The Secretary of State transmits herewith, for the information of the
Ambassador, copies of a memorandum dated August 26, 1933, from the
Acting Secretary of the Treasury to Mr. Caffery, and of a memorandum of
the same date from an officer in the Treasury Department to Mr.
Acheson,16
both with regard to the Ambassador’s telegram No. 175 of August 20,
1933.
The Under Secretary of the Treasury
(Acheson) to the Assistant
Secretary of State (Caffery)
[Washington,] August 26,
1933.
This will supplement my memorandum of August 2118 in regard to Ambassador
Welles’ cable #175, August 20.
A further study of the proposal made by the Cuban Government and
referred to by Ambassador Welles in paragraph five of this cable
convinces the Treasury that it is wholly without authority to enter
into the arrangement suggested. Not only has the Treasury no
authority to issue obligations and part with title thereto upon a
contract to pay for such obligations on the installment plan, but it
appears to the Treasury that the provisions of Article I, Section 9,
Clause 7 of the Constitution, as well as Section 11 of Title 41 of
the United States Code and Section 529 of Title 31 of the United
States Code are express prohibitions against the type of arrangement
proposed by the Cuban Government. It is, therefore, the view of the
Treasury that it is not practicable to pursue this further.
[Page 583]
It is also the view of the Treasury that there is no authority in the
legislation relating to the Reconstruction Finance Corporation which
would enable that corporation to lend money to the Cuban Government.
The Treasury is also advised that the American banks interested in
Cuba could not be induced to enter into the arrangement suggested in
paragraph six of Ambassador Welles’ cable.
Should the Cuban Government desire to acquire silver from American
interests for the purpose of issuing additional silver coinage, it
might be possible under the law to obtain help from the
Reconstruction Finance Corporation in financing such a purchase.
However, it would be necessary to accomplish this to have the Cuban
Government able to furnish adequate security. It appears to the
Treasury upon the basis of such information as it has, that
practically all revenues and other assets of the Cuban Government
are involved in one way or another in pledges already made to secure
loans and it would, therefore, seem that in order to furnish
adequate security as suggested above, it would be desirable, and
probably necessary, that the Cuban Government secure the
acquiescence of its principal creditors. It is probably also
necessary under the law that the American interests which might sell
the silver participate in the furnishing of security.
The Treasury has not sufficient information to make any useful
suggestions regarding other methods which might be employed by the
Cuban Government to finance itself.
The Philadelphia Mint has already been instructed to complete the
coinage of the silver pieces for Cuba with the greatest possible
expedition. It is expected the pieces will be completed within a
month.
