838.51/2606: Telegram
The Minister in Haiti ( Armour ) to the Secretary of State
15. The following completes my telegram No. 14 of February 27, 3 [1?] p.m. in answer to the questions in the Department’s telegraphic instruction No. 8 of February 25, noon.
Department’s paragraph 3. The postscript to the Financial Adviser’s letter of February 7, to the Legation was never intended to mean [Page 731] that a contract with a fruit company should be a condition precedent to our approval of the credit and precedent to beginning actual construction of the Artibonite irrigation project. Of course a definite contract with a reliable company along the lines of the proposed contract with the German fruit company, assuring its assistance in the agricultural development of the Artibonite and engaging to purchase such production, would be desirable but it is not, in our opinion, necessary. Our recommendations regarding approval of a loan for the development of the Artibonite and the approval of this development expressed in the penultimate paragraph of Munro’s despatch No. 393 of May 2, 1932,41 made before there was any prospect of a definite contract with a fruit company. Cotton and rice can apparently be grown successfully in the Artibonite and while the possibility of a permanent and important banana development is dampened by the news contained in my letter to Wilson of February 24,42 there is no reason apparent for postponing a small initial experimental irrigation project such as is now envisaged. This is particularly true in view of the prospects of a budget surplus which would pay for the greater part if not all the cost of such a project.
Paragraph 4. As reported on page 9 of my despatch No. 8 of November 19th, 1932,43 the original project submitted by the Public Works Department of the Haitian Government contemplated the irrigation of the entire valley at a cost of $1,373,000. Due to the impossibility of financing a complete project at present and due also to our feeling that it would be wiser not to commit ourselves to the approval of a complete project at this time, the Haitian Department of Public Works made new plans calling for the irrigation of the valley by sections, each section a project complete in itself but capable of being tied up to later extensions. In view of the limited funds available the water is to be furnished by temporary and inexpensive diversion dams which later may be replaced. The Financial Adviser is of the opinion that this is a practical scheme. According to Haitian engineer-in-chief, the scheme of a hydroelectric pumping development discussed in my despatch 8 of November 19, 1932, is the ultimate goal to be achieved when funds are available and the $400,000 project is so planned that it can form a part of such a development at some time in the future.
Department’s paragraph 5. The Legation is informed that the possible exchange of A bonds in the Treasury investment account for B bonds in the hands of the public would not in any way affect amortization through the fiscal agent because bonds in the Treasury [Page 732] investment account are considered by the fiscal agent as still outstanding. Assuming retirement of all bonds at nominal value, including those in the Treasury investment account, amortization will be completed early in the fiscal year 1945–46. If, on the other hand, bonds in the Treasury investment account are considered as no longer outstanding because of the possibility of their cancellation, amortization would be completed early in fiscal year 1944–45. Assuming the exchange had taken place, final amortization would be extended 9 months.
Assuming average retirement is effected at 80 and assuming the Treasury disposed of none of its holdings, final amortization would take place in 1941–42.
It should be remembered, however, that the bonds in the investment account were purchased with a view to employing accumulated Treasury funds profitably while holding them available for such use as the Government might find desirable at some future time. There is no assurance therefore that the Government will wish to leave these bonds in the Treasury until all other bonds have been redeemed.
Department’s paragraph 6. The $100,000 advance would be used exclusively on the Artibonite project and would not be available for other public works unless our approval were obtained to any modification of the program which might be dictated by unforeseen developments. Even should the bank’s offer of a $400,000 credit be accepted, the $100,000 would not be borrowed from the bank at this time because it would be cheaper to utilize the Government’s own cash reserves. It probably will not be necessary to touch the credit during the current fiscal year as the budget should provide a sufficient surplus to pay for such work as will have been completed by September 30 next. The advantage of the credit is its insurance against the revenue uncertainties of the next fiscal year.
Department’s paragraph 7. Pixley states that revenue returns to date indicate a budget surplus for this year of between $200,000 and $400,000. At the end of January the Government had on sight deposit $1,528,036 and on 30 days’ time deposit $107,676. The bonds in the investment account have a nominal value of $1,983,580. These bonds cost the Government $1,889,000.
The foregoing has been drafted in conjunction with Pixley. As stated in my telegram No. 14, De la Rue will prepare the report called for in the Department’s telegram No. 8 upon his return March 2.
- Telegram in four sections.↩
- Not printed. Dana G. Munro was then the American Minister in Haiti.↩
- Not printed; the letter stated that the experts of the United Fruit Co. had reported the discovery of Panama blight as well as too great alkalinity in the soil of the lower Artibonite Valley.↩
- Not printed.↩