Loan Convention between the United States and Nicaragua.1

The Republic of Nicaragua, being now established on a firm political and constitutional basis, after eleven months of civil war and after seventeen years of administrative abuses resulting in the illegal diversion of public property and revenue, the accumulation of debts and claims in the hands of both natives and foreigners, and the existence of ruinous and disputed concessions in many of which foreigners are beneficiaries, finds the financial and economic situation of the country in urgent need of radical reconstruction;

And believing that this needed reconstruction on account of the circumstances above set forth will be difficult and complicated, especially as it involves the necessity of obtaining a loan adequate in amount yet on terms commensurate with the national resources—

The Republic of Nicaragua has indicated its desire for cooperation on the part of the United States for the refunding of its debt and the placing of its finances and administration upon a sound and stable basis with a view to meeting its foreign obligations, and to securing the tranquillity, prosperity and progress of the country.

And the Government of the United States, animated by a desire to promote the peace and prosperous development of all the Central American countries, and appreciating the wish of Nicaragua to contribute to such development by establishing on a firm footing its own material strength;

And it being recognized as necessary, in view of the present conditions of Nicaraguan finances and resources, that, to afford efficient and legitimate security and to obtain the special benefits sought, the Governments concerned should assume a special relation thereto;

And the two Governments being convinced that some contract should be negotiated and concluded between the Government of Nicaragua and some competent and reliable American banking group, said contract to afford a beneficial, just and equitable accomplishment of the purposes in question, have, with these objects in view, named as their plenipotentiaries:

  • The President of the United States of America, Philander C. Knox, Secretary of State of the United States; and
  • The President of Nicaragua, Dr. Salvador Castrillo, junior, Envoy Extraordinary and Minister Plenipotentiary of the Republic of Nicaragua near the Government of the United States;

Who, having communicated to each other their respective full powers, found in good and due form, have agreed upon the following:

Article I.

The Government of Nicaragua undertakes to make and negotiate a contract providing for the refunding of its present internal and [Page 1075] external debt and the adjustment and settlement of claims, liquidated and unliquidated; for the placing of its finances upon a sound and stable basis; and for the future development of the natural and economic resources of that country. The Governments of the United States and Nicaragua will take due note of all the provisions of the said contract when made, and will consult, in case of any difficulties, with a view to the faithful execution of the provisions of said contract, in order that all the benefits to Nicaragua and the security of the loan may at the same time be assured.

Article II.

The loan which shall be made by the Government of Nicaragua pursuant to the above undertaking shall be secured upon the customs of Nicaragua, and the Government of Nicaragua agrees not to alter the import or export customs duties, or other charges affecting the entry, exit, or transit of goods, during the existence of the loan under the said contract, without consultation and agreement with the Government of the United States.

Article III.

A full and detailed statement of the operations under this contract shall be submitted by the Fiscal Agent of the loan to the Department of State of the United States and to the Minister of Finance of Nicaragua at the expiration of each twelve months, and at such other times as may be requested by either of the two Governments.

Article IV.

The Government of Nicaragua, so long as the loan exists, will appoint from a list of names to be presented to it by the fiscal agent of the loan and approved by the President of the United States of America a collector general of customs, who need not be a Nicaraguan and who shall administer the customs in accordance with the contract securing said loan, and will give this official full protection in the exercise of his functions. The Government of the United States,’ should the circumstances require, will in turn afford such protection as it may find requisite.

Article V.

This Convention shall be ratified and the ratifications hereof shall be exchanged at Managua as soon as possible.

In faith whereof, the respective plenipotentiaries have signed the present Convention in the English and Spanish languages and have hereunto affixed their seals.


(Seal)
Philander C. Knox.

(Seal)
Salvador Castrillo.
  1. Ratified by the Assembly of Nicaragua June 15, 1911, and July 7, 1911. Made public August 5, 1911. Still pending in the Senate of the United States.