838.51/2934a

The Secretary of State to the Vice President of the Foreign Bondholders Protective Council, Inc. (White)

My Dear Mr. White: With reference to our conversation on Friday, last, June 21st, in the course of which you reiterated the views of the Foreign Bondholders Protective Council to the effect that the suggested treaty arrangement between this Government and the Government of Haiti to be entered into after the purchase of the National Bank of the Republic of Haiti by the Haitian Government would not provide guaranties as satisfactory to the holders of the bonds of the [Page 725] Haitian loan of 192222 as those created by the Protocol of October 3, 1919,23 and by the Accord of August 7, 1933,24 now in force. I feel it necessary to state that the Department of State cannot concur in the opinion so expressed.

With the evacuation of the American Forces of Occupation in Haiti and with the termination in May, 1936, of the Treaty of 1915,25 a continuation of the present arrangement for the collection of Haitian funds and for the application of such funds to interest and amortization charges on the bonds of the 1922 loan would necessarily depend solely upon the continuing in force of the Protocol and the Accord above referred to. Should the present Government of Haiti, or any future Government, during the life of the loan, determine to abrogate these agreements by unilateral action, it would be contrary to the established policy of this Administration to undertake to use force in order to preserve to the present treaty officials the rights and powers now vested in them. As you are informed, the Accord of August 7, 1933, has been vigorously attacked by public opinion in Haiti and it is far from unlikely that a Haitian Government may determine to denounce this Accord during the life of the bonds of the Haitian loan of 1922. Under these circumstances, it has seemed to this Government that it would be both wise and desirable, in the interest of the American bondholders, to consider the transfer of the functions of the present treaty officials to the National Bank of the Republic of Haiti under a new treaty to be negotiated with Haiti provided that, until the bonds of the Haitian loan of 1922 are either refunded or paid in full, the management of that bank be vested in a Board of Directors selected in the manner laid down in the legislation passed by the Haitian Congress approving the contract of sale of the National Bank of the Republic of Haiti by the National City Bank of New York to the Republic of Haiti. In this manner, in the judgment of the Department of State, the best interests of the American bondholders would be fully protected, inasmuch as while their representatives on the Board of Directors of the bank would constitute a majority and should thus insure proper management of that institution, the collection and disbursement of funds applicable to the bonds of 1922 loan would nevertheless be vested in a Haitian institution, the property of the Haitian Government, and for that reason less likely to create opposition on the part of Haitian public opinion.

As you will further understand, this question of policy has been determined upon by the Department of State only after the fullest [Page 726] consideration and with all due and proper regard for the interests of the American bondholders. Since this matter of policy has now been determined, there remains only the selection of the Board of Directors of the National Bank of the Republic of Haiti when the sale of the bank is consummated. I trust that the Foreign Bondholders Protective Council, upon further consideration of the matter, will make evident its desire to cooperate both in the interest of the bondholders and in the interest of this Government by naming a panel of five persons from among whom the Government of Haiti is to select two directors for the bank. It would seem to be apparent that in the best interests of the bondholders themselves, a selection of such a panel by the Foreign Bondholders Protective Council would be highly desirable.26

Sincerely yours,

Cordell Hull
  1. See Foreign Relations, 1922, vol. ii, pp. 472 ff.
  2. Ibid., 1919, vol. ii, p. 347.
  3. Ibid., 1933, vol. v, p. 755.
  4. Ibid., 1915, p. 449.
  5. For the attitude of the Council on this subject, see its Annual Report, 1935, pp. 125–126.