Foreign Relations of the United States, Diplomatic Papers, 1933, The American Republics, Volume V

838.51/2569

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

No. 10

Washington, December 8, 1932.

Sir: The Department has received and has given attentive study to your despatches Nos. 6, 8, and 9, dated respectively November 18, 19, and 25, 1932,⁹ regarding the desire of the Haitian Government to obtain a loan of approximately two million dollars for the purpose of embarking on a program of public works, notably the irrigation of the Artibonite plain.

The Department had a conversation regarding this matter with Mr. de la Rue, Financial Adviser to the Haitian Government, on November 26. A copy of the memorandum of this conversation is enclosed herewith for your information.¹⁰ The Department has had no further communication from Mr. de la Rue, nor has it been approached in any manner by bankers who may be interested in the project of the Haitian Government.

Your despatch No. 6 enclosed a copy of the note of the Haitian Government to you dated November 18, 1932,¹⁰ regarding this proposal. There is enclosed herewith the text of a note which the Department desires you to send to the Haitian Government in reply. If, after examining this reply, you wish to make any comment or suggestion before transmitting it to the Haitian Government, please communicate with the Department by cable.

The Department appreciates the reasons why it might be advisable for the Haitian Government to undertake this projected program of public works construction, subject to the conditions and recommendations outlined in your despatches. The Department is prepared to give sympathetic consideration to the matter, but its action must necessarily be guided by certain principles inherent in its relations with Haiti. It is, for instance, obvious that the United States Government cannot in any sense urge or recommend to bankers that they undertake this business for Haiti. This is a matter for the Haitian Government to negotiate with the bankers who may be interested, and for the latter to decide from the standpoint of their own interests. If eventually this question of the loan and the public works construction should be worked out satisfactorily, this Government would of course be prepared to do whatever it appropriately could to assist Haiti, if the Haitian Government so desired, in such matters as that of recommending an expert to advise on the irrigation project, as suggested by you.

Furthermore, this Government regards it as of prime importance that before consenting under Article VIII of the Treaty of 1915¹¹ to any increase in the public debt of Haiti, there should be a definite agreement with the Government of Haiti regarding the system of financial administration to be in effect following the expiration of the Treaty of 1915 and until such time as all bonds issued under the Protocol of October 3, 1919,¹² have been retired or refunded. It should seem obvious to the Haitian Government that before the United States Government can agree to any further responsibilities respecting Haitian finances it must know where it stands regarding its responsibilities as they will exist after the expiration of the Treaty of 1915. As is pointed out in the note enclosed herewith, to be sent to the Haitian Government, Protocol B attached to the Treaty signed September 3, 1932, between the Haitian Government and the United States¹⁴ contains appropriate provisions for such financial administration after the expiration of the 1915 Treaty. Whether the Haitian Government will be disposed to reopen with the Legislature the question of ratification of this Treaty, or whether it will desire to propose certain modifications in the Treaty which would not affect what this Government regards as the essential elements of financial administration, this Department is not in a position to determine. It would, however, seem clear that there is an inconsistency in the Haitian attitude in requesting on the one hand the assistance and approval of this Government in obtaining a further loan under the provisions of the Treaty of 1915 and the Protocol of 1919, and at the same time making no effort to place on a definite basis the system of financial administration which under the Protocol of 1919 will have to be put in effect upon the expiration of the 1915 Treaty. This Government regards it as essential that before any approval on its part can be given to the proposed increase in the Haitian public debt, and entirely apart from other considerations which may or may not warrant this approval being given, there should be an agreement between the two Governments regarding the measures of financial administration to be in effect following the expiration of the Treaty of 1915.

Very truly yours,

For the Secretary of State:

Francis White

[Enclosure]

Draft Note to the Haitian Government

I duly transmitted to my Government a copy of Your Excellency’s note of November 18, 1932, with enclosures, and am now in receipt of instructions to reply to Your Excellency as follows:

The Government of the United States has given careful and sympathetic consideration to the note of the Minister for Foreign Affairs of Haiti dated November 18, 1932, with enclosures, regarding the desire of the Government of Haiti to obtain a loan of approximately $2,000,000 for the purpose of undertaking the construction of certain public works, notably the irrigation of the Artibonite plain. It has noted that the Haitian Government has instructed its Financial Adviser to consult with bankers concerning this matter and that the Government of Haiti “will duly appreciate the approval and assistance which the Government of the United States may extend to it in the negotiations for the loan of $2,000,000.”

There has as yet been no approach to the Department of State by bankers who may be interested in financing this proposition, and, of course, until such time as bankers interested in the matter place a definite proposal before it, there is no action which the United States Government can appropriately take in the matter. Your Excellency may be assured, however, that if, and when, such a definite proposal is submitted, it will receive the careful consideration warranted by the request of the Haitian Government.

With regard to the suggestion that $500,000 be withdrawn from the Treasury reserves to begin the public works program, it would seem most unwise to initiate work on such a program until such time as the Haitian Government were assured that the funds required for its complete realization would be provided. Moreover, it appears that the cash reserves of the Treasury amount at this time to but little more than $500,000, and while this year’s budget appears to be balanced it is yet too early in the fiscal year to determine whether actual revenues will approximate the budget estimates.

It has been noted that the plan outlined in the note to the Haitian Minister for Foreign Affairs contemplates the issue of bonds of Series D of the 1922 loan in the amount of $5,000,000, to be used to retire the bonds of Series B now outstanding in the hands of the public, and to furnish collateral for the projected loan of $2,000,000. It is noted that the proposed Series D bonds would be amortized at a date not later than that of the amortization of all other outstanding bonds of the 1922 loan, and that therefore the issue of these proposed bonds would not extend the period of American financial control in Haiti. This would of course be essential. In the note dated October 7, 1932, which Chargé d’Affaires Heath addressed to Your Excellency, it is stated that this Government “desires to limit its responsibilities in connection with Haitian financial matters to the minimum required by the existing obligations undertaken by both Governments.” It is, however, obvious that the proposed Series D bonds, if issued, could not be amortized until some time subsequent to May 3, 1936, the date on which the Treaty of 1915 expires. It is the view of the Government of the United States that before appropriate consideration could be given to the question of agreeing, under Article VIII of the 1915 Treaty, to an increase in the public debt of Haiti, it would be necessary to reach a definite agreement with the Haitian Government respecting the measures of financial administration to be in effect following the expiration of the Treaty of 1915 and until the total retirement or refunding of all bonds issued in accord with the Protocol of October 3, 1919. It will be readily perceived by the Haitian Government that the Government of the United States could not be expected to assume further responsibilities in respect of Haitian public finance in the absence of an exact definition of what the situation will be regarding its responsibilities in the period subsequent to the expiration of the Treaty of 1915. The Government of Haiti will recall, in this connection, that the Treaty signed on September 3, 1932, as a result of negotiations between the two Governments, provided in Protocol B thereof for such a definite agreement as to financial administration.

9. None printed.
10. Not printed.
10. Not printed.
11. Foreign Relations, 1916, p. 328.
12. Ibid., 1919, vol. ii, p. 347.
14. Foreign Relations, 1932, vol. v, p. 671.