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.
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.
[Enclosure]
Draft of Proposed Agreement for the Administration
of the Finances of the Haitian Government
I
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]
II
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.
III
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.
IV
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.
V
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]
VI
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.
VII
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.
VIII
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.
IX
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:
- 1.
- 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.
- 2.
- Not to permit any department of the Government to exceed
its monthly allocation (douzième)
except in case of demonstrated necessity.
- 3.
- 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.
- 4.
- 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.
- 5.
- 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.
X
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.
XI
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.
XII
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.
XIII
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.
XIV
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.
XV
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 …
