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

No. 40

Sir: With reference to my despatch No. 28, of October 4,80 and to the Department’s telegraphic instruction No. 55 of October 10, I have the honor to report as follows.

In conversation with President Vincent yesterday he brought up the subject of the redemption of the 1922 loan and again advanced the argument that Article 26 of the Accord of August 7, 1933, was meaningless if it did not give him the right to redeem the bonds at par prior to their call date, with interest only up to the date of such redemption rather than right up to the call date.

I replied that quite aside from the fundamental fact that the Accord of August 1933 only provided for an anticipatory redemption on the express condition that the Haitian Government reach an agreement [Page 697] satisfactory to the bondholders, Article 26 was full of meaning and significance. By agreeing not to invoke Article 6 of the Protocol of 1919, and thus not to insist on keeping the loan, with consequent American financial control, alive for 15 years, the American Government, had made him a very substantial concession which had constituted a definite and tangible asset to him in his internal political program of the complete liberation of Haiti from all foreign control.

To this, I am glad to report, the President made no rejoinder.

I then said that while of course neither the Department nor the Fiscal Agent could do otherwise than maintain the principle that the bondholders are entitled to demand interest up to the call dates of their bonds, the Department felt that the refunding proposals now presented by de la Rue might well result in so little insistence upon this right on the part of the bondholders, that the interest losses to the Haitian Government might be reduced to a very appreciable degree.

To this the President merely said that he hoped so, but that he was fearful that some rather large blocks of bonds were held by corporations, such as insurance companies, which would be in no hurry to cash in and would prefer to hold the bonds and draw interest thereon right up to the call date.

In view of this conversation, which to me seemed clearly to indicate that the President was just about ready to abandon his ill-considered position, I suggested to Pixley that he take to the Palace a draft of an instruction to de la Rue—which would in terms recognize the principle of the necessity of depositing with the Fiscal Agent sufficient funds to pay off all outstanding bonds with interest to their call dates—and ask that it be approved so that he (Pixley) might send it to de la Rue by tomorrow’s air mail.

Pixley got this draft—a copy of which is enclosed81—to the Foreign Minister this noon, and the latter at once approved it. He was then requested to show it to the President, and late this afternoon M. Châtelain told Pixley over the telephone that the President had given his approval.

Accordingly, I trust that this particular difficulty may now be considered straightened out.

Respectfully yours,

George A. Gordon
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