838.51/2330: Telegram

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

112. I saw the Minister of Foreign Affairs this morning with the intention of asking him whether the Government proposed to make payment of the indemnities to the retiring treaty people on September 30th. He stated that the Government could not do so until October 1st under article 22 of the new Law of Expenditures despite the agreement [Page 522] to make payment on September 18th. I then asked him if they proposed to balance the budget. He replied that the Government had a fifty-fifty proposition to make whereby the Government would make a reduction of approximately 750,000 gourdes in its budget proposal of 32,753,000 gourdes and that we should furnish from the reserve approximately the same amount to bring our estimate of 31,220,000 up to 32,000,000 thereby balancing the budget at 32,000,000 gourdes.

I then asked the Minister if he would call a conference at noon between himself, Minister of Finance, Pixley and myself for the purpose of considering this proposition. He said he would. I then repeated to the Minister the renewed assurance that I had made on many previous occasions to the effect that a very serious situation was likely to arise if the Government did not make an effort to balance the budget. He answered that the only serious situation that he could foresee was that we would suspend payments on October 1st as we had done once before and thereby starve the Haitian people. I merely replied that there was the possibility of a suspension. The Minister replied “Well go ahead and do it. Take the whole country and the responsibility for doing it.” It is to be noted that I did not make any statement as authorized by the Department’s number 65 of September 22 [23], 5 p.m., which was received early this morning. It was the Minister himself who brought up the question.

At the conference this noon which the President attended Pixley and I urged the balancing of the budget.

The Minister of Foreign Affairs and the President said that it was impossible unless the proposition outlined above was accepted. We said that we could not say that it could be accepted and that I could hardly recommend it. The Minister of Foreign Affairs then proposed that a percentage cut be made in all salaries and administrative expenses including the President and the American Treaty Services and personnel down to the lowest employee. We said that such a proposition would not be at all acceptable. I again brought out the seriousness of the situation which might arise and both the President and the Minister of Foreign Affairs seemed to be unanimous in repeating what the Minister of Foreign Affairs had said to me earlier in the morning: to go ahead and do our worst and take the country if necessary.

It is definitely established that the Garde has been cut 408,000 gourdes and I stated that this amount would have to be replaced in the budget which would then make the budget according to the Haitian figures 33,161,000 gourdes and that if they would start at that figure and reduce to 32,753,000 gourdes I would be willing to consider a fifty-fifty proposition and ask for instructions on it.

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The Government’s propositions are as follows:

We to furnish the total of 2,149,000 gourdes from the reserve which would include one-half of the 408,000 Garde reduction, 290,000 already earmarked for Internal Revenue in the light of recent unfavorable developments, 500,000 earmarked for Customs Service, 375,000 earmarked as direct contribution from the reserve and 780,000 to bring up the estimate of 31,220,000 to 32,000,000 gourdes. The Government on its side would endeavor to bring down its figures by 961,000 gourdes.
To balance the budget by means of a percentage cut in all salaries including the President, treaty officials and their personnel and all other Government credits except those for public debt. The required percentage to effect this would be 7 to 9 percent.

I cannot recommend the second proposal. If the Department is disposed to accept the first one I should like to know as soon as possible. I feel that I must comply with the instructions contained in the Department’s 65, September 23, 5 p.m., not later than Saturday morning, and unless the Department should instruct me to withhold compliance by telegraph, in order that it may have ample time to consider the above propositions, I shall do so.