The Minister in Haiti ( Munro ) to the Secretary of State

No. 114

Sir: As I had the honor to report in my despatch No. 113, of May 5, 1931, I informed the Haitian Minister for Foreign Relations on May 4, 1931, of the general outline of the new financial convention which I had been authorized to conclude. The Minister made two or three observations upon which I should be glad to have the Department’s instructions. A copy of the outline which I handed him informally and unofficially to indicate the main provisions of the new convention is transmitted herewith.

I told the Minister that the official to be appointed to collect the pledged revenues was referred to in the outline merely for convenience as the Financial Adviser-General Receiver, but that I had pointed out to the Department that this title would probably be unacceptable to the Haitian Government and that I understood that the Department would have no objection to the adoption of any other suitable title as, for example, that of “fiscal agent”. The Minister said that he would much prefer the adoption of another title and that “fiscal agent” seemed to him entirely satisfactory.

Mr. Sannon, on glancing over my outline, inquired at once about the reference to aids and employees in paragraph 1. He said that this phrase had given rise to questions of interpretation under the present Treaty and that he felt that the number of aids and employees should be strictly limited in the convention and that other employees in the customs service should be appointed by the President of Haiti. I said that I would be prepared to recommend that all employees in the financial service, except the head of the service and perhaps one or two other officials, should be appointed in accordance with the procedure already agreed upon for the commissioning of employees in the customs service. This procedure is set forth in the following paragraph which, in accordance with the Department’s instructions, is to be incorporated in the Haitianization accord:

“The President of Haiti will issue commissions to Haitian employees occupying positions of authority and trust in the Customs Service upon the recommendation of the General Receiver. The form of these commissions will be agreed upon by the Minister of Finance and the General Receiver. If the services of a commissioned employee should [Page 466] not be satisfactory or if his removal should be deemed necessary for other reasons, the General Receiver will terminate his services and will at the same time recommend such action as he considers advisable regarding his replacement, making a temporary appointment if necessary until a new commission is issued.”

This procedure would appear to be entirely consistent with the provisions of the Protocol and I recommend, therefore, that I be authorized to incorporate a paragraph similar to that above quoted as the second paragraph of Article I of the draft convention and to insert in the first paragraph of that article the words “a fiscal agent and deputy fiscal agent” instead of the words “a Financial Adviser-General Receiver with such aids and employees as may be necessary”.

Mr. Sannon also said that he thought that the new convention should clearly set forth the right of the Haitian Government to free itself from outside financial control by the conversion of the existing public debt. I said that this would apparently be covered by a provision that the convention should become null and void upon the retirement of all bonds issued under the provisions of the Protocol of 1919. Mr. Sannon felt, however, that the Haitian Government would desire a still more explicit statement and I said that I did not believe that there would be any objection to such a statement on the part of the Government of the United States.

I have not yet submitted to Mr. Sannon the full text of the draft convention because I considered it preferable to place the matter before him and the Government first in a more simple and understandable form and to commit him definitely to the acceptance of the general plan, before beginning the discussion of the details. In all probability, however, it will appear desirable in the not distant future to hand him the full text of the proposed convention with such changes as the Department may authorize in the meantime. In the discussion of this text many points of minor importance will arise both in respect to phraseology and with respect to procedure upon which it will appear advisable to accept the views of the Haitian Government in order to obtain the latter’s consent to the general principles involved. It will greatly facilitate and expedite the conduct of negotiations if the Department is disposed to give me authority to accept such minor changes if they do not materially affect the essential provisions of the convention, and I respectfully request that the Department convey such authority to me by cable if it is willing to do so.

Respectfully yours,

Dana G. Munro

General Outline of Proposed Financial Convention

In order to carry out the provisions of Article 8 of the Protocol of 1919, the new Convention would provide that the President of [Page 467] Haiti shall appoint, upon the nomination of the President of the United States, a Financial Adviser-General Receiver with such aids and employees as may be necessary, who shall collect, receive, and apply all customs duties on imports and exports accruing at the several customs houses and ports of entry of the Republic. This official would also supervise and control the Bureau of Contributions.
This official would apply sums collected, first: to the interest and sinking fund of the public debt; second, to the expense of collection and would then make the balance available for the current expenses of the Haitian Government.
He would also maintain an adequate system of public accounting and make monthly reports of all collections, receipts, and disbursements, to the appropriate officer of the Republic of Haiti.
In order to assure the termination at the earliest practicable moment of the financial control required by the provisions of the bond contracts, it would be agreed that no further series of the loan authorized under the provisions of the Protocol of 1919 would be issued unless it were considered necessary by the two governments to make a new issue of not exceeding three million dollars ($3,000,000). The purpose of this would be to provide for emergency financing or urgently needed public works in case of necessity. It would also be provided for the protection of the bondholders, that the Republic of Haiti should not otherwise increase its public debt except by previous agreement with the President of the United States.
It would be agreed that the Republic of Haiti would not reduce customs revenues or internal revenue taxes without the consent of the Financial Adviser-General Receiver.
It would be agreed that the Haitian Government would maintain a balanced budget and would not make appropriations in excess of the amount of revenue as estimated by the Financial Adviser-General Receiver on the basis of the revenues of the preceding year. It would be the duty of the Financial Adviser-General Receiver to ascertain that proper provision was made in the budget for the service of the public debt and for other contractual obligations, for the expenses of collection and for adequate reserves for the currency; but the official referred to would exercise no further control over the allocation of the amounts expended so long as they remained within the total estimated revenues. The Haitian Government, therefore, would be free to make such distributions of its income as the legislative and executive powers might see fit after provision had been made for the contractual obligations, etc. above referred to.
The existing law of expenditure would be maintained and would be reenacted annually with certain amendments to be agreed upon between the two governments.
Expenditures in excess of the sums voted in the annual budget would require the accord of the Financial Adviser-General Receiver in order to make certain that adequate funds were available in the treasury to meet them.
Suitable provisions would be incorporated in the Convention regarding the authority given to the Financial Adviser-General Receiver to collect customs revenues, the form of the laws of ways and means, and of expenditures, the proroguing of the budget in case of failure by Congress to act, etc.
The Convention would take effect on May 3, 1936, and would become null and void upon the retirement of the bonds issued under the provision of the Protocol of 1919.