sources, it would go far toward relieving the situation. It was on this condition that I withheld objection to the proposal made by your Government, and I did it in the very same interview at which your Minister brought it to my attention. I feel that you will agree with me, Mr. President, when I say that on the financial side I have done the utmost to meet your wishes. What I have agreed to above conforms to every one of your requests of this nature. I believe that this résumé of the situation, both in general and in detail, shows that my Government has cooperated effectively and sympathetically with the problems of your Government. I believe that it also shows, so far as I can judge it from here, the course which must be followed in order to eradicate banditry and to restore peace and order in your Northern Provinces by the year 1932. I have frankly stated my position, as I feel that only in this way may misunderstanding be avoided. The responsibility and obligation for the solution of these problems rests upon your Government, and I have indicated to you the only means by which the responsible officers of this Government feel that the situation can be met. In so doing, I feel that I have fully discharged the responsibility of the Government of the United States in this matter and that the questions now rest clearly with you. I earnestly request that you give these matters your fullest thought and most careful attention; and I think that you know that my cordial good wishes in the future, as in the past, go with you. I am [etc.] HENRY L. STIMSON 817.1051/466 The Minister in Nicaragua (Hanna) to the Secretary of State No. 268 MANAGUA, December 13, 1930. [Received December 22.] SIR: I have the honor to report that I duly presented to President Moncada the letter of the Secretary of State concerning a reduction in the strength and cost of the Guardia Nacional which was transmitted with the Department's instruction No. 89, November 24, 1930, I have received no reply from President Moncada and he has not mentioned the subject to me on the numerous occasions when I have seen him since the presentation of the Secretary's letter. Nevertheless, I understand from other sources that President Moncada was greatly pleased with the Secretary's effort as set forth in his letter to be of assistance to President Moncada in this matter. I am transmitting herewith a copy and translation of a communication which President Moncada addressed to General McDougal on December 10, 1930,36 from which it seems clear that the President has accepted the Secretary's suggestions that the strength of the Guardia be reduced to 160 officers and 1650 men at an annual cost of $799,652.00, that additional annual allotments be made amounting to $15,000 for the Military Academy and $40,000 for maintenance of prisons, and that the salaries of American officers who enter the Guardia in the future be reduced as set forth in the Secretary's letter. The President suggests in his letter to General McDougal that the lower scale of salaries should be applied to officers who enter the Guardia after December 1, 1930, and General McDougal has told him that he is in accord with the suggestion. It will be noted that the President requests General McDougal to submit plans for reducing the cost of the Guardia and the enlisted strength and cautions General McDougal that this reduction should be made as conditions permit bearing in mind the necessity of selecting the men who are to be discharged. It also appears that the President considers appointing the more efficient of the enlisted men thus discharged to the positions of Jueces de Mesta or Jueces de Cantones. General McDougal is now preparing a statement of his plans for submission to President Moncada. I will not fail to keep the Department advised of further developments in this matter. Respectfully yours, MATTHEW E. HANNA 817.1051/467 The Minister in Nicaragua (Hanna) to the Secretary of State No. 274 MANAGUA, December 16, 1930. [Received December 23.] SIR: Supplementing my despatch No. 268 of December 13, 1930, concerning the reduction being made in the strength and cost of the Guardia Nacional, I have the honor to transmit herewith a copy of General McDougal's reply 3 to President Moncada's letter of December 10, 1930, a copy of which latter letter was transmitted with my despatch under reference. General McDougal's letter submits his plan for carrying into effect the reduction in the strength of the Guardia to 160 officers and 1650 enlisted men as contemplated in the recent exchange of correspondence between the Secretary of State and President Moncada. It will be noted that the Guardia serving in the four bandit infested Departments is to be maintained at a strength of 1000 men and that, to effect 36 Not printed. a reduction to a total of 1650 enlisted, the strength of the Guardia serving in the remaining nine provinces of the Republic must be reduced to 366 men (the remaining 284 men to make up the total of 1650 are comprised in the Headquarters, prison guard, band, presidential guard and other like miscellaneous services). It should not be overlooked that General McDougal has not expressed any opinion in his letter concerning the places where the reduction is to be made but has, on the contrary, requested the President to indicate the stations he desires to have abandoned and the number of men he desires to remain at the stations not abandoned so that the total serving in those stations will not exceed 366. In this same connection, General McDougal also makes special mention of President Moncada's statement that "it is of great importance that this reduction be made as conditions permit", and General McDougal states that he will be guided by the President's instructions as to the places where and the date on which the reduction is to take place. I understand that it is General McDougal's desire to avoid all responsibility for decisions of this nature in connection with the reduction. Respectfully yours, MATTHEW E. HANNA ASSISTANCE OF THE DEPARTMENT OF STATE IN REORGANIZING THE FINANCES OF NICARAGUA 37 817.516/239A: Telegram The Acting Secretary of State to the Chargé in Nicaragua (Beaulac) WASHINGTON, January 28, 1930-3 p. m. 9. Carazo 38 informed the Department some days ago that Sacasa 39 had terminated negotiations with Otis & Company because he considered their final proposal unsatisfactory. He objected particularly to a provision that the manager of the bank would have full authority with respect to the conduct of its business subject only to control as to matters of policy by a two-thirds vote of the members of the Board of Directors consisting of five nominees of the Government and four nominees of the bankers. He also objected to a provision giving the bankers an option on future financing so long as the agreement should remain in force. The Republic would have a right to terminate the agreement at any time on 30 days notice. Sacasa and Carazo asked the Department's advice as to the next step to be taken, but was informed that the Department could not advise the Nicaraguan representatives regarding the acceptance or "Continued from Foreign Relations, 1929, vol. 1, pp. 651-670. rejection of a particular proposal, or regarding possible new negotiations with other bankers. It was unnecessary to consider the advisability of putting the Nicaraguan representatives in touch with other bankers, as they believed that they already knew of others who might be interested. It is understood that Carazo has had some discussion with the Bank of Manhattan and Trust Company. In response to his request for information he was informed that the Department understood from the Department of Commerce that this was a strong and reputable institution. If you find that there is any misapprehension on the part of the Nicaraguan Government regarding the Department's relation to these negotiations you may make it clear that the Department's activity has been confined to introducing the Nicaraguan financial representatives to a group of bankers known to be reputable, and to furnish the latter with general information which seemed likely to be useful to them. The Department could not undertake to advise the Nicaraguan representatives to accept or reject any given proposal, and it has not advised them regarding the beginning of negotiations now with a new banking group. They have acted in these matters entirely on their own responsibility, subject to any instructions which they may have received from their Government. The text of the final proposal of Otis & Company will be forwarded to you for your information by air mail. 817.516/248 COTTON The Vice President of the International Manhattan Company (Knowlton) to the Under Secretary of State (Cotton) NEW YORK, April 16, 1930. [Received April 19.] MY DEAR MR. COTTON: In February I had the pleasure of discussing with you and Secretary White the conversations which our affiliated institution, the International Acceptance Bank, Inc., was holding with representatives of the Nicaraguan Government. We feel that you may be interested to know that as a result of these conversations, the International Acceptance Bank, Inc. has been appointed the American Depositary and Fiscal Agent of the National Bank of Nicaragua and the Ferrocarril del Pacifico de Nicaragua. Two of the Vice Presidents of our bank, Mr. William H. Schubart and Mr. Howard J. Rogers, have been elected and have consented to serve as directors of the National Bank. Mr. Schubart has been elected and is serving as a director of the railroad company. In addition to the above mentioned, the board of the National Bank now consists of the Nicaraguan Minister, Dr. Juan B. Sacasa, the Counsel of the Nicaraguan Legation, Dr. Evaristo Carazo, Dr. Vicente Vita and Dr. Virgilio Lacayo, all Nicaraguans resident in this country, and Dr. C. E. McGuire of Washington, and Mr. H. Christian Sonne of the importing house of Amsinck, Sonne & Co., Inc. of this city. The board of the railroad consists of the above gentlemen (with the exception of Mr. Sonne), and Mr. Henry H. Hanson, Vice President of the International Railways of Central America. The relations between the International Acceptance Bank, Inc. and the National Bank and railroad have not been made the subject of any contract or formal agreement, and it is understood that our bank, in addition to rendering the usual banking services extended to a depositor, is acting only in an advisory capacity and that the relationship is one which may be terminated at any time by either side. It is our hope, of course, that in this capacity our bank and its officers who are serving on the boards of the two Nicaraguan institutions may be of real assistance and service to the Government of Nicaragua. On behalf of my associates and myself, I wish to express to you our appreciation of your and Secretary White's kindness to me when in Washington and to assure you that the conversations which I had with you were of the greatest help to us all. Respectfully yours, HUGH KNOWLTON EXTEND THE TERM OF DISAPPROBATION BY THE DEPARTMENT OF STATE OF PROPOSED 817.00/6554: Telegram The Chargé in Nicaragua (Beaulac) to the Secretary of State MANAGUA, March 14 [137], 1930-5 p. m. [Received 8:30 p. m.] 32. Reference my despatch No. 1341 of February 27.40 I am informed that a project for partial reform of the Constitution was introduced into the Senate last night providing among other things the following: The Presidential term to be extended to seven years; the term of Supreme Court Magistrates and Senators to be extended to nine years; the term of Deputies to be extended to six years. I am informed that the president of the Senate carried away the project with him and I have therefore been unable to confirm the above. |