837.51 Cooperation Program/8–2144
Memorandum by Mr. Eugene LeBaron of the Export-Import Bank of Washington18
President-elect Grau San Martín called on Mr. Pierson yesterday afternoon accompanied by Dr. Guillermo Belt, Minister of Foreign Relations Designate, Dr. Gustavo Moreno, Minister of Public Works Designate, Dr. Germán Alvarez Fuentes, Minister of Agriculture Designate, two of Dr. Grau’s nephews, U.S. Ambassador Braden and Mr. Willard Barber of the State Department. Also present were Messrs. Whittemore, Fitch and LeBaron of Export-Import Bank.
Mr. Pierson explained the present status of the Bank’s credit to Dr. Grau and outlined the procedure which has been evolved for the operation thereof. Details were given on original approvals in principle by the Bank followed by definitive approvals based upon final project reports. Considerable time was spent on the manner in which various projects have been subdivided into sub-projects and contracts awarded for such sub-projects. An account was given to Dr. Grau on the overhead which is added to contract prices to determine the presently estimated final cost of any project or sub-project.
Dr. Grau was very much interested in the construction of a network of country roads throughout the Island which he believes will best serve the interests of Cuba and the masses of small agricultural producers and isolated regions. Following this expression of Dr. Grau’s interest in country roads, considerable time was devoted to an examination of tributary roads, the manner in which they had been chosen, how contracts had been awarded and what proportion of the credit had been allocated for this purpose in the different provinces.
Dr. Grau and his associates indicated that it might be preferable to cancel numerous contracts for tributary roads and other projects in order to use funds thus released to finance the network of country roads. After considerable discussion, Dr. Grau and his associates conceded that a large portion of money already spent would be irretrievably lost if contracts calling for the completion of the balance of the work were cancelled. This matter, however, was left for further discussion this morning by Messrs. Moreno, Alvarez, Grau (nephew), Fitch and LeBaron.
Dr. Grau handed Mr. Pierson a copy of an undated and unsigned memorandum19 listing road building equipment which he believes [Page 987] would be required for the execution of the country road program. Dr. Grau was told that numerous items appearing in his memorandum, which is attached hereto, were in short supply and that it probably would be considerable time before the equipment listed would be available. This point was repeated and stressed in order that Dr. Grau might not be disappointed inasmuch as he had stated that he would like to get between fifteen and twenty complete sets of such equipment to Cuba by October 10.
Further examination of the credit and the allocation of funds thereunder indicated that the first six projects approved by the Bank probably should not be disturbed. Of the original commitment for tributary roads, approximately $4,500,000 could be diverted for country roads and other purposes without jeopardizing funds already spent or allocated for works in this category. Projects 8 and 9, aggregating $340,000, which originally were approved to survey country roads and acquire telegraph equipment, could likewise be devoted to other purposes. These changes would thus release close to $5,000,000 which could be employed to finance new projects.
Dr. Alvarez raised the question of irrigation. The status of irrigation projects, as briefly summarized in the agenda of August 30,20 was explained to Dr. Alvarez and the President-elect. It was conceded by those present that funds still available under the credit could be used for country roads or irrigation, or divided between these two, but that if the entire amount were allocated for one class of work there would be no funds available for the other. It was indicated to us that the President-elect and his associates will discuss this point and advise later.
Dr. Grau was requested to outline his plans for the Commission. He replied that it was his intention to have Dr. Moreno be President of the Commission as well as Minister of Public Works. The President-elect thought that it would be more efficient to have the two organisms operate in harmony and coordination rather than at cross-purposes. Dr. Moreno added that the machine shops maintained by the Ministry, which are very extensive and efficient, would be available for the repair and maintenance of machinery and equipment owned and operated by the Commission. The Ministry apparently has considerable space which could be used to house the Commission, thus avoiding payment of rent for quarters for the latter. Dr. Moreno [Page 988] stressed the fact that the Commission would not be absorbed by the Ministry and that its accounts and operations would be kept entirely separate. (The members of the Bank’s staff who were present are somewhat skeptical over the success of Dr. Moreno’s plans to close the gap between the Commission and the Ministry.) He was anxious to create the impression that his primary concern was to effect all economies possible in order that Export-Import Bank’s funds be used most efficiently and without waste.
Mr. Pierson brought up the matter of the Havana Waterworks credit and after an explanation of the present status thereof to Dr. Grau, the President-elect stated that he had no objection to the cancellation of the credit at this time by the Bank. Dr. Belt however, called Dr. Grau’s attention to the possible unfavorable political reaction to such cancellation following upon the heels of Dr. Grau’s visit to Washington, particularly in view of the fact that Dr. Grau’s opposition to and disapproval of Dr. Menocal’s21 relations with the Canadian American group has been publicly manifested in Cuba. Mr. Braden concurred in the latter view and expressed his opinion to the effect that a delay in cancellation would probably be preferable. Mr. Pierson acceded to such a request on the part of Dr. Grau.
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