Foreign Relations of the United States Diplomatic Papers, 1936, The American Republics, Volume V

838.51/3131

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

No. 388

Washington , April 16, 1936.

Sir: The receipt is acknowledged of your despatch No. 194 of April 3, 1936, reporting a conversation with the Minister for Foreign Affairs regarding the proposed new treaty which would terminate the present financial arrangement under the agreement of August 7, 1933,¹⁰ and existing treaties.¹¹

The Department’s belief that it would be advisable to maintain, during the present year, the accord of August 7, 1933, was not influenced by the effect that the maintenance of the accord might have upon the outcome of any loan negotiations the Haitian Government might undertake. As indicated in instruction No. 360 of February 4, 1936, the Department was of the opinion that the Haitian Government would stand a better chance of securing a loan at the end of the year if it had given a practical demonstration during the present year of its determination to live within its budget. It was thought that the Fiscal Representative,¹² whose office was established by the accord, could use his authority and influence, with the informal assistance of the Legation, to assist the Haitian Government in eliminating unnecessary expenses and cutting expenses to meet receipts. It was also pointed out that if Haiti could continue during the fiscal year without a loan it would possibly no longer find the same need for a loan, inasmuch as three hundred thousand dollars per annum would be available for general governmental expenses which previously had been applied to amortization of the “B” bonds. In connection with Mr. de la Rue’s efforts to raise a loan, the Department therefore would not care to have the impression given by the Haitian Government, or otherwise, that the accord is likely to continue in force for an indefinite period, thereby tending to increase the confidence of possible lenders in the United States. If approached by any financial institution considering a loan to Haiti for information regarding the treaty relationship between the two countries, and it is highly probable that any reputable financial institution would desire to ascertain this information, the Department would feel constrained to state that it not only has an intention, but that it is committed to the abrogation of the accord of August 7, 1933.

With respect to this Government’s attitude regarding the proposed new treaty, there can be no doubt that it is definitely committed to sign it, as was indicated by the joint statement of President Roosevelt and President Vincent of April 17, 1934,¹³ that “We have discussed a new form of financial administration which is satisfactory to our two Governments and which should be equally satisfactory to the holders of the bonds of the 1922 loan”; by the fact that the proposed treaty was agreed to in its present form by the two Governments and Mr. Armour was authorized in instruction No. 171 of May 23, 1934,¹⁴ to sign it; and furthermore, by a letter dated January 28, 1935,¹⁵ to the Foreign Bondholders Protective Council, the Department declared that this question of policy of transferring the functions of the present treaty officials to the National Bank under a new treaty had been determined upon only after the fullest consideration and with all due and proper regard for the interests of the American bondholders.

Should the Haitian Government now determine that it wishes to proceed to sign the treaty despite the Department’s views as set forth in instruction No. 360 of February 4, 1935 [1936], the Department stands ready to sign the treaty with some modification in the letters accompanying it, in view of the possibility that the Foreign Bondholders Protective Council may wish to withdraw from participation therein.

If further inquiry is made of you regarding the attitude of our Government to the proposed new treaty, you may explain the Department’s views as set forth in this instruction.

Very truly yours,

For the Secretary of State:

Sumner Welles

10. Ibid., 1933, vol. v, p. 755.
11. Treaty of September 16, 1915, ibid., 1916, p. 328; supplementary agreements of August 24 and December 3, 1918, ibid., 1919, vol. ii, pp. 309 and 312; agreement of June 27, 1916, ibid., 1916, p. 332; protocol of October 3, 1919, ibid., 1919, vol. ii, p. 347.
12. Sidney de la Rue.
13. See telegram No. 18, April 18, 1934, to the Minister in Haiti, Foreign Relations, 1934, vol. v, p. 352.
14. Ibid., p. 361.
15. Not found in Department files.