438.00/230: Telegram

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

44. For General Russell.

Your April 6, 1 p.m. Department does not feel that authorization of increase in public debt could be justified at the present time, in view of the provisions of Article 8 of the treaty of 1915. Statistics available would appear to indicate that the Haitian Government will not be able to meet the service of the loans already authorized and the current expenditures of the Government under the budget recently adopted, unless there is an increase in its revenues. In this connection see figures presented in Department’s May 24, [1922] 2 p.m.25 The budget recently adopted apparently contemplates total expenditures at the rate of $4,914,000 per year, including debt service. This amount exceeds the average annual revenues of the first six years of the American occupation and is only $50,000 less than the total revenues of the last fiscal year. The increase of the Series B issue to $8,000,000 would involve an additional charge of $210,000 per year.

It is not deemed safe to assume that the present increase in the revenues will continue, or that the proposed internal revenue legislation, making possible a permanent increase, will be passed without material delay. Pending such a permanent increase it would not [Page 405] be safe to assume obligations which cannot be met from present revenues.

The Department feels, therefore, that the Claims Commission should make its plans on the basis of the issue of “B” bonds as now authorized. This will leave a considerable sum for public works, which may be augmented if the claims now pending are scaled down to any extent. The surplus revenues received during the last few months would also appear to be available for such purposes as the Haitian Government in accord with the Financial Adviser may deem advisable. After the new revenue legislation has been adopted and Haiti is in a position to assume further obligations, the issue of a new series of the loan might properly be considered.

The Department deeply regrets the fact that there will not be a larger sum available for public works from the present loan, but it feels that it would be extremely dangerous to rely upon an increase in the present revenues sufficient to justify the assumption of new obligations.