837.51/1576: Telegram
The Ambassador in Cuba (Welles) to the Acting Secretary of State
[Received 6:45 p.m.]
83. My 54 and 62 and Department’s 37. The Secretary of the Treasury advised me Saturday that the Government would be unable to make any payments this month towards arrears in salaries of civilian employees of the Government. The profits resulting from the six million dollars silver transaction will be utilized in great part in meeting payments due bankers and the balance remaining of about $1,400,000 will be used to meet salaries of the judiciary, the Congress, and the Army. The Cuban Government desired to obtain a tax advance from the petroleum companies amounting to approximately $1,000,000 in accordance with the precedent established December 1932, intending to devote this advance to salary arrears. The Chase Bank thereupon interposed and insisted that any advance so collected must be considered as public works revenues and consequently solely applicable to interest and sinking fund charges upon the bankers’ obligations.
The suggestion was consequently made that any tax advance received from the petroleum interests be devoted to meeting the June payments due to the bankers thus releasing an equivalent amount from the silver seigniorage profits (which are not pledged) for payment on civilian employees’ salary arrears. Both the Cuban Government and the local representative of the Chase Bank see no reason why there should be any objection to this proposal, but have requested that I support the proposal and that the Department so advise the bankers. Doctor Averhoff advises me that a strike will be declared by the governmental employees if nothing is done for them this month.
Since there is no legal obstacle to the procedure above indicated, I can see no reason why the Cuban Government should not take the action outlined or why the American bankers should interpose any objection.