838.51/1276: Telegram

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

44. For General Russell.

Your May 12, 2 p.m., and May 18, 2 p.m. for Mr. Munro.37

Department concurs in your view that a new internal revenue law can best be framed after the arrival of Mr. Hord.38 Mr. Hord is now in Washington and it is proposed that he should proceed to Haiti immediately after the conclusion of the present loan negotiations. A new internal revenue law could probably be framed within a few months after Mr. Hord’s arrival, thus making possible an increase in revenues which might justify an additional loan for public works.

In the absence of such new legislation, the Department feels that it would be very difficult to justify at present the flotation of a loan larger than $16,000,000. The service of such a loan and of the proposed $5,000,000 internal loan under the present plan would amount to $1,460,000 the first year, or approximately $122,000 a month. Assuming that the customs revenues, as you estimate, reach $5,000,000 this year, or an average of $416,666 a month, the application would be as follows:—General Receiver, $20,800; gendarmerie, $74,620; budget expenses based on average since January, $208,000; leaving approximately only $113,000 a month for debt service. The necessary balance of approximately $9,000, must be supplied from internal revenues, which are now an uncertain quantity, and an increase of $2,000,000 in the proposed loan would require an additional monthly expenditure of approximately $12,000, which could only be provided by a decrease in the Government’s budget. Legation’s telegram of January 21, 10 a.m.,39 indicated that such decrease was impossible. Department is convinced, [Page 496] therefore, that increase in contemplated loan at present would be dangerous. It feels that the $16,000,000 loan should be authorized at once in order to take advantage of present money market conditions, but also to make it possible for the Haitian Government to proceed at once to consider other much needed financial measures. You are requested to urge this view very strongly on President Borno.

While it is impossible for bankers to commit themselves on question of price until definite contract is signed, Department is of opinion, from present market conditions, that price of 88 could probably be secured, thus making available nearly half a million dollars additional for public works. This amount, with the sum already assigned to public works from the proceeds of the loan, should provide for such works as the Government is able to undertake in advance of the revision of the internal revenue system and the flotation of a possible additional loan.

Mr. Hord will be glad to receive data concerning finances which you have planned to send him.

Hughes
  1. Latter not printed.
  2. John S. Hord, designated to succeed Mr. McIlhenny as Financial Adviser to the Government of Haiti in October 1922.
  3. Not printed.