838.51/2590
The Minister in Haiti (Armour) to the Secretary of State
[Received February 2.]
Sir: With reference to my despatch No. 34 of January 2, 1933 and previous correspondence on the same subject, I have the honor to transmit the draft of a note tentatively submitted by the Haitian Government24 (but later withdrawn) requesting the approval of the United States to the $400,000.00 revolving credit offered by the National City Bank to finance an irrigation and banana-growing development in the Artibonite valley and containing certain engagements regarding [Page 715] the negotiation of a new treaty which would provide for the measures of financial administration to be in effect following the expiration of the Treaty of 1915. There is also enclosed a memorandum of the principal provisions of a contract25 for the promotion and purchase of banana production in the Artibonite which the vice-president of the Standard Fruit Company will present to his board of directors within the next few days and which has been approved in principle by President Vincent and the Minister of Finance.
The draft note from the Haitian Government was a result of a series of conversations with the President, the Ministers for Foreign Affairs and Finance. Minutes of these conversations are enclosed.25 In these conversations I pointed out that as a result of the rejection in principle by the last Legislature of the Treaty of September 3, 1932, the Department could not, by reason of the obligations assumed by both Governments to the bondholders of the 1922 loan, give its approval to an increase in Haiti’s public debt until it was in possession of definite assurances regarding the system of future financial administration, contemplated in the Protocol of 1919 and in the loan contract. I stated that I had as yet no instructions from my Government as to what form these definite assurances should take but that the first memorandum presented by the Minister of Foreign Affairs and transmitted in my despatch No. 32 of December 26, 1932, appeared to me to be obviously insufficient; that this memorandum was weaker than the President’s two public utterances on the subject, namely the proclamation of September 16, 1932,26 and his speech at Aux Cayes on December 10, 1932.27
As a result of these conversations, the President handed me the draft of a note, previously referred to, and asked for my comments thereon. I informed him, after reading it, that while I felt great hesitancy in editing any communication from his Government, my personal feeling was that the note proposed was still unsatisfactory in that it failed to give any indication of the modifications of the Treaty of September 3, 1932, which the Haitian Government would propose. I pointed out that this Treaty contained, in our opinion, the maximum concessions to the point of view of the Haitian Government, consistent with the commitments of both Governments in respect to the loan of 1922 and suggested that if he were unable to present at this time the text of modifications which he would propose that the note should clearly indicate that the new treaty would not alter the essential provisions of the convention of last September. The President asked me to study his note further and perhaps go over it more in detail [Page 716] with M. Blanchet. This I did, on the following day, again pointing out my objections as given above. I also suggested that the penultimate paragraph of the note, containing a reference to the Panama Canal etc., might be omitted as apparently not contributing anything to the matter under discussion and possibly being capable of misconstruction. M. Blanchet took back the draft saying he would bring my suggestions to the attention of the President. I have heard nothing further from him since that date, January 25th, although he intimated that he would hand me a new draft probably not later than the following day.
I think that the Department will agree that the draft note, tentatively submitted, while a great improvement over the vague memorandum of December 22, does not contain the requisite assurances. It will be remarked that the draft note states that “the project” of a new treaty would be presented for our consideration during the first half of February. Personally I do not feel that if the loan is otherwise acceptable to the Department its approval should be delayed any longer than absolutely necessary. Certainly it should be made dependent on ratification of the treaty or even its negotiation in final form, as this may take some weeks and if, as expected, the Standard Fruit Company and possibly also the United Fruit Company, whose experts are now making their survey, present during the next fortnight or so a definite and valuable plan for banana culture in Haiti, this plan should be accepted without undue delay. However, I shall continue to press for a definite statement of the modifications which the Haitian Government thinks will be necessary to ensure the ratification of the Treaty.
I may say here that the confidence with which the President and the Minister for Finance orally promised (see my despatch No. 34 of January 2, 1933) to put through a new treaty during the next legislative session has apparently weakened somewhat as a result of the continuation of the newspaper campaign for the withdrawal of the Marine Brigade (see my despatch No. 52 of January 21, 193328) inaugurated by Le Nouvelliste, following publication of the news that our troops were being evacuated from Nicaragua.29 The Minister for Foreign Affairs is apparently even more shaken than the President and, as will be noted from the minutes of my last conversation with him, expressed fear that decided modifications of substance of the Treaty of September 3, 1932, would have to be conceded to the Legislature to obtain ratification. These moments of discouragement are periodic in the present government and it is hoped that it will return shortly to a comprehension of the artificial nature of much of the opposition and to a realization [Page 717] of its responsibility to provide an agreement on financial administration and of its own proper powers to effect the ratification of such an accord.
As explained in previous despatches, I do not believe that even should the Haitian Government delay in giving satisfactory assurances with regard to the new treaty that we should refuse our consent to the small credit proposed. Certainly it is not practical, with conditions as they are, to insist upon a ratified treaty as a condition precedent to our approval, and I feel that we have a good chance to obtain eventually a satisfactory treaty if it is made clear to the Haitian Government and the Legislature that we cannot give our consent to further borrowing either from Haitian treasury reserves or from foreign bankers of funds which will very probably be necessary to complete the Artibonite development if the treaty is refused.
It occurs to me that if the Department should decide to give its approval to the $400,000.00 renewable credit offered by the National City Bank that it may wish to confine its accord to a credit for one year and reserve its approval of any renewal thereof. This might provide another incentive for the Government to push the treaty during the next legislative session. It may be mentioned that returns to date indicate that a budget surplus, possibly as high as $200,000.00, may occur this year.
Mr. Zito, the vice-president of the Standard Fruit Company, while allowing me to read the contract which he will submit next week to his board of directors, was unwilling in advance of action by the latter, to leave a copy of it with me. The enclosed memorandum, however, contains the essential points of the proposal.30 The Financial Adviser and the Legation are of the opinion that while certain provisions will have to be revised to the advantage of the Haitian State, in general, it is a proposition of real value to Haiti. A statement of the Financial Adviser’s views is also enclosed.30
Mr. Zito in his talks with me has been very optimistic concerning the possibilities of banana growing in Haiti. Presumably spurred on by the competition of the United Fruit Company, he has cut short his inspection trip here, presented his draft contract to the Haitian Government in advance of the expected date and is proceeding by airplane to New Orleans to consult with his board of directors. Although it is not mentioned in the contract it is probable that the granting of a concession to his or the other fruit company would involve an investment within the next year or so of around $500,000.00 principally in the construction of a large loading wharf and storage facilities at St. Marc.
Respectfully yours,