838.51/1341: Telegram

The Secretary of State to the Vice Consul in Charge of the Legation in Haiti ( Longyear )

62. For General Russell. Your August 11, 2 p.m. You will express to the Haitian Government the Department’s gratification that the essential conditions of the foreign loan have now been determined upon. You will say, however, that there are three points in the note addressed to you by the Haitian Government which the Department feels might well receive further consideration.

In Paragraph 5 of the Haitian Government’s note it is stated that the bids “will be made above a minimum rate of issue.” It would seem more customary and possibly productive of better results if, instead of fixing a minimum rate, the Financial Adviser acting in cooperation with the Department of State, reserved the right to reject any or all bids. There would appear to be no danger of collusion between the bankers because of the large number of bankers who will be invited to submit bids, and it will be possible, if the bids submitted appear unjustifiably low, to reject them.
You will urge upon the Haitian Government the desirability of taking action immediately toward constituting a Claims Commission. The Department feels that the prospect for the successful flotation of the loan would be materially improved if it were possible, in calling for bids, to announce that the Claims Commission had been constituted. The Department hopes, therefore, that the Haitian Government will reconsider its decision on this point.
The Department deems it essential for the successful flotation of the loan that the internal bonds should be authorized by law before bids are invited for the external bonds, because bankers must know the exact nature of the internal bond issue before they can act intelligently in submitting bids for the external bonds. Furthermore, it is believed that no bankers would consider the purchase of the bonds unless provision should previously have been made for the payment of the creditors now having liens on the customs [Page 509] duties. You will, therefore, urge the Government to promulgate a decree, or, if necessary, to prepare and have enacted a law authorizing the internal bonds with all possible expedition.

In this connection, after considering your August 1, noon, the Department does not feel inclined to insist upon the issue of the internal bonds in gourdes if the Haitian Government continues desirous of making the bonds payable in dollars. The Department still feels that a better price would be obtained for the external bonds if the internal bonds were payable in gourdes, but it feels that this matter is one which must be decided by the Haitian Government. It assumes that the question can be reconsidered, if the issue of the internal bonds in dollars makes the flotation of the external loan unduly difficult.

The Department regards the question of the currency in which the internal bonds are payable as important from the point of view of the marketability of the external series. It appreciates on the other hand that the internal bonds would be more readily received if they were payable in dollars, and it does not wish to delay the negotiations by insistence upon this point. It leaves it, therefore, to your discretion to settle the matter with the Haitian Government.

In the event that the Haitian Government determines to issue the internal series in dollars you are authorized to suggest that the bonds of these two series be registered both as to principal and interest. The Department hopes to receive a reply upon this and the other points above mentioned in the immediate future.