The Minister in Haiti (Bailly-Blanchard) to the Secretary of State

No. 519

Sir: I have the honor to forward herewith for the information of the Department, copy of a letter from the Acting Financial Adviser, dated July 2nd, 1921,27 received July 5th, enclosing a translation of a letter of June 30 to the Haitian Minister of Finance,27 inviting his attention to the serious financial situation and the urgent necessity of taking steps to meet it, also a copy of a letter of July 1 to the Financial Adviser outlining the policy which he proposes to follow with respect to the payment of Haitian Government expenses for July, unless instructed to the contrary.

I have [etc.]

A. Bailly-Blanchard
[Page 211]

The Acting Financial Adviser to the Haitian Government (Maumus) to the Financial Adviser (McIlhenny), temporarily in the United States

Dear Mr. McIlhenny: I enclose herewith a translation of a letter sent by me to the Minister of Finance under date of June 30, 1921.27a Our available funds are so low that this month I am making no advance to the Gendarmerie until July 10, and the advances to the Sanitary Engineer and the Engineer of Haiti are being made in three payments, on July 1, 14, and 29. It is essential that definite action be taken with respect to the financial situation here without delay.

The Haitian Government has had nine months within which to take action to increase receipts or reduce expenses, and nothing has been done in either direction, nor will anything be done by the present government unless force or other compulsion is applied. The Minister of Finance, whose intentions are good enough, has not been able even to enforce the existing internal revenue laws because of the opposition of his colleagues. As you have been informed, he had an examination of the books of the electric light company and the P.C.S. railroad made to determine the amount due the Government in taxes for past years, with the view of instituting prosecutions. Nothing has been done. …

We are at the end of our resources here, and it is my purpose, unless I receive definite instructions from Washington to the contrary accompanied by assurance that funds will be available to meet payments, to inform the Hatian Government about July 20 (the usual date for sending through the mandats) that there are no funds with which to meet the expenses of the Haitian Government proper, and that the mandats will not be paid. I propose to pay so much of the Gendarmerie contract allowance as the Chief of the Gendarmerie certifies is required, on the ground that it is preferred under the Treaty and maintenance of public order is paramount. I also propose to pay the necessary expenses of the Sanitary Service on the ground that public health is next in importance after public order and safety. I further propose to pay such part of the expenses of the services under the Engineer in Chief as is necessary to keep ways of communication and transportation open and to maintain the public buildings and property under its supervision, and probably also will pay the expenses of the postal service under the Department of Finance. This will result in charges of discrimination against Haitians, [Page 212] but it is the only solution that I can see. I estimate that receipts including the amount which can be used from the reserve for interest and amortization of debts, will be about sufficient to pay the above mentioned expenses. Everything else will have to be delayed until additional receipts are forthcoming from a loan or from new taxation.

I propose to suspend all Haitian Government payments, not merely a part of them, until such time as there shall be a sufficient amount available (an improbable event) with which to pay all the expenses of an entire month. To do otherwise would open the door to a form of graft prevalent here before the Occupation, when members of the government directly or indirectly bought unpaid payrolls at huge discounts and immediately had them paid at par. This practice was so prevalent and so remunerative that few payrolls were ever paid to the persons named therein. We can not afford to permit or tolerate the recurrence of such graft, and there is no way to prevent it other than to announce that none of the monthly expenses will be paid until an amount is available sufficient to meet the whole.

In this connection I am informed that the Haitian Minister at Washington, after the protest was made against the $175,000 monthly segregation plan, advised his Government that he had been assured by the Department of State that, whatever happened, the salaries, pensions, etc., would be paid. I can not believe that any such assurance was ever authoritatively given by the Department of State, but the Haitian Government certainly thinks it has this assurance and, feeling that salaries are safe, whatever happens, has followed a drifting policy without any effort to prevent bankruptcy and apparently welcoming it as another proof that the Treaty brought nothing but evil to Haiti.

Most sincerely yours,

A. J. Maumus
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