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

No. 125

Sir: With reference to my telegram No. 3 of this date,90 I have the honor to report further as follows.

As indicated in the said telegram, the President asked me to call upon him, and said that he wished to let me know that he had definitely decided to denounce the Debachy contract; that after consideration of the best manner in which to effect this denunciation it had been decided to proceed by way of legislative enactment. In response to a question of mine, the President stated that on December 3, the date on which the payment of the first installment was due under the contract, a formal legal summons had been addressed to Debachy in Paris demanding fulfillment of his undertaking, and that in order to make assurance doubly sure, this procedure had been repeated some weeks later—to both of which summons Debachy had failed to respond, thus putting himself in default. It may be noted that in addition, Chate-lain has stated that the Government has in its possession a letter written by Debachy to Mayard stating that the former was unable to obtain the loan. The Haitian Government accordingly is not apprehensive that its action in denouncing the contract will lead to any claim for damages on the part of Debachy or those who may have been provisionally associated with him.

The President then spoke of the possibilities of raising a public works construction loan in the United States, and referred to a communication which the Fiscal Representative had received in December from a Mr. Jenny, representing a Philadelphia group, who had expressed an interest in raising, and placing privately in that city, a five million dollar public works construction loan. The clear inference from the President’s conversation was that he would have liked to have first procured a larger loan—if possible one large enough to refund the 1922 loan—but that if this was out of the question, he would now be glad if he could secure the smaller loan. He said that he wanted to keep the Department informed, through me, of his views and plans; and he came as near as he could, without putting it in plain words, to saying that he wished to avoid any further “misunderstandings”, as in the case of the negotiation of the Debachy contract.

It may be noted that until the President could make up his mind that there was no longer any hope for raising any money under the Debachy contract, he showed no active interest in the possibility of [Page 702] this new American loan, which was made known to him a full month ago; but now in his pressing anxiety to secure some fresh money and to announce to the nation that he has actually done so, he wishes to go right ahead with negotiations for this possible Philadelphia loan.

In the course of our discussion, it was natural that the question of the 1910 loan should arise, and in a general way I again set forth the views which I reported to the Department in my telegram No. 117, of December 12. I said to the President that even though the instructions to Mayard may have been only to discuss with French bankers or industrialists—and not with officials—the question of a compromise settlement of the 1910 loan claims, and to make this contingent upon the payment of the first installment under the Debachy contract, and even though this contract had now been rendered nugatory, the fact alone of having authorized such negotiations had weakened the Haitian position vis-à-vis the French claims.

I think that this is true, and it is equally true that the Haitian Government did not hesitate, when under the urge of wanting to see the Debachy money, to recede from its assurances to us. It is also true that the latest action of the Haitian Government in refusing to postpone beyond February 1 the putting into force of the law restricting retail trade to Haitians of origin, is to some extent adverse to our interests. In spite, however, of these rather typically refractory manifestations, it would not in my opinion be practical policy to allow them to operate to close the door to securing this proposed loan if satisfactory terms therefor can be arrived at. In this connection, it is my understanding that the general lines of negotiations for this potential Jenny loan will be that during the life of the 1922 loan the new loan would be secured by a second charge on the Haitian revenues pledged to the 1922 loan, and that after the refunding or payment of the 1922 loan the new loan would be secured by a first charge on these same revenues.

In other words, to put the thought of the preceding paragraph in different form, if the Department sees no objection to negotiations for a private loan along the foregoing lines, it would seem to me that the very fact of entering into such negotiations and, a fortiori, their eventual success, would keep President Vincent from taking steps as to which I expressed apprehension in my despatch No. 94, December 13, and my telegram No. 118 of December 14, 1935.91

I should greatly appreciate the Department’s views and instructions in the premises.

Respectfully yours,

George A. Gordon
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