838.51/2837a

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

No. 171

Sir: There is transmitted herewith the President’s authorization76 empowering you to negotiate, conclude and sign the proposed Treaty of Relations between the United States and the Republic of Haiti, transmitted in the Department’s telegraphic instruction No. 28 of May 15, 1934, as modified by the Department’s telegraphic instructions No. 32 of May 21, 1934, and No. 33, May 22, 6 p.m.

[Page 362]

Upon the enactment of the law of sanctions governing the sale of the bank and the receipt of letters “A” and “B” from the Haitian Government, drafts of which were enclosed with your letter of May 10, 1934, to Mr. Wilson, with the modifications in letter “A” set forth in the Department’s telegraphic instructions Nos. 28 of May 15 and 32 of May 21, 1934, you may transmit the attached replies to the Haitian Government and immediately thereafter sign the treaty.

Very truly yours,

For the Secretary of State:
Sumner Welles
[Enclosure 1]

Draft Reply to Letter “A” From the Haitian Government

Excellency: Acting under instructions of my Government, I have the honor to acknowledge the receipt of Your Excellency’s note No. …, dated . . . . . . ., stating that Your Excellency’s Government, with a view to concluding with the Government of the United States a treaty abrogating the treaty of September 16, 1915, and the agreements made thereunder, has determined to maintain the organization of the National Bank of the Republic of Haiti, as set forth in the contract of sale of this bank, which contract was sanctioned by the Haitian Chambers by law of May, 1934, and to entrust to this bank all the powers necessary to assure the service of the loan and to change nothing either in the organization of the bank or in the powers granted to it, until such time as the bonds of the 1922 Haitian loan shall have been completely amortized or refunded.

Specifically, Your Excellency’s note under acknowledgment sets forth:

“(a) The Bank shall be directed by a Board of Directors of six members named by the President of the Republic of Haiti. Of these six members, two, one of whom shall be the Secretary of State for Finance, shall be named directly by the President of Haiti. Two shall be chosen from a list of five names presented by the Fiscal Agency of record of the Series A, and two from a list of five names presented by the Foreign Bondholders Protective Council, Incorporated.

“(b) The Bank, as the sole depository of all of the funds whatsoever of the Government of Haiti, shall have the power and the duty to receive all of the receipts of the Government and all payments made in favor thereof, to set aside in preference to any other expenditure, the sums necessary for the service of the 1922 Haitian loan and, as the duly constituted Agent of the Government, to make all the payments required by the loan contracts.

“On the First of October, 1934, the Bank shall take from the funds of the Government the sum necessary for the service of the month of October, and in the course of this same month of October, it shall set aside, in preference to any other levy, the amounts required for [Page 363]the service of the month of November and so on, the service of any month whatever being assured by the levies made during the preceding month.

“For the service of the treasury and for all the administrative services that it may render with a view to assuring the complete protection of the interests of the holders of the loan, the Bank shall levy two per cent on all the gross receipts of the Government.

“(c) The Government shall give irrevocable instructions to the Bank, specifying that the payments for the service of the loan shall enjoy a special privilege with respect to any other payment to be made from its funds.

“(d) On October 1, 1934, a service shall be established in the National Bank of the Republic of Haiti, chargéd with the examination of the bordereaux issued by the various customs houses of the Republic and by the Service des Contributions. The Board of Directors of the Bank, within thirty days of the issuance of any customs bordereaux or internal revenue bordereaux shall have the right to request the issuance of a supplementary bordereaux by the Haitian Director General of Customs, who, in order to facilitate the application of the measures contemplated in this paragraph, shall have jurisdiction over the Administration Générale des Contributions. In case of disagreement between the Board of Directors of the Bank and the Director General of Customs, the matter shall be adjusted by the Secretary of State for Finance.

“Every facility shall be afforded to the Board of Directors of the Bank to ascertain directly or by its qualified representative whether the customs laws, the customs regulations and the fiscal laws in general are strictly applied, in order to make a report thereof to the Secretary of State for Finance.”

In view of the added assurance of Your Excellency’s Government that the National Bank of the Republic of Haiti, with the organization and powers set forth above, will adequately ensure the service of the loan of 1922 and protect the interests of the holders of the bonds, I am further instructed to state that I am authorized to sign the draft treaty which you were good enough to enclose with the note under acknowledgment, it being understood that the note under acknowledgment shall be attached to the treaty so that after approval by the Haitian National Assembly it shall form an integral part thereof.

Accept, Excellency, etc., etc.

[Enclosure 2]

Draft Reply to Letter “B” From the Haitian Government

Excellency: Acting under instructions of my Government, I have the honor to acknowledge the receipt of Your Excellency’s note No. …, dated . . . . . ., enclosing a memorandum setting forth the principal provisions of the fiscal policy which Your Excellency’s [Page 364]Government pledges itself to follow until the complete amortization or prior refunding of the Haitian loan of 1922.

My Government has taken due note of the content of the memorandum in question, an English translation of which is attached hereto.

Accept, Excellency, etc., etc.

[Subenclosure]

Memorandum

to be communicated by the Haitian Government to the Fiscal Agency of Loans A, B, C and to the Foreign Bondholders Protective Council, specifying the financial policy which the Haitian Government pledges itself to follow until the Loan of 1922 has been completely amortized or refunded.

I. Budgetary Balance

(a)
Not later than January 31 of each fiscal year to request the Board of Directors of the National Bank of the Republic of Haiti for a scientific estimate of the receipts for the next fiscal year.
(b)
To maintain the annual budget of expenditures within the limits of the estimate made.

II. Deficits

To bring the receipts to the level of the expenditures, in case of a probable deficit, either by the creation of new receipts or by the reduction of the expenditures to the level of the receipts, or by both methods at once.

III. Public Debt

Not to increase the public debt except on the occasion of a refunding operation of the 1922 loan.

IV. Supplementary and Extraordinary Credits

Not to pass supplementary or extraordinary credits unless there are funds available to cover them.

V. The Douzième

Not to exceed the monthly douzième except in case of force majeure, and with the approval of the Council of Secretaries of State.

VI. Service of Payments

To transfer to the National Bank of the Republic of Haiti the service of the issue of checks, as now organized. All checks issued shall be in the name only of the Haitian Government and shall be signed [Page 365]by a special employee designated by the President of Haiti. The Bank shall continue the publication of the monthly Bulletin and in an appropriate form of the annual Bulletin now prepared by the services of the Fiscal Agent; it shall also have the duty of indicating to the Secretary of State for Finance any error which may be found in orders addressed to it for payment, or in the vouchers which accompany such orders.

VII. Haitian Customs Service and Internal Revenue Service

(a)
To organize the customs and internal revenue services according to rules of recruitment and career so as to insure the stability of said services and to provide for promotion according to competence, length of service and quality of work furnished.
(b)
To operate the customs service on two per cent, of the custom receipts and the internal revenue service on twelve per cent, of the internal revenue receipts.
(c)
To give the Haitian Director General of Customs jurisdiction over the internal revenue service (Service des Contributions).
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