838.51/2794

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

No. 238

Sir: I have the honor to inform the Department that, at the President’s request, I called on him at the Palace this morning. He told me that his attention had been called to a report appearing in one of the Dominican papers to the effect that the Secretary of State would probably return from Panama to New York by way of the Antilles, his boat probably touching at Haiti. The President asked me whether I had any confirmation of this report and I told him that I had not but that I had rather assumed that the Secretary would remain on board the same ship until his arrival in New York and that I understood that the ship’s schedule did not call for a stop at Haiti. However, I told the President that I would be glad to communicate with the Department and ascertain whether there was any foundation in the report.

The President then went on to say that he had been thinking over the matter of a refunding loan for some time and that he expected, after the Secretary’s return, to take up the matter in Washington with a view to seeing what could be done in this respect. He made the observation that Mr. Spruille Braden, a member of the American delegation to the Pan American Conference who, he understood, was the member of the delegation primarily interested in financial matters, had assured members of the Haitian delegation that a refunding loan for an amount sufficient to take care of the present situation here should not be difficult to secure. The President said that what he would like to do would be to obtain a refunding loan sufficient to yield $3,000,000 over the amount actually required for refunding purposes, this surplus to be devoted to public works and other necessary projects, a detailed list of which would be drawn up and presented to the bankers before the loan was made. This would enable the Haitian Government to devote its entire revenues to regular budgetary purposes [Page 341]including service on such a loan. The President felt that, if a fairly long term loan could be secured, the amortization payments could be kept low enough not to have the loan service a drain on the public treasury. With the development of the various projects now under study, notably the banana scheme, he felt that the economic stability of the country would be assured. Furthermore, he realized more and more that the economic and financial future of Haiti lay in the direction of the United States and he was most anxious that the refunding operation should be put through in the United States. If this could be done, he proposed himself to visit the United States to complete the final negotiations and at that time would like to visit the President. He felt that such a meeting, which could be accompanied by a statement announcing the application of the doctrine of the “good neighbor” to Haiti, would have an extremely good effect not only on relations between the two countries but throughout Latin America, particularly if, at the same time, the announcement could be made that Haiti and the United States were prepared to enter into a treaty of amity and commerce based upon the new spirit which animated President Roosevelt’s administration.

While I did not commit myself other than to say that I knew that our Government would be very glad to lend its good offices, as stated by President Roosevelt, I must confess that I feel that if a refunding loan could be secured in the United States, particularly through the good offices of our Government, some such procedure as that suggested by President Vincent might be used with telling effect in following up the excellent impression that seems everywhere to have been created by the attitude shown by our delegation at Montevideo. As to the feasibility of a refunding loan at the present time, the Department is, of course, in a better position than the Legation to judge.

Before leaving, I took the occasion to say to the President that, without wishing to seem to offer gratuitous advice, there were two points which I should like very much to stress to him. First, with regard to the Garde, I had noticed an increasing tendency, both in the press and among individuals with whom I had spoken, to stress the necessity of a largely increased Garde and the purchase of equipment for it. I said that if he really hoped to secure a refunding loan along the lines suggested he must convince American bankers of the soundness of Haiti as a financial investment and that I could think of no worse way to go about this than to give the impression that, once American influence was withdrawn, the Government would divert the revenues, which were badly needed in developing the economic resources of the country, into military channels. What Haiti needed, in my opinion, was a police force adequate to maintain law and order in the country and that anything that went beyond that point [Page 342]could only be interpreted abroad as indicating an attitude of nervousness and apprehension on the part of the Government which apprehension would be certain to be communicated to those abroad whom they were seeking to convince as to the stability of the country. Secondly, while I naturally had no information as to what guaranties would be required by any banking group, should a refunding loan be seriously considered, I felt that if the Haitian Government could introduce the “douzième” principle into its budget structure this would be one of the most constructive and reassuring evidences of financial responsibility that they could give. I pointed out that, while on paper, perhaps, the plan he had so often suggested to me, by which his government would give irrevocable instructions to the National Bank with regard to payments under the loan service, seemed perfectly secure, nevertheless, we had seen both in Salvador and the Dominican Republic how, even though perhaps acting in perfectly good faith, a Government might get itself into financial difficulties through a faulty budget structure and I ventured to suggest that, if the Haitian Government would take such a step, this would do more than any one thing to create a feeling of confidence in Haiti’s financial future.

The President took my remarks in very good part and with every evidence of sincerity assured me that he could see no reason why both these suggestions should not be carried out. With regard to the Garde he said that they had every intention of maintaining the Garde at its present approximate strength although it would be necessary to purchase a certain amount of equipment at the time the Haitianization was completed as they had hitherto been dependent on the equipment loaned by the American Government.

The Fiscal Representative, Mr. de la Rue, told me this morning of a talk which he had had with the Minister of Finance, M. Hibbert, which followed very much the same lines as the President’s talk with me. M. Hibbert, however, was more specific in giving the details as to the procedure which the Haitian Government proposed to follow in securing a refunding loan. One of these details of some importance which the President had not mentioned to me was that the Haitian Government would accept the offer of the National City Bank and would itself take over the National Bank but would keep it under the management of the bank or consortion through which the refunding loan might be made. I am enclosing a copy of a memorandum prepared for me by Mr. de la Rue56 covering his talk with M. Hibbert.

It will be noted that, in his letter to me, Mr. de la Rue states that M. Hibbert told him the President would like to have him, Mr. de la Rue, go up to the United States in connection not only with preliminary [Page 343]work looking toward a loan but also with certain other problems, notably, the commercial treaty,57 the freight rate situation, et cetera. Mr. de la Rue replied that a request to this effect would have to be made by the Minister for Foreign Affairs to the Legation to which M. Hibbert replied he would see that this was done.

In order to avoid possible delay I should appreciate hearing from the Department what its views with regard to this proposal may be. Personally, I am of the opinion that Mr. de la Rue’s presence in the United States at this time might be very useful and I earnestly request that every consideration be given to this suggestion.

There is nothing that has occurred recently to change the opinion I have expressed in previous despatches that, after October next,58 it will become more and more difficult to secure Haitian cooperation in executing the financial clauses contained in the Accord of August 7 and, if there is any possibility that our Government’s participation in Haitian financial matters could be terminated prior to that time through a refunding loan, I feel that every effort should be made to this end.

I shall not fail to keep the Department fully informed regarding further developments along these lines.

Respectfully yours,

Norman Armour
  1. Not printed.
  2. See pp. 308 ff.
  3. The agreement of August 7, 1933, provided that the withdrawal of the Marine Brigade of the United States would commence October 1, 1934, and was to be completed within 30 days.