438.00/232: Telegram

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

52. For General Russell.

Your April 19, 1 p.m. Department has very carefully considered your arguments in favor of an increase in the series “B” issue and has of course given weight to your advice and that of the Financial Adviser. It does not, however, feel that it would be justified in consenting to a further increase of the Haitian public debt at the present time. It is too early to assume that the present increase in customs revenues will be permanent and it seems extremely inadvisable to make calculations based on the new internal revenue law until that law has finally been put into effect. The Department appreciates the need for the execution of public works but it could not properly consent, under Article 8 of the treaty, to an increase in the public debt unless it were demonstrated that the ordinary revenues of the Republic were sufficient to meet the service of this debt, after the payment of the ordinary expenses of the Government. Furthermore, it is particularly anxious to do nothing which would interfere with the early removal or reduction of the export duties.

It would not be practicable to authorize an increase in the series “B” issue and permit the Claims Commission to make awards on that basis with the understanding that the additional bonds would not be issued if the internal revenue law were not passed. In this contingency it would apparently be some of the European claimants who would remain unpaid, thus creating possible diplomatic complications.

In this connection the Department desires that you should discuss with the Claims Commission the advisability of paying so large a proportion of the awards in bonds. The Department feels that it would be difficult to persuade foreign claimants to accept 60 or 70 per cent of the awards in the series “B” bonds, which probably will always have a restricted market because they are payable solely in Haiti. It is believed that Haiti might avoid possible difficulties [Page 408] with foreign claimants if at least 50 per cent of the awards was paid in cash. You will remember that the British Government has stated that it is not prepared necessarily to accept awards if the amount paid in bonds was sufficiently large to reduce materially the net value of the awards.26

  1. Note no. 923, of Dec. 8, 1922, from the British Ambassador, Foreign Relations, 1922, vol. ii, p. 553.