The Secretary of State to the Minister in Haiti ( Gordon )
Sir: The receipt is acknowledged of your despatch No. 125, of January 21, 1936,2 reporting your conversation with the President of Haiti with respect to the denunciation of the Debachy contract3 and the possibilities of the Haitian Government raising a public works construction loan in the United States.
It will be recalled that in 1932 President Vincent was desirous of obtaining a loan of $5,000,000 to finance certain public works, including the Artibonite irrigation project. At that time, the Haitian Government could not secure a loan, and the Department is of the opinion that the Haitian Government can not now or in the near future obtain a loan through reputable financial interests in the United States except on the basis of control similar to that now exercised under the agreement of August 7, 1933.4 The Department will not undertake any new commitment involving control of Haitian Customs by this Government, nor will it take any initiative with regard to efforts that may be made by the Haitian Government or its representatives to secure a loan. It will not, of course, offer any objection to a loan of an amount up to $5,000,000 in the event a lender can be found in the United States, or elsewhere, provided the interests of the bondholders of the present outstanding loan are not jeopardized.
In the present situation the Department agrees with you that it would be much better to endeavor to maintain the agreement of August 7, 1933, for the course of the present year, during which time the office of the Fiscal Representative may be able to convince the Haitian Government of the desirability of operating within its present [Page 600] budget, and of foregoing the use of extra budgetary credits which would undoubtedly exhaust the reserves now in the treasury. Before taking a stand on the matter vis-à-vis the Haitian Government, and then only in the event the Haitian Government raises the question of the new treaty, the Department desires you to consult with the Fiscal Representative and report whether you believe the plan to maintain the agreement of August 7 for another year would be acceptable to the Haitian Government. It is the Department’s view that if the Haitian Government lives within its present budget and foregoes extra budgetary credits, it will have made a practical demonstration of its determination to maintain stability in its national economy, which will tend to react favorably on financial interests in this country if a loan is found to be necessary at the end of the year. It is believed that this is the advisable course for the Haitian Government to follow for at least a year, having in mind that the Haitian Government will have released to it some $300,000 or more at the end of the year due to the complete amortization of the “B” bonds, which the Haitian Government could use as it saw fit.
In conclusion, it may be stated that the Department can not aid the Haitian Government in any way in obtaining a loan. On the other hand it will not offer any objection to a loan which would not jeopardize the interests of the holders of the bonds of the present loan, or, as previously stated, to any refunding operation satisfactory to the bondholders. With respect to the proposed treaty and the agreement of August 7, 1933, the Department will await the raising by the Haitian Government of any questions with regard to them.
Very truly yours,