Memorandum by the Assistant Chief of the Division of Latin American Affairs (McGurk)

Conversation: Mr. W. W. Lancaster, of the National City Bank
Mr. Welles
Mr. McGurk

Mr. Welles stated that due to his absence from Washington he was not fully acquainted with the situation concerning the details of the bank-sale transaction and that he would be glad to hear of the most recent developments. He then stated that he wished to make it perfectly clear that he was not attempting to suggest one way or another the action the bank should take, as the matter was a transaction solely between the National City Bank and the Government of Haiti.

Mr. Lancaster stated that he had been away from New York for several weeks and that he had not heard from the Haitian Minister since March 7; he had returned to New York only last Thursday. He said that he believed that the recent proposition of the bank to the Haitian Government had been misunderstood by the Haitian Government.

Mr. Lancaster stated that in view of the telegram quoted to him in Mr. Blanchet’s letter of January 26, last, the bank understood that the Government wished incorporated in the contract the changes recommended by the Chamber of Deputies last summer, and had acted accordingly. Furthermore, in view of certain intimations that had been made by members of the Chamber of Deputies to the Directors [Page 715] in Port-au-Prince, regarding their liability under the stock sale plan, the Directors had believed it necessary to change the contract so as to provide for a sale of assets instead of a sale of the stock. Mr. Lancaster stated that he was now endeavoring to convince the Directors that the sale of the stock was the better plan and had consulted counsel regarding the Directors’ liability under this plan. He had tentatively agreed with Mr. Mitchell, formerly Attorney General, whom he had consulted, that there would be no liability on the part of the Directors. Mr. Lancaster also stated that the question had come up regarding the liability of the Directors with respect to the use of currency instead of gold as a reserve against the issue of the gourde notes. Mr. Lancaster said that he thought it was clear that the bank in using currency had acted strictly within its rights. Mr. Lancaster also added that the bank was endeavoring to determine whether it should accept a cash payment and the balance in three years as provided in the original contract, in view of the risk involved in the potential loss of the payment of balance amounting to $450,000, should a subsequent government determine that the action of the present Government had been unconstitutional. Mr. Lancaster felt that this difficulty would be readily overcome, as he Understood that the National City Bank already had offers to finance the balance payment.

Mr. Lancaster asked what the attitude of this government would be in the event that the bank contract should be consummated under the present legislative set-up. Mr. Welles replied that, leaving aside the legal view, the matter was a question of policy, which would have to be determined if and when the bank contract was consummated.

Mr. Welles then asked if Mr. Lancaster had any information regarding the approach made by the Dominican Minister with respect to the financial plan proposed by the Dominican Government. Mr. Lancaster said that he did know something about it but he was not familiar with the details. Mr. Welles asked Mr. Lancaster if he believed Mr. Rentschler7 and the officers of the National City were taking the proposal seriously. Mr. Lancaster replied that he believed they were.

Mr. Lancaster asked Mr. Welles whether he had any recent information regarding the Public Works bonds in Cuba. Mr. Welles stated that it was his considered judgment that nothing could be done with respect to the Public Works bonds until such time as a constitutional government had been set up in Cuba. Mr. Welles said that he believed that Mr. Aldrich8 and the Chase people were fully aware of [Page 716] this, and that Mr. Aldrich’s recent communication to President Mendieta was for purposes of record.

Mr. Welles thanked Mr. Lancaster for his courtesy in coming to Washington.

Attached are copies of M. Blanchet’s letter of January 26 to Mr. Lancaster, and Mr. Lancaster’s reply.9

  1. Gordon Rentschler, president of the National City Bank.
  2. Winthrop Williams Aldrich, chairman of the board of the Chase National Bank of New York.
  3. Neither printed.