838.51/2570
The Minister in Haiti (Armour) to the Secretary of State
[Received December 12.]
Sir: I have the honor to acknowledge receipt of the telegraphic instruction No. 77 of December 7, 2 P.M.,15 stating that the text of a note in reply to the communication of the Haitian Government of November 18, 1932, is being sent to the Legation by airmail. The telegram states that it is the Department’s firm view “that before appropriate consideration can be given to the question of agreeing under Article VIII of the 1915 Treaty to an increase in the public debt in Haiti it will 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 accordance with the protocol of October 3, 1919.”
I recognize that this is the logical view of the case. The Haitian Government cannot reasonably expect the United States to approve its application to increase the public debt while it has as yet failed to give assurance that it intends or will be able to provide the agreement regarding financial administration after 1936 which it is obligated to provide under the Protocol of 1919. While the Haitian Executive signed a treaty satisfactory in that respect, the Legislative Body, which is in office until 1936, refused to ratify it. Moreover, the Legislature rejected it “in principle”—that is to say it is apparently determined to disregard the obligation to provide a financial agreement which was one of the principal guarantees given in order to obtain the loan of 1922.
[Page 699]While therefore the position taken by the Department is logically sound, nevertheless I feel that it would be a mistake at this time to present a note along the lines of the Department’s telegram at least until the Haitian Government is assured that the bankers are ready to grant the desired loan.
To present a financial agreement as a condition precedent to consideration of the application for approval of a loan when there is as yet no assurance that the loan will be forthcoming would have, I feel, a most unfortunate effect. The refusal of the condition, under existing circumstances, could, I believe, be taken for granted.
If there were definite assurance of a loan, it is possible that the President would accept the condition and it is also perhaps possible that the Legislature might ratify an agreement regarding financial and other pending issues together with the loan contract, particularly if the bankers and the Department would consent to an advance, prior to ratification, of from $100,000 to $200,000 to begin work on the Artibonite development and, possibly, on some of the other minor public works proposed by the Haitian Government in its note of November 18. Probably a special session would be called to consider the loan.
As I have pointed out in previous despatches, the President is greatly discouraged as a result of his loss of prestige and popularity which occurred, he feels, largely as a result of the submission and legislative rejection of the Treaty of September 3. He has not as yet succeeded in understanding why the Government is not allowed temporarily to default on amortization or to take from the reserves in order to obtain funds to execute needed public works which would be productive and would alleviate, as he sincerely wishes to do, the prevailing economic distress. He is pessimistic regarding the chances of obtaining a loan, having already, earlier in the year, been categorically refused one by the National City Bank with which the Government is again negotiating. The loan of 1922 still being a controversial matter he has come slowly to the solution of a new loan, his other proposals having been rejected.
At the same time he evidently apprehends difficulties with the Legislature unless he can actually start the public works before the loan contract is submitted to the approval of that body. During the past year, the President has gradually been approaching a policy of cooperation with American officials in Haiti. Since last July this policy has been definite with very good results, notably in regard to the budget. The present cabinet which is the best we have had to work with since the Borno regime is an expression of this policy. The President is reported to have been extremely irritated over his failure to receive any favorable news concerning the application for funds for [Page 700] public works which he could use in his speech today at Aux Cayes. It is somewhat to be feared that, feeling that a policy of cooperation has brought him as he sees it, loss of popularity and has not resulted in this very desirable project, in which he has displayed more active interest than in anything else that has occurred during his administration, he may dismiss his cabinet (certain members of which, notably … he blames for misleading him as to reliance to be placed on American cooperation) and return to his previous stand of nationalistic opposition to the United States, arguing that he would thereby regain lost popularity. He perhaps remembers also that the chief achievement of his administration, the popular Accord of August 5, 1931,16 was obtained with a “nationalistic” cabinet. While I believe that eventually he would return to a cooperative attitude we might re-experience a fairly prolonged and unfortunate period of useless strife with the Government.
Personally I do not feel that we should risk this latter possibility nor that we should do anything that would endanger the possibility of obtaining this loan. The development of the Artibonite, under the plan and safeguards which the Government is willing to provide, gives very good promise of practical results and increased revenues which are very necessary in view of the uncertainty regarding coffee, on which the Haitian economy depends. To provide new production is also, in the final analysis, in the interest of the bondholders in that an improved economic situation assures the necessary revenues to meet obligations under the loan. Finally I believe that compliance with the Haitian Government’s request for approval of a loan and the expenditure of such funds for the public works envisaged might so improve our relations with the Haitian Government that it would make possible the conclusion, at later date, of a satisfactory agreement regarding financial administration after 1936.
In view of the foregoing, I therefore propose:
That no definite reply be made to the Haitian Government at this time unless there is assurance that the bankers are willing to provide the desired loan subject to the Department’s approval.
That, while it is recognized that we cannot urge or recommend the loan to the bankers, the Department nevertheless answer the latter’s request, which I assume will be made, for information as to the Department’s attitude on the proposed financing, that in view of the profitable nature of the bank’s business relationship with the Haitian Government it is felt that they should at least give very careful study to the application, if for no other reason than in the interest of the bank’s own position in Haiti.
That, in preference to joining in the proposed note the issues of an agreement regarding future financial administration to approval of [Page 701] the application for an increase in the public debt, I be authorized to explain the situation orally to the President and ask that a definite statement be made in a note from the Minister for Foreign Affairs to the effect that the Haitian Government recognizes its obligation under the Protocol of 1919 to provide an agreement along the general lines of Protocol B of the Treaty of September 3, 1932. regarding the measures of financial administration to be in effect alter the expiration of the Treaty of 1915 and that it intends to fulfill this obligation at the earliest practical date. I am not certain that the President will agree to this but I believe it to be a distinct possibility. I have no doubt that he would give an oral promise to this effect which I believe might be relied upon, in view of the more favorable public feeling and situation that would probably follow the execution of the public works and because of the support from the Legation that the President will very probably need in his future relations with the Legislature.
If the Department feels that the written or oral promise of the Government would be insufficient, then the note could make approval of the application to increase the public debt conditional upon conclusion of a financial agreement but, as previously recommended, the note should not be delivered until there is assurance that the loan will be forthcoming and that some funds, in advance of ratification, will be provided to start work on the Artibonite and possibly other projects. Even under these conditions I feel that there is a decided risk in thus tying up the financial agreement and the loan—if legislative ratification of the “definite accord” is contemplated—of losing the loan and of risking the most unfortunate occurrence of a second rejection of the proposition of financial control after 1936. Even if the Legislature would accept the condition there would probably be unpleasant criticism in Haiti and abroad that we had used undue pressure to achieve our aims.
It has been assumed throughout this despatch that the “definite agreement” mentioned in the Department’s telegram signifies an accord covering all of the pending issues and subject to legislative ratification. If the note which is being sent does not make this clear I would appreciate instructions on this point. Would the Department consider a purely executive arrangement, such as the Haitianization agreement of August 5, 1931, on the question of financial administration? It is possible that the Haitian Government might agree to conclude an executive arrangement although probably not before the close of the next regular legislative session.
One argument which might possibly be invoked in favor of an executive accord on financial administration after 1936 is the fact that a future agreement on this point, conferring the same powers as at present exercised, is specifically foreseen in the Protocol of 1919, which itself was duly ratified. It might be argued that a second ratification was unnecessary and that a later Legislature had no power to change [Page 702] a contract made by a previous one. On the other hand, a precedent for ratification was established by the Treaty of September 3, 1932, and an effort to escape legislative reference would undoubtedly cause criticism in Haiti and among opponents of our Haitian policy in the United States.
Respectfully yours,
- Not printed; see instruction No. 10, December 8, 1932, to the Minister in Haiti, supra.↩
- Foreign Relations, 1931, vol. ii, p. 403.↩