The Chargé in Haiti (Jordan) to the Secretary of State

No. 564

Sir: Referring to my radio number 94 [92] of December 30 [28], 4 p.m.,6 I have the honor to forward herewith the reply of the Haitian Government to the loan offers of the three banking houses transmitted to it through this Legation. The French text only is herewith enclosed as the translation has not been completed and I considered it imperative that a copy be forwarded to the Department by the first boat. As soon as the translation is complete I shall send it by first mail.

I have [etc.]

Curtis C. Jordan

The Haitian Secretary of State for Foreign Affairs (Barau) to the American Chargé (Jordan)

In the name of the Haitian Government, and in answer first, to the note verbale dated December 5, 1921,8 by which the Department [Page 473] of State makes known that it has already considered with great care the objection of the Haitian Government on the question of the lapse of the protocol of October 3, 1919,9 and that it has arrived at the definite conclusion that the nonperformance by the Haitian Government of its undertakings does not relieve it of its obligation as long as the other party opts in favor of the protocol;

Secondly, to the supplementary note handed to His Excellency the President of the Republic on December 6,10 on the subject of the offer of a loan from the bank of Messrs. Lee, Higginson & Co., of New York;

Thirdly, to the supplementary memorandum transmitted to the Government through the intermediary of the Department of Foreign Affairs December 6,11 concerning the modifications on the loan propositions presented by the Speyer group and National City Co.;

The Secretary of State for Foreign Affairs has the honor to declare that the Haitian Government persists in believing that according to law the protocol of October 3, 1919, has lapsed, but that the difficulty can be solved by inserting in the loan law such clauses as are approved by the Department of State in the note of December 6.

In this law, there shall be enacted the following provisions:

1. The Haitian Government takes the position that the member who is to be appointed to the Claims Commission12 shall be named by the Government and not by the Secretary of State for Finance.

2. With regard to the Claims Commission to be instituted by virtue of the agreement made between the Department of State and the French and English Governments,13 the Haitian Government proposes the following provision:

It is, however, understood that during the period during which the claims shall be examined, the third member, instead of being designated by the Financial Adviser, may be named by the government of the claimant, and each government shall be charged with the payment of the referee named by it.

Further, claimant governments reserve the absolute right to submit to an arbitral tribunal composed of two members, one named by the Haitian Government, the other by the claimant government, and a third referee who shall be designated by common agreement of the two Governments, all claims on which the decision rendered by the Claims Commission may not be satisfactory to them. The expenses of this tribunal of appeal shall be paid in equal proportion by the two interested Governments.

[Page 474]

3. Insofar as it is within the jurisdiction of the Commission to pronounce on the debt due to the National Bank of the Republic of Haiti, it shall be stated that the $600,000 statutory loan be restored and held at the order of the Haitian Government;

4. As to the sum due as interest on the bonds of the National Railway Co. of Haiti, it shall be stated that the Republic of Haiti reserves the right to come to an agreement with the holders of the obligations of the National Railway Co. in order to pay part in cash, to be drawn from funds from the loan, and part in claims to be amortized in proportion and to be added to the obligations already subscribed. It shall be stated further that as to the sum due the National Railway Co. for interest claims, the Commission shall not be competent to pass upon it after its verification in accordance with the contract and its acceptance by the Financial Adviser.

5. As to the sum due the National Company of the Plaine du Cul-de-Sac, there is no occasion for a provision, as it is purposeless, the sum of $35,000 gold having been paid to this end by an extraordinary credit of December 24, 1920;

6. The following clause shall be inscribed by virtue of a memorandum from the American Minister, November 6, 1920:14

It is understood that the bonds issued in 1912, 1913, and 1914, representing the internal consolidated debt of Haiti, cannot be considered as pecuniary claims, but are debts which have been liquidated and consequently must be paid without the necessity of being submitted to the Claims Commission.

The same applies to the debts of the Sambour Commission and the Féquière Commission.15 The internal debt and the recognized floating debt shall not be verified anew; their payment shall be subject to an understanding between the Haitian Government and its creditors.

The nonliquidated and unrejected credits shall be submitted to the Claims Commission.

7. In regard to the payment of each recognized claim determined by the Claims Commission, the following arrangement shall be made: The proportion to be paid in cash shall not exceed one-half of the award.

8. The amount of the loan must be changed. It must be stated that the Republic of Haiti engages itself to contract, in accord with the Financial Adviser, a national loan which shall not exceed $16,000,000 in nominal bonds payable in 30 years by annual drawings at par or through purchase on the market below par.

The reasonable time for notice of withdrawal is to be fixed at 3 months, and likewise for the redemption of the loan the term of 15 years must be changed to 10 years.

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9. Holders of the bonds of the loans of 1896 and 1910 not being obliged to accept bonds in exchange for their claims, it must be stated that the bonds of the loans of 1896 and 1910 will be redeemed in accordance with the contract of issue of these said loans (the total sum owing to be held at their disposal in francs converted at the most favorable rate by the Haitian Government). The same is to apply to all the categories of debts to be settled out of the funds of the loan; they must be paid in American gold unless the parties consent expressly to settle their claims in part or in whole with bonds of the loan.

10. It must be stated that all sums not employed after the settlement of the debts and claims shall be applied to public works, to agriculture, and to public instruction.

11. The Haitian Government insists that it be clearly understood that the payment of the interest and amortization of this loan shall be guaranteed by a monthly levy of one-twelfth of each yearly installment on the first receipts of import duties of every month, up to the aforesaid twelfth.

This levy shall be under the control of the General Receiver of Customs established by the convention of September 15 [16], 1915,16 to the extent and during the life of the convention; after the expiration of the convention the sum above mentioned, to be levied from the first monthly receipts of import duties, shall be kept for the account of the rightful creditor by the National Bank of the Republic of Haiti performing the duties of the Treasury, or by any other establishment performing this service if the contract of the National Bank of the Republic of Haiti comes to an end before this time.

12. The sums allotted to the members of the Commission appear excessive; the $8,000 for salary and $2,000 for expenses may be reduced to a net figure of $6,000.

The expenditures made by the Commission for aides, experts, and general expenses should not exceed $10,000 per year.

13. It shall be inserted that the Government of Haiti engages itself to present to the legislative body the measures necessary to give full effect to these provisions.

These provisions shall be presented for the sanction of the legislative body in the loan law.

The Secretary of State for Foreign Affairs is commissioned to declare that of the three groups of lenders, there is no occasion to consider the propositions made (1) by the Speyer group or (2) by the National City Co., because propositions providing for two series of bonds must be abandoned once for all.

The proposition of the banking house of Messrs. Lee, Higginson & Co. of New York is the one that is to be accepted. It is summarized as follows:

Direct and immediate issue of $16,000,000 in obligations of 30 years, 6% bonds, at the rate of 85, redeemable by purchase on the [Page 476] market up to par or by drawings at par if the quoted price is above par; not redeemable before 15 years, except by gradual amortization necessitating an annuity of $1,110,000, to be increased by $5,000 a year up to the 29th year (the 30th annuity shall be $833,645), which, with the yearly appropriation of 25% of all revenues above $7,000,000, up to $250,000, is the yearly total for amortization.

The Government is disposed to accept a loan offer of this nature, but with the modifications stated above included in the provisions of the loan law, and under the reserve of propositions allowing less unfavorable rates of issue and also a lower rate of interest, as appears from the explanatory note of the Ministry of Finance17 annexed to this memorandum.

  1. Ibid., p. 222.
  2. File translation revised.
  3. Based on Department’s telegram no. 61, Nov. 18, 1921, Foreign Relations, 1921, vol. ii, p. 220.
  4. Ibid., 1919, vol. ii, p. 347.
  5. See Department’s telegram no. 60, Nov. 14, 1921, ibid., 1921, vol. ii, p. 217.
  6. Not printed.
  7. For papers concerning the institution of the Claims Commission, see pp. 535 ff.
  8. See Foreign Relations, 1920, vol. ii, pp. 827 ff.
  9. Based on the Department’s telegram no. 96, Nov. 1, 1920, 7 p.m., Foreign Relations, 1920, vol. ii, p. 847.
  10. Commissions created to verify the floating debt. The Sambour Commission was established by law, Sept. 9, 1911; the law validating its findings was abrogated by the treaty of Sept. 16, 1915. The Féquière Commission was established on Nov. 4, 1916.
  11. Foreign Relations, 1916, p. 328.
  12. Not printed.