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

No. 549

Sir: With reference to Legation’s telegram No. 11, February 20, 12 noon,93 and previous correspondence regarding President Vincent’s referendum on his economic policies, and notably the effect of this appeal to the people on the Bank Sale plan, I have the honor to submit, as of possible use to the Department, certain considerations with regard to this question, notably in connection with the position that our Government may take with regard to it.

The “Bank Sale” plan—looking to eventual withdrawal of the American Government from participation in Haitian financial affairs—was worked out at the request of the Haitian Government.

The American Government was perfectly satisfied with the status quo as represented by the Accord of August 7, 1933,94 although, on account of commitments taken at Montevideo it is understood we would be pleased if enabled to withdraw, consistently with our obligations to the bondholders, which, it is felt, this plan permits us to do.

The Plan envisages a contract between the Haitian Government and the National City Bank of New York. If and when this contract is approved through the regular procedure, i. e., by law of sanction voted by the Haitian Legislature, the American Government agrees to put into effect the second part of the plan, namely, to conclude a treaty declaring the existing treaties and accords providing for the financial control at an end, and vesting the financial supervision in the newly acquired and organized bank.

This contract was duly signed by the Bank and the Haitian Government on May 12, 1934.95 It was approved, though in an amended and, it is understood, unacceptable form, by the Chamber of Deputies at the last regular session in August 1934. The financial committee of the Senate, which received the Contract from the Chamber, delivered its report, which was generally unfavorable to the Contract. The session, however, closed early in September without the Senate, as a whole, voting on the project.

[Page 704]

In November 1934, the President, in a speech at Cap-Haitien, in discussing the financial situation, declared that there were only two alternatives: (1) the approval of the Bank Contract of May 12, 1934, which would bring “financial liberation” to the country; or (2) the “status quo”, as represented by the Accord of August 7, 1933.

On January 12, 1935, the President called for a referendum to be held February 10th, to decide whether the people desired to see adopted by their representatives the measures set forth by the President in his speech at Cap-Haitien, November 27, 1934, with the view particularly to freeing the country from foreign financial control.

On January 18th, the eleven (majority) opposition Senators made public a signed declaration in which they stated that, regardless of the outcome of such referendum, they would not hold themselves bound by it—as they did not consider it constitutional.

On February 10th, the people voted overwhelmingly in favor of the Government.

On February 18th, the President issued an Arrête convoking the Chamber of Deputies in extraordinary session to fill the vacancies in the Senate, “eleven members of which are in open revolt against the sovereign will of the people.”

On February 21st, eleven new Senators were elected.

On February 22nd, the President convoked the newly constituted Legislature in extraordinary session. One of the principal questions on the agenda is the ratification of the Bank Contract.

The President has been warned that before committing himself too far, he should first be sure that the National City Bank of New York is willing to consider the approval of the Contract by the newly constituted Legislature as legal and binding. If they do not so consider it and are unwilling to proceed to the consummation of the sale, then the matter apparently rests there, and the American Government will not be called upon to make a decision as to its willingness to continue with the plan.

If, however, the Bank feels that a law of sanction voted by the new Senate would be constitutional, then, presumably, it will be for the American Government to decide whether it feels it can carry out its part of the plan.

Even if the Bank should give its approval, it would seem inadvisable for the President to continue with the sale, having for its real objective the transfer of the financial control to the Bank, until the American Government’s approval to the balance of the plan has been obtained.

For this reason, it would seem advisable that a decision on this point should be reached, at once, unless the Department should ascertain in the meantime that the Bank does not intend to give its approval.

[Page 705]

It would appear that this question should be considered from two angles:

I. Constitutionality

Under this heading there would seem to arise two questions:

(1) Is this properly a question for the American Government? Is the American Government interested in the internal machinery by which the Contract is approved, i. e., whether in accordance with the letter of the Constitution? If the Constitution provides that such contracts must be ratified by a law of sanction voted by the Legislature, and if it is voted by a legislature functioning at least “de facto”, in that it is apparently accepted by the Haitian people, are we to “look behind the seal” to the extent of deciding whether both bodies of that legislature are legally constituted; in the present instance, whether the Senate is a “de jure” Senate.

Our excuse, in the case of the Bank Contract, would be that the treaty we are planning to conclude would be based upon the Bank-Sale Contract—in that it is to the newly created Bank that the financial control would be transferred. But if such Bank has no valid, legal existence, then there would be no legal entity to which this power could be transferred, and hence the “raison d’etre” of the treaty would cease to exist.

But if we reach a decision that the Senate, as at present constituted, is not, in our opinion, qualified under the Haitian Constitution, to approve the Bank-Sale Contract, then we would throw doubt upon all contracts approved by that body, as now constituted, in the future. Although, to be sure, such contracts, with private companies, would not concern us (the Bank-Sale Contract being an exception for reasons above stated), would not such companies hesitate to take the risk of accepting contracts so ratified, on the ground that a later administration might repudiate them, citing as justification the fact that the American Government had refused to admit the power of the Senate to approve such contracts?

In this connection, an instruction from Mr. Fish, Secretary of State, to Mr. Bassett, Minister to Haiti, dated February 21, 1877, is interesting. (See Moore’s International Law Digest, volume 1, page 250.)

Furthermore, could we consider treaties or agreements concluded with the Haitian Government and requiring legislative approval—for example, our trade agreement with Haiti96—as properly and validly ratified, if voted by the Legislature in National Assembly,—eleven members of the Senate being, in our opinion, improperly and unconstitutionally in office? To be sure, the Government has a majority in the National Assembly without having to rely on the newly elected [Page 706] eleven Senators,—so it might be argued that, if a majority vote were secured without the eleven, this would be legal. But would not the presence of the eleven invalidate the whole proceedings?

In other words, if the American Government should undertake to decide whether in the present instance the members of the Haitian Legislature have been properly and duly elected, it might lead to unforeseen complications. An adverse decision might even necessitate withdrawal of recognition, since it would be difficult, if not impossible, to differentiate between acts valid and invalid.

President Vincent has stated that refusal of the American Government to continue with the plan, on the ground that the constitutional procedure has not been followed, would be tantamount to interference in the internal affairs of Haiti. Is that statement justified? That is, of course, for the Department to decide.

(2) If it is decided that the American Government must be satisfied as to the constitutionality of the method by which the contract has been approved, then apparently a decision on this point will have to be arrived at by the Department itself, as unfortunately there appears to be nobody here duly qualified to declare upon the constitutionality of laws, as is the case in the United States. For this purpose, the Department appears to have before it all the documents and evidence required, including a statement of the facts in the case.

The President based his right to appeal to the people to decide between him and the Senate, on Article 28 of the Constitution, which states that “national sovereignty is vested in the citizens as a whole.”

The Senators, in their declaration of January 18th, replied that while Article 28 may vest the national sovereignty in the people, Article 29 formally states that “the exercise of this sovereignty is delegated to three powers, namely: the Executive, the Legislative, and the Judiciary.”

In view of this, they disputed the right of the Executive to hold a referendum and declared they would not be bound by the decision of such referendum. The President held that by so declaring they had gone against the will of the people and consequently forfeited their right to hold office. In view of this, citing Article 39 as justification, he called upon the Chamber of Deputies to elect their successors in accord with Articles 50, 51, and 28 of the Constitution, and B of the “Dispositions Transitoires” of the Constitution. This having been done, the newly constituted Chamber has proceeded to its labors.

As of possible use to the Department in passing upon the constitutionality of this act, I shall forward, as soon as available, a copy of the opinion, which the Bank here has asked its legal adviser to prepare for the use of the National City Bank of New York, in reaching its decision on how to proceed.

[Page 707]

The texts of various Arrêtes, memoranda, declarations, etc., in connection with the Referendum and its consequences, were forwarded to the Department under cover of the Legation’s despatches Nos. 504, January 11, 1935; 505, January 14, 1935; 515, January 21, 1935; 524, January 29, 1935; 542, February 19, 1935; and 544, February 19, 1935.97

II. Public Policy

If the Department should reach the conclusion that the question of the constitutionality of the precedure by which the eleven Senators were replaced is entirety a domestic question, and one which we are not prepared to challenge or to pass upon, or even if, having passed upon it, we decide that the President acted within his rights in taking such action, then it would seem that we are presented with the second phase of the question, namely: whether, on the ground of Public Policy, we would be justified in continuing with the plan.

In another despatch, I endeavored to point out what seemed to be the real reasons prompting the President’s action, or at any rate, those which inspired his entourage. Briefly, it would seem that the Bank-Sale question was merely used as a pretext for getting rid of the eleven opposition Senators; and the principal object in getting rid of them would seem to be not only—and perhaps not even primarily—in order to put through the various projects under consideration,—Bank-Sale Contract, Banana Contract, Electric Light Contract, Trade Convention with the United States, Boundary Convention with Santo Domingo, etc.—but to eliminate various members of the “onze” as presidential possibilities.

In other words, it seems evident that the desire to secure approval of the Bank-Sale plan was not by any means the sole reason for setting aside the constitutional machinery, if this has actually been done.

I mention this because, presumably, we would not wish to give any basis for the argument that the Haitian Government, having failed to secure approval of the Bank Contract by constitutional means, we supported the President in his decision to secure its approval by unconstitutional means.

This is undoubtedly an important point to be considered. The eleven ousted Senators and their followers, of whom they have a considerable number, are certainly hoping that the American Government will show its disapproval of what has taken place by refusing to continue with the plan, for one reason or another. They have become so used to the feeling that no important action of any kind can be taken that has not received the prior approval of the American Government, that now that they are standing on their own feet, they [Page 708] appear to forget that many questions arise which are solely for the determination of the Haitian Government; and that we cannot undertake to pass upon them without laying ourselves open to the charge of interfering in their internal affairs.

There is one point in considering this angle of the question—i. e., public policy as distinct from constitutionality—which has not perhaps been sufficiently brought out; namely, that not only are we ourselves perfectly satisfied with the status quo and willing to continue with it; not only was the Bank-Sale plan worked out and agreed upon at the request, even on the insistence, of the Haitian Government, but that by it, we are giving up something to Haiti; we are surrendering certain rights legally and validly accorded us by the Haitian Government; we are voluntarily and spontaneously withdrawing from further participation in the internal financial affairs of Haiti.

For this reason, if we should decide to proceed with the plan, it would seem absurd that the charge of the “onze” and their friends—if they had the temerity to advance it—that we connived in the overthrowing of the Constitution for the purpose of securing approval of the plan, could be given serious consideration.

If the plan under consideration were, for example, the establishment of a naval base at the Mole St. Nicholas; if it were, conversely to the actual plan, to permit the American Government to secure control over the Haitian customs; then we might well hesitate, on the ground of Public Policy, from continuing with the plan after what might possibly be interpreted as a coup d’état by the President here. But that—when it would obviously seem to be to our interest to continue on under the accord of August 7, 1933—we should encourage the President to break through the Constitution in order to accomplish the Bank-Sale plan, would really seem to be a very far-fetched argument.

Finally, there is this point to be considered: if we should decide that we could properly proceed with the plan and it was put into effect, would there be any real danger that a subsequent administration—hostile to the bank purchase—might upset it on the ground that the Contract was never validly and constitutionally approved? The answer to this question is, I feel, furnished by the President’s Cap-Haitien speech, in which he said that there were only two alternatives: (1) to vote the Bank-Contract plan; or (2) the maintenance of the status quo. (See also Mr. Fish’s instruction to Mr. Bassett, referred to on page 6 above.98)

If a subsequent administration, therefore, decided to repudiate the Bank Contract, it would apparently have no alternative other than to return to the Accord of August 7, 1933: in other words, to restore [Page 709] financial control under the aegis of the American Government. Would any Haitian administration dare to do this, and subject itself to the opposition attack that would inevitably be levelled at it? The answer seems fairly obvious.

When, last September, the Haitian Government, or rather President Vincent himself, suggested that, failing ratification of the Bank plan by the Legislature, they submit it to the people by referendum and substitute the approval so secured for approval by the Legislature, as provided in the Constitution, the Department intimated that it would rather not have it done in this way. The bank, even more interested, of course, took a similar position.

But there would seem to be a valid distinction between this and the procedure now envisaged to secure ratification.

Perhaps it is only a question of degree; but in the first case, there was no vestige of right under the Constitution to justify the course proposed, while in the present case, the law of sanction is to be voted by the Legislature: the only question being, whether by a duly qualified legislature.

The above ideas, somewhat confused perhaps, have been set down at random as of possible use to the Department in passing upon this somewhat complicated question. I presume of course that the Department will consult with the Bank, and that the Bank will furnish the Department with a copy of the opinion which I understand their legal adviser here is submitting to the director of the branch here.

As I have telegraphed the Department, should it reach the decision to continue with the plan, well and good. But should a contrary decision be reached, then I feel that this should be kept very confidential, and communicated to the Haitian Government either through the Haitian Minister in Washington or this Legation, as the position of President Vincent and the prestige of his Government would be very seriously affected should the fact that we have refused to continue with the plan become generally known.

It would naturally be for President Vincent, in such case, to take such measures as he might see fit to protect himself, once a decision was taken.

Respectfully yours,

Norman Armour
  1. Not printed.
  2. Foreign Relations, 1933, vol. v, p. 755.
  3. For text of this contract, as modified by the law of sanction of March 28, 1935, see Bulletin des Lois et Actes, Année 1985 (Port-au-Prince, Haiti, Imprimerie de l’Etat, n. d.), p. 164; Le Moniteur, Journal Officiel de la République d’Haiti, May 6, 1935, p. 284.
  4. See pp. 642 ff.
  5. None printed.
  6. See p. 705, paragraph 6.