known to be sufficient to meet the service thereof, will expedite matters and make it possible when the Cuban Congress shall have passed upon the recommendations of the Mixed Legislative Committee to proceed immediately with the flotation in this country of the desired loan.
Please communicate to President Zayas the views of the Department as set forth above.