Foreign Relations of the United States Diplomatic Papers, 1935, The American Republics, Volume IV

838.516/332

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

No. 563

Port-au-Prince, March 11, 1935.
[Received March 15.]

Sir: With reference to the Legation’s despatch No. 562 of March 11th,⁹⁹ transmitting the text of the speech delivered by the President of the Republic before the Senate at the opening of the extraordinary session of Legislature on March 8th last, I have the honor to inform the Department that this speech throws light on a situation which otherwise would give the appearance of being somewhat confused.

To go back a little; on February 21st last I received from Mr. Voorhies a copy of the preliminary draft of a proposed new contract for the sale of the bank, which he had received from the New York office. On February 27th, I sent to the Department a telegram, No. 14, 1 p.m.,^99a quoting from a telegram sent to Lancaster¹ by the Director of the Bank here, Mr. Voorhies, in which Mr. Voorhies reported that, in accordance with instructions sent him by the New York office, he had handed to the President and to Mr. de la Rue² copies of this new contract. He went on to say that the Minister for Foreign Affairs, M. Hibbert, just before leaving with the President for the official visit to the Dominican Republic, had informed Mr. de la Rue that “it was neither the contract nor the spirit of the contract of May 12th which the Government understood by the gentlemen’s agreement with the bank was open to be accepted, with only such modifications as necessarily incident to changes in dates.” The telegram went on to state that in a conference with me and with Mr. de la Rue it was thought that the resolution of the Board of Directors, referring to the new contract, and the publication of a notice to the stockholders advising the public that the May 12th contract had been set aside and that a new contract was to be negotiated, should not be made until all points had been satisfactorily adjusted with the Government. (It should also perhaps here be mentioned that Mr. Voorhies had been instructed by the New York office to publish a notice to the above effect.)

On the return of the President and his Foreign Minister from the Dominican Republic, M. Hibbert had his first opportunity really to study the new contract proffered by the National City Bank of New York, and he confirmed his early impression that this contract was not only entirely unacceptable to the Haitian Government but a departure in substance from the contract of May 12th, upon which the President had based his whole plan—his speech at Cap-Haitien of November 27th, the referendum to the people, the replacing of the eleven Senators by eleven new Senators, and finally the calling of the extraordinary session—and that the Haitian Government would insist upon the maintenance of the May 12th contract, in accordance with the gentlemen’s agreement between the Bank and the Haitian Government, by which the Contract with the Bank was to be kept open until such time as the Government would be able to submit it once more for legislative approval.

In reply to telegrams from the Bank here to the New York office a cable was received by Mr. Voorhies signed by Lancaster, dated March 7, 1935, as follows:

“Your cable of the first, your cable of the 4th, and de la Rue’s cable of March 1st, have consulted with Chairman who is studying situation to ascertain if it is possible to reverse the steps already taken in good faith based upon President’s cable and my letter first ultimo to Blanchet.³ Past attitude Chamber of Deputies in attempting to modify or strike out general release paragraph relating to past officers and directors and the fact that new draft submitted by Government appears to us substantially to modify contract May 12th increase our difficulties in asking Directors to reverse action taken in resolution dated February 5th but am hopeful we can find some middle ground which will be mutually satisfactory. Because of grippe attack I am unexpectedly leaving for South Carolina this afternoon upon physician’s advice and will probably be away until March 18th; hence am unable either to go to Washington, D. C. or Haiti at this time. Until I (we) can talk with State Department we reserve opinion as to all legal questions. Suggest to save time Government delegate someone to come to New York to discuss situation. During my absence please address correspondence to Beaumont⁴ who will keep contact with Chairman and me. You may communicate this cable in your discretion to other persons.”

Mr. Voorhies immediately took this cable over to the President, and later brought it to the attention of Mr. de la Rue and myself. On the following day, that is, Friday, March 8th, the President saw Mr. de la Rue, and expressed to him great indignation at what he considered to be the Bank’s bad faith in attempting to replace the May contract by a new contract. President Vincent insisted that no instructions had ever been sent to Blanchet that justified the New York Bank in assuming that he desired to see the May 12th contract changed in any substantial particular: certainly not to have a new contract made. His whole action, he insisted, had been based upon the May 12th contract, and for them at this late hour to attempt to go back on it, would, he said, create an impossible situation. He added that he was requesting M. Hibbert to send instructions to Blanchet to inform the bank that he expected them to adhere to the gentlemen’s agreement; and that the May 12th contract—if they considered that it had lapsed—must be revived, and serve as the basis for continued discussions. The President, Mr. de la Rue tells me, added to this telegram to Blanchet an instruction to call at the Department and to request the good offices of Mr. Welles⁵ in recalling to the Bank their agreement to continue on the basis of the May 12th contract.

Later the same morning, the President called for Mr. Voorhies and repeated to him the substance of what he had said to Mr. de la Rue. Following this conversation, Mr. Voorhies, at the President’s request, sent the following telegram to the Bank, to Mr. Beaumont, for Mr. Lancaster (out of New York for reasons of health):

“Have just left President who stated he had impression that a voluntary confusion has been created with the object of preventing sale of Banque Nationale de la République d’Haiti and that new contract is an expression of this confusion, and in the spirit of the Haitian Government the contract of May 12th signed with the approval of United States Government remains the substance agreed upon to terminate the financial control. The President has communicated to me letters exchanged between him and his Minister in Washington, D. C., establishing that there never has been the question of change in the contract of May 12th. The President hopes that the contract signed May 12th and accepted by American Government be maintained. The President stated that the Legislature convened in Extraordinary Session particularly to consider Banque contract is actually considering May 12th contract. My opinion is that due to the fact that Legislature is actually considering May 12th contract a prompt decision should be reached in order to eliminate any unfavorable impression created on both the Haitian Government and the United States Government. Would appreciate prompt reply and thorough clarification.”

Mr. Voorhies later called at my office to explain the situation to me, at which time he brought the above telegram to my attention. I told him that I considered it most unfortunate that the President had seen fit to question the Bank’s good faith, as I thought that there were other circumstances that might explain the change in front on the part of the Bank. In any case, I felt that the injection of personalities into the negotiations might very well have an unfortunate effect, possibly bringing the negotiations to a close. It so happened that shortly after my talk with Mr. Voorhies the President asked to see me, and he immediately plunged into the whole question of the Bank Contract. With Mr. Voorhies’ permission, I told the President that Mr. Voorhies had shown me a copy of the outgoing telegram. The President reiterated to me what he had already said to Messrs de la Rue and Voorhies. I took the occasion to point out to the President what I felt would be the very unfortunate effect upon the officers of the Bank—all of them, I felt, honorable men—if his charge of bad faith were permitted to remain, and urged him to take an early occasion to correct what I felt would be a most unfortunate impression if the message were delivered. The President, who was extremely agitated, and apparently under the stress of very great emotion, finally consented to withdraw the charge and said that he would take early steps to correct it. At the same time, however, he insisted that the Bank must continue with the Contract as agreed upon, as otherwise he would be placed in an impossible position. He called my attention to the message he had delivered the previous day to the Senate and to the Chamber in which he had, he said, stressed the fact that he expected them to ratify the Contract as presented. “If now, at this late hour the Bank is going to go back on their agreement and insist upon a new contract, where does it leave me?”, he said. (The text of the President’s speech was not, it might here be stated, made available until the following morning.)

Shortly after my return to my office, Mr. Voorhies telephoned me to say that the President had sent his Chief of Cabinet to arrange for a telegram to be sent to correct the unfortunate impression made by the earlier telegram. A copy of this last telegram, which Mr. Voorhies later sent me, read as follows:

March 9, 1935

“Beaumont for Lancaster. Our cable of 8th instant, instead of ‘voluntary confusion had been created to prevent sale of Banque’ President intended to say ‘general misunderstanding appears to exist which might prevent sale of Banque’. Minister of Foreign Affairs has cabled Haitian Minister at Washington, D. C., today, March 9th, in this sense to insist upon maintaining May 12th contract intact and directed him to get in touch with Lancaster.

Voorhies”

There the matter now rests, but as stated in the opening paragraph of this despatch, a reading of the President’s message to the two Chambers makes clear the reason for the President’s agitation upon hearing that the Bank did not intend to proceed upon the basis of the May 12th contract.

While it might perhaps be argued that the President had due warning not to get himself into such a position, at least until he knew what action the Bank, and incidentally the State Department, intended to take with regard to the Bank-Sale plan, in view of recent political developments—in fact, the Legation’s telegram No. 11, February 20, 12 noon,⁶ stated that the President would not take any steps that could not be retraced, until he had such information—the fact that he has, in spite of this assurance, gone ahead with his message, is another example of what is, I am afraid we must begin to consider, to be the President’s fait accompli policy. To be sure, the message to the two Houses is merely the final and logical step in the sequence begun May 12th, continued in the Cap-Haitien speech of November, and in the subsequent events constituted by the referendum, the election of the new Senators, and the calling of the extraordinary session.

However, it is perhaps too late for criticism or personalities. The fact remains that the President has decided to go ahead “full speed” in his effort to accomplish what he terms the “financial liberation of the country”; and it would seem that no time should be lost in reaching a decision as to what our policy is to be. Of course, the first step is up to the Bank, and Mr. Voorhies, I am informed, is today writing to the Bank, bringing the President’s message to the Legislature to its attention, and urging immediate acceptance on their part of the principle of maintenance of the May 12th contract. Once that is agreed upon, the Bank can then decide what, if any changes, it may desire made in this Contract, and presumably whether or not it is willing to continue with the execution of the agreement. It will be noted that Mr. Lancaster, in concluding his telegram of March 7th last, states, “Until I can talk with State Department, we reserve opinion as to all legal questions.” This of course refers to the question of the constitutionality of the proceedings under which the eleven Senators were replaced, etc.

Respectfully yours,

Norman Armour

99. Not printed.
100. Not printed.
1. William W. Lancaster, member of the New York firm of Shearman and Sterling, counsel of the National City Bank of New York.
2. Sidney de la Rue, Fiscal Representative of the Haitian Government.
3. Albert Blanchet, Haitian Minister in the United States.
4. Hartford Beaumont, member of the New York law firm of Shearman and Sterling, counsel for National City Bank of New York.
5. Sumner Welles, Assistant Secretary of State.
6. Not printed.