838.51/2575: Telegram

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

136. I have an appointment with President Vincent tomorrow at which time I will set forth fully the views contained in the Department’s telegraphic instruction No. 79 of December 17, 2 p.m. I am informed that the President realizes and is reconciled to the fact that the larger loan envisaged in the Haitian Government’s note of November 18 last is out of the question at present due to the state of the financial market, but is counting on having the possibility reexamined [Page 705] next summer when conditions may have changed. In the meantime he is apparently satisfied with the proposed short-term bankers’ advance which he considers does not constitute an increase of the public debt within the meaning of the Treaty of 1915 requiring the consent of the Department and believes therefore that the Department will offer no objection to it.

Capital construction in Haiti has for the past 10 years at least been financed from available cash reserves and not from a voted budget. While capital public-works projects have been submitted to the Financial Adviser for his approval and that of the Legation, it has apparently not heretofore been considered that they required the specific approval of the Department. De la Rue and the President hold that the short-term banking operation envisaged is in lieu of selling the bonds from the reserves to provide funds for the initial construction on public works and that the treaty is not involved.

They hold that the authority to borrow temporarily, as proposed on the security of B bonds held, is given by the law of August 5, 1926,18 which provides that bonds in the investment account can be sold or “utilized as a guarantee for loans”. While under this law the Financial Adviser has never heretofore borrowed money on the security of bonds held in the investment account he frequently sold bonds from this account usually for the purpose of completing amortization requirements for the various loans as a cheaper method than by calling the bonds by lot on the open market. The resulting cash for such sales of bonds has always been placed in the available cash reserves of the Government where they could be used as proposed in the present case.

Armour
  1. Le Moniteur, August 12, 1926.