838.51/2597
The Minister in Haiti ( Armour ) to the Secretary of State
[Received February 20.]
Sir: I have the honor to refer to previous correspondence regarding the application of the Haitian Government for a $400,000 revolving fund credit from the National City Bank and in this connection to transmit for the Department’s consideration a copy of a communication just received from the Financial Adviser-General Receiver containing certain recommendations.33
It will be noted therefrom that on the basis of recent returns, the Financial Adviser now confidently anticipates a budget surplus for the current fiscal year of at least Gdes. 1, 100,000 and regards it as very possible that this surplus will reach Gdes. 2,000,000 ($400,000) or the amount of the proposed credit.
He therefore expects to be able to finance the initial Artibonite project if not entirely from this year’s budget surplus then from surplus revenues supplemented by some borrowing from cash reserves, with little or no utilization of the proposed credit.
He recommends this method of financing as preferable to increasing the already heavy burden of taxation in which point of view the Legation concurs.
At the same time he would recommend to the Haitian Government that it accept the proposed revolving fund credit, provided the terms of the final contract therefor are substantially the same as in the tentative proposal of the bankers. This credit would be considered as insurance and would be availed of only in case of poor crops, further heavy decline in coffee prices or similar unforeseen [Page 722] happenings which would adversely affect government revenues next year. In any event the credit would be closed out annually.
The Financial Adviser has mentioned to me the possibility of obtaining additional funds (perhaps amounting to $350,000 a year) by the conversion of B bonds, which require heavy annual amortization payments by reason of their due date of 1936, into A bonds. While he believes such a conversion operation as quite possible he is not advancing the theory to the Haitian Government at this time but is keeping the possibility of such an operation in reserve.
The Financial Adviser recommends that the Department authorize the immediate advance of $100,000 from cash reserves to start work on the Artibonite irrigation project with the understanding that if and when the bank credit is set up, in case of necessity, this money would be replaced. It would further be understood that no extraordinary credit for other purposes would be asked for by the Haitian Government during the remainder of the current fiscal period.
I also concur in this suggestion.
There will be sent under separate cover another communication just received from the Financial Adviser,34 discussing among other things, the present irrigation plans of the Haitian Government. He finds these plans feasible and is of the opinion that inasmuch as no particular engineering problems are involved and in view of the experience of Haitian engineers in constructing and operating the existing irrigation systems in the country that the latter can fairly safely be relied upon to construct the small system now proposed for the Artibonite valley. I share his opinion in this matter.
I would appreciate it if the Department would transmit by telegraph its instructions regarding the recommendation that an immediate advance of $100,000 from treasury reserves be authorized to start work on the Artibonite project.
Respectfully yours,