Mr. Powell to Mr. Hay.
Port au Prince, October 2, 1902.
Sra: I have the honor to inform the Department that * * *the foreign commercial houses located here are making money out of both parties in this conflict. * * *
They are loaning money at a heavy rate of interest. Within the last four months the Provisional Government has contracted loans to the amount of $1,500,000 paper, to be repaid in gold at the face value of the paper, and interest at 1 per cent a month, the loans guaranteed by a certain per cent of the customs revenue. Money is loaned to General Firmin at even a higher rate. Aside from this fact, they supply arms and munitions of war at double their value to each party. They well know that this money is secured whichever side wins, as their diplomatic representatives will compel whatever government may be in power to pay the same, so there is no way for them to lose.
As long as the Government has anything to mortgage in the way of customs receipts they will get money; this will continue until there is nothing left to borrow upon, or rather upon which to predicate a loan.
Another Government loan of $300,000 is about to be placed upon the market, and possibly others to follow when this is expended, so no cessation of the pending condition of affairs may be looked for until these firms refuse to supply money.
* * * If it had not been for this assistance the political situation would have regulated itself within three weeks after it commenced.
I have, etc.,