838.51/1278: Telegram

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

49. For General Russell. Your May 25, noon, and May 29, 11 a.m.43

Department has given careful consideration to your recommendations, and to the view of the Haitian Government, as communicated through the Minister here, that new bids should be received. It has discussed this matter with Lee, Higginson and Company. This Company has now informed the Department that, in order to avoid any embarrassment which might arise from the understanding that further negotiations would be carried on only with the Company [Page 498] which had submitted the best bid last fall, it would make no demand for preferential treatment in subsequent negotiations. The Haitian Government would, therefore, appear free to invite new bids for the loan.

The Department feels that new bids should not be asked for until the loan law has been passed and the Financial Adviser has been authorized definitely to close negotiations with the highest bidder, subject, of course, to the approval of the Haitian Government. The Department suggests, therefore, that the Financial Adviser, in consultation with the Department, and in accord with the Haitian Government, should work out a complete plan for the proposed bond issue settling all essential details, except the price of the bonds, and that after this plan is approved all interested bankers should be invited to submit offers to purchase these bonds under the same conditions, and at the same time. These offers, which would simply indicate the price which each banker would pay for the bonds, would be opened in Washington by the Financial Adviser and the Haitian Minister, and the banker offering the highest price would float the bond issue.

In this connection, the Department desires you to ascertain whether, under Haitian law, after the loan law has once been passed, either in its present or in more detailed form, the President or his authorized agents would be empowered to close a definitive contract without further reference to the Council of State. It would be desirable that the contract be closed in this manner if possible, because bankers will not make a firm bid on the most advantageous terms except for a very few days, and the immediate acceptance of the bid and sale of the bonds is necessary if the Haitian Government is to derive the full benefits of competition.

An immediate conclusion of negotiations is very necessary, because it is more difficult to sell bonds on the American market during the summer. If the Haitian Government, therefore, will promptly indicate its acceptance of the Department’s views as to the procedure to be followed, the Department will cooperate with the Financial Adviser in framing a plan for a loan which will be submitted to you at the earliest practicable moment by cable.

Department desires that procedure, as outlined above, should be embodied in exchange of notes with Haitian Government.

The Department will not approve any procedure which involves direct negotiations between the bankers and the Haitian Government, or which does not assure the acceptance of the best bid without affording opportunity for the use of any improper influence.

  1. Neither printed.