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

No. 471

Sir: With reference to my telegram no. 86 of this date,22 I have the honor to enclose herewith a draft of the proposed agreement for the administration of the finances of the Haitian Government, embodying the modifications proposed yesterday by the Minister for Foreign Affairs, except with respect to a change still desired by the Government in the fourth subsection of Article IX. The Minister has not yet seen my draft of the new last paragraph of Article II, or the new draft of Article VIII which latter I am withholding pending the receipt of instructions from the Department; but I believe that both of these articles will meet his wishes and that an agreement substantially following the enclosed draft can probably be signed. I have not accepted the Minister’s text for Articles I and XV as included in the draft, and I shall probably suggest changes in these before final signature.

It will be noted that the agreement as tentatively accepted by the Minister for Foreign Affairs gives to the Fiscal Representative practically all of the power which that official would have had under the Department’s original proposal. In one respect, in fact, it is a distinct improvement over the first draft, because it leaves under the control of the Fiscal Representative the physical preparation of checks used in making government payments. I believe that this provision, which was consented to by the Government in order to avoid any specific mention of a preaudit system, will more than offset any disadvantage which may be encountered if deposits were made to the credit of the Government rather than to that of the Fiscal Representative.

[Page 664]

The Minister’s tentative acceptance of the financial agreement is of course conditional upon our consenting to put at least part of the new arrangement into effect before the expiration of the present treaty. Upon the receipt of the Department’s instructions on this point, I indicated that an agreement to this effect might be considered provided that the financial agreement was accepted by the Haitian Government in a form which gave adequate assurance of real financial stability. This matter is more fully discussed in my telegram of this date above referred to. I believe that an agreement to abrogate certain portions of the existing treaty, which is of course very unpopular here, would produce an excellent effect and would help to obtain congressional approval for the new financial agreement.

As anticipated, the principal obstacle to an agreement has been the Haitian Government’s reluctance to consent to continued American administration of the customs. I believe that the Minister for Foreign Affairs is now convinced that this must be accepted, and he rather clearly indicated yesterday that it would not be an obstacle to an agreement. He said, however, that he wished me to have a frank talk with the President and the Minister of Finance, apparently in order to let those officials see for themselves how impossible it was to obtain a concession, and he promised to arrange such a conference in the very near future. I shall take advantage of this same conference to bring about a direct discussion between the Financial Adviser and the Minister of Finance regarding the amount of money to be allowed for the internal revenue inspection service, as this point has not yet been covered in my discussions with the Minister for Foreign Affairs. I hope that the question can be settled more easily in this way, because the Minister of Finance has worked especially harmoniously with Mr. de la Rue.

Respectfully yours,

Dana G. Munro

Draft of Proposed Agreement for the Administration of the Finances of the Haitian Government


Until the total retirement or refunding of all bonds of the Loan of 1922, a Fiscal Representative and a Deputy Fiscal Representative, appointed by the President of Haiti upon the nomination of the President of the United States, shall control the contractual guarantees of the holders of these bonds in order adequately to insure the interest and amortization of the said loan.

[Page 665]


The Fiscal Representative shall administer the tariff and shall collect all duties and other charges on imports and exports accruing at the several custom houses and ports of entry of the Republic of Haiti under the customs tariff and laws now or hereafter in force. He shall have for this purpose and for the necessary audit and accounting services such assistants and employees as may appear necessary. The expenses of the customs service, however, including the amounts upon which the two Governments may agree as the salary of the Fiscal Representative, and the Deputy Fiscal Representative, may not exceed five per centum of the receipts from the customs duties, unless by agreement of the two Governments, and these expenses will constitute a second charge upon the customs receipts next in order after the payment of the service of the bonds issued in accord with the Protocol of October 3, 1919.

The President of Haiti will issue commissions to employees occupying positions of authority and trust in the Customs Service upon the recommendation of the Fiscal Representative. The form of these commissions will be agreed upon by the Minister of Finance and the Fiscal Representative. If the services of a commissioned employee should not be satisfactory or if his removal should be deemed necessary for other reasons, the Fiscal Representative 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.

The Fiscal Representative will make every effort to train Haitian personnel for all positions in the Customs Service. At least one year before the complete amortization of the outstanding bonds, he shall select Haitian employes for special training as Receiver General and Deputy Receiver General of Customs in order that the Service, efficiently organized and fully Haitianized, may be turned over to their direction when complete amortization takes place.


The Internal Revenue Service with its present organization shall be placed under a Haitian Director and with an exclusively Haitian personnel, unless the Haitian Government should express its desire to retain the services of one or more foreign technical employes. The Director of Internal Revenue shall have full administrative authority over the Service, under the high direction of the Minister of Finance, but the Fiscal Representative shall have the power and the duty to inspect all activities of the Internal Revenue Service and to make any [Page 666] appropriate recommendations regarding the conduct of the service or the efficiency of individual employes.

The Fiscal Representative, for this inspection service, shall employ such American and Haitian inspectors and assistants as may appear necessary, providing, however, that the total amount allocated for this service shall not exceed . . annually, except by previous agreement between the two governments. This allocation shall be made by means of funds established, as set forth in Article V hereof.

If the Fiscal Representative should notify the Minister of Finance that there is reason to suppose that the conduct of any officer or employe of the Internal Revenue Service is incorrect or inefficient, such employe will be suspended and will not be reinstated until the charges against him have been disproved to the satisfaction of the Minister of Finance and of the Fiscal Representative.

The Fiscal Representative shall present to the Minister of Finance such suggestions as may appear helpful regarding the improvement of existing internal revenue legislation.

The revenues collected by the Internal Revenue Service shall be deposited in the National Bank as provided in Article VIII hereof.

A law regarding the organization of the Internal Revenue Service will govern the appointment, promotion, and retirement of the personnel of this Service.


If for any reason the internal revenues should decline so that the amount collected falls below 3,000,000 gourdes during the six months from October to March inclusive, or below 2,000,000 gourdes during the six months from April to September inclusive, the Fiscal Representative shall call the situation to the attention of the Minister of Finance and shall make such recommendations as he may deem appropriate for restoring collections to their proper level; and the Haitian Government will put these recommendations into effect.


The expenses of the Internal Revenue Service shall be paid out of the amounts collected, in accord with a schedule of payments agreed upon between that official and the Minister of Finance. These expenses shall not exceed . . per cent of the total amount of internal revenue collections, except by agreement between the Minister of Finance and the Fiscal Representative, but an additional amount of not exceeding . . . . . dollars per annum, as provided in Article III above, shall be included in the same schedule to cover the salaries and expenses of the inspectors who shall be attached to the office of the Fiscal Representative for the inspection of the Internal Revenue Service.

[Page 667]


The expenses of the Internal Revenue Service including the expenses of the inspectors attached to the office of the Fiscal Representative, shall constitute a second charge upon the internal revenues, next in order after the payment of the service of the bonds issued in accord with the Protocol of October 3, 1919.


All authorities of the Haitian Government will extend full protection and all proper assistance to the Customs Service and to the Internal Revenue Service in order to assure their proper operation and the enforcement of the tax laws.

Neither the Fiscal Representative nor those of his assistants who are not of Haitian nationality shall be subject to arrest or to any judicial proceedings without the consent of the Government of the United States.


All monies received by the Haitian Government shall be deposited in the National Bank, to the credit of the Haitian Government.

The Bank shall have irrevocable instructions to set aside each month to the credit of the Fiscal Representative, before permitting the withdrawal of any other funds belonging to the Government, the amounts required to be paid under the various loan contracts. It will also set aside preferentially to the credit of the Fiscal Representative, 5 per cent of the customs collections, . . per cent of the internal revenue collections and the amount required each month for the expenses of the internal revenue inspection service, as provided in Article V above.

All payments of government funds shall continue to be made by checks prepared by the Service of Payments. The existing arrangement, as agreed upon between the two governments on August 5, 1931, shall continue to govern this Service, but the checks except those for the payments of the debt service and the expenses of revenue collection, shall bear the signature of the Minister of Finance. The National Bank will be irrevocably instructed not to honor any check not emanating from the Service of Payments.


Until the complete amortization of the bonds of the loan of 1922 or the retirement of these bonds before their due date, the Government of Haiti undertakes:

To balance its budget each year and not to authorize any extraordinary or supplemental appropriations in excess of budgetary items [Page 668] unless unobligated funds are available, after setting up such reserves as may be necessary to assure the payment of the debt service and other budgetary expenses during those months of the fiscal year when receipts are normally reduced, to cover such extraordinary or supplemental appropriations.
Not to permit any department of the Government to exceed its monthly allocation (douzième) except in case of demonstrated necessity.
Not to reduce the customs tariff or to modify the internal taxes in such a way as to reduce the total yield of the internal revenues.
Not to issue further series of the loan authorized June 26, 1922 except with the previous consent of the Government of the United States; not to contract any debt or assume any financial obligation unless the ordinary revenues of the Republic available for that purpose after defraying the expenses of the Government shall be adequate to pay the interest and provide a sinking fund for the final discharge of such debt; and not to grant any subsidy for a period of more than one year, except with the accord of the Fiscal Representative.
To include annually in the budget of the Republic the amounts necessary for the regular service of the public debt and other contractual obligations, as well as lump sums representing the customs 5 per cent and the internal revenue . . per cent and inspection service funds. If the revenues received in any month should be insufficient to meet the full debt service and expenses of collection, the Minister of Finance will pay to the Fiscal Representative from his reserves the amount required to make up the deficit.

In everything relating to the matters dealt with in this article, the Haitian Government will proceed in accord with the Fiscal Representative.


If it should appear during the course of a fiscal year that the revenues will be substantially less than the estimates used in preparing the budget, the Haitian Government, acting in accord with the Fiscal Representative, will adopt adequate means to meet the deficit, either by reducing expenditures or by providing new sources of revenue.

The Government will not sell the securities held in the investment account, or other public property, except with the prior accord of the Fiscal Representative.


The system of financial administration of the Republic of Haiti shall be governed by a special law of finance the project of which has been submitted to the Legislative Body.


In order to assure the maintenance of public order, the monthly allocation for the Garde d’Haïti will be set aside preferentially by the [Page 669] National Bank from the funds remaining after deduction of the amounts necessary to pay the service of the debt and the expenses of revenue collection, as provided in Article VIII hereof, and the sums thus set aside shall not be subject to withdrawal for any other purpose than the necessary expenses of the Garde. Any unexpended balance at the end of the fiscal year shall revert to the general fund of the Treasury.


The Fiscal Representative shall maintain adequate records of all receipts and disbursements, which records shall be open to inspection and verification by the appropriate authorities.


The Haitian Government reserves the right to retire the bonds issued in accord with the Protocol of October 3, 1919, in advance of their due date; and the Government of the United States will not invoke the provisions of Article VI of the Protocol as an obstacle to such retirement before the expiration of the period of fifteen years fixed therein, provided that the Haitian Government is able to make an arrangement for this purpose satisfactory to the holders of the outstanding bonds.


The present convention shall be ratified and the ratifications exchanged at Port au Prince without delay in order that it may take effect not later than . . . . . 19 …

  1. Not printed.