838.51/3227
The Minister in Haiti (Gordon) to
the Secretary of State
No. 344
Port-au-Prince, November 13, 1936.
[Received
November 17.]
Sir: I have the honor to report that the
Department’s telegraphic instruction No. 28 of November 11, was not
received at this Legation until the morning of November 12. It not only
then seemed impracticable to postpone my engagement with the Foreign
Minister, but also I did not consider it advisable to do so: both
because the main consideration was to forestall any possibility of M.
Léger submitting a draft to me prior to my delivering to him our own
draft protocol and note, and also because I felt that it would be more
salutary to have him know how we felt about President Vincent’s attitude
in the premises.
Accordingly, I called upon him at the appointed time yesterday, and again
this morning. The enclosed memoranda and Aide
Mémoire from the Haitian Foreign Office will, I trust, give a
clear picture of what transpired. The difference between today and
yesterday in the President’s attitude, as conveyed to me by M. Léger, is
very interesting.
I should like to express my appreciation of the Department’s promptitude
in sending the telegraphic instruction above referred to in reply to my
telegrams No. 51 of November 9, and 52 of November 11; and the same
applies to the Department’s telegram No. 29 of [Page 615] November 12, in reply to my despatch No. 339 of
November 6.28
They had the desired effect of preventing any precipitate action on the
part of the Foreign Minister and of bringing about a reconsideration of
the very casual, to put it mildly, attitude taken by the Haitian
Government. As indicated in my brief telegram of this date28a I hope to
have the draft protocol and note ready for presentation to M. Léger
early next week, and at my conference with him today he stated that he
would await their receipt before addressing any further communication to
me in the premises.
Respectfully yours,
[Enclosure 1]
Memorandum by the American Minister (Gordon) of an Interview
With the Haitian Minister for Foreign Affairs (Léger), November 12,
1936
I called upon M. Léger this morning by appointment and spent just
short of an hour and a half with him. I told him that I had today
received instructions from my Government (Department’s telegram No.
28 of November 11), as the result of which it appeared that within a
very few days I should be prepared to submit to him a draft protocol
and note as a basis to negotiate an agreement to terminate financial
control.
I recalled that when I had seen him some two weeks ago I had told him
that the agreement to terminate control had been carefully worked
out two years ago and embodied in a draft treaty with annexed
letters containing undertakings on the part of the Government of
Haiti to confer upon the Bank certain powers and to adopt certain
measures of fiscal policy for the purpose of insuring adequate
protection for the 1922 bondholders. I said that when Mr. Pixley had
told me two days ago that M. Léger had informed him that no trace of
these documents could be found in the archives of the Foreign Office
or of the President’s Office, I was naturally greatly surprised, to
say the least; I had necessarily reported this to my Government
which had replied expressing similar surprise that the Haitian
Government appeared not to be aware of the terms of the agreement so
carefully negotiated between the two Governments two years ago. I
said that I thought it would be better to read him my instructions
on this point textually, and proceeded to read the pertinent portion
of the Department’s telegram under reference.
M. Léger said, speaking very frankly, that he had really been
somewhat ashamed to ask me for the missing documents himself and [Page 616] therefore had requested
Mr. Pixley to ask me for them. Not having seen letters A and B,
which had been agreed upon as constituting annexes to the proposed
treaty two years ago, he could not speak with properly full
knowledge of the facts, but it had been apparent to him as the
result of his conversations with Mr. Pixley that there was
considerable misunderstanding in the premises. He gathered from Mr.
Pixley and from me that it was proposed to transfer to the Bank
substantially the entire Fiscal Representative’s service as it now
stood, whereas the desire of the Haitian Government was to begin to
build up a permanent Haitianized fiscal service which would have an
important portion of the functions now exercised by the Fiscal
Representative’s Office, notably the Comptroller’s Service.
Léger said that having nothing in his files to indicate what had been
discussed and tentatively agreed upon in 1934, and being sincerely
desirous of not repudiating any commitments that might have been
made, he had asked the President to tell him just what commitments
had been entered into, and the President, in reply, told him that
while in 1934 there had been a general agreement as to the
conditions under which the control was to be terminated, there had
been no definite commitments, and that circumstances having changed
in the two and a half years which had since elapsed the President
did not consider that the termination of control would have to be
effected under exactly the same conditions as had been envisaged in
1934.
In reply I said that I must take sharp issue with this. The
agreements entered into in 1934 were in no sense tentative, but were
the result of careful negotiation. We had at that time only agreed
to abrogate existing treaties, under which obligations had been
assumed for the protection of 1922 bondholders, under certain
specific conditions which were designed to insure the maintenance of
the existing security for the 1922 loans. Nor was there merely a
general agreement as to these conditions; on the contrary, they were
carefully and specifically set forth in the documents agreed upon at
that time. When approached by the Haitian Minister in Washington two
weeks ago and formally notified that the Haitian Government desired
to proceed with the negotiation of an agreement for terminating
financial control, my Government in fulfilling the undertaking
entered into by it in 1934 and announcing its readiness to proceed
with such negotiation, naturally did so upon the understanding that
the Haitian Government, in its turn, would fulfill the undertakings
it had given in return for our consent to the termination of
control. If President Vincent were now to maintain the attitude that
the Haitian Government had made no commitments and was under no
obligation to do what in 1934 it had said it would do, why of course
we would have no option but to withdraw our consent to the
abrogation of existing treaties and the termination of financial
control.
[Page 617]
If M. Léger should tell me officially that this was the definite
attitude of President Vincent, I would of course report it to my
Government, but I could tell him right now, and I was sure he would
appreciate the point, that my Government’s reaction would
necessarily be most unfavorable, and that my Government would
undoubtedly have to take the corresponding attitude which I had just
indicated. M. Léger then said that he would be sorry to have me send
a report of this nature and he asked me if I would consent to hold
up making a report until he had been able to discuss with the
President our present conversation. As I thought there was
everything to be gained by this, I assented, and I am to see him
tomorrow at 11 a.m.
Reverting to what he felt was a definite misunderstanding, Léger
pointed to Article 13 of the Bank Contract,29 which stipulates that for its
treasury and other services the Bank shall only receive 2% of the
gross revenues of the government. As, according to him, the
government’s gross receipts were now little in excess of Gdes.
32,000,000, i. e., about $6,500,000, 2% thereof would be but about
$130,000. The Bank was already receiving 1% of these gross receipts,
and it seemed clear to him that for an additional $65,000, it could
not have been contemplated that the Bank was to take over
substantially the entire functions of the Fiscal Representative’s
Office, which he said was now operating on a budget of approximately
$160,000 a year.
Léger then said that he hoped I would give earnest consideration to
the Haitian Government’s point of view that it desired to build up a
permanent and efficient fiscal service. For Haiti’s own
protection—with respect to her credit standing, the possibility of
future loans, etc.,—the government wished to ensure just as
effective service of the 1922 loans, and as adequate protection of
the bondholders, as has existed up to now. He felt that the plan of
reorganization of the Bank which he had in mind would bring this
about, and he hoped that if he presented a plan which insured the
attainment of these two objectives we would not refuse to discuss
it, even if it was not just what had hitherto been envisaged.
I pointed out to M. Léger that I had recently seen a memorandum,
which Mr. de la Rue had prepared just before leaving here in
September, in which he referred to a conversation, or conversations,
which he had had with the President, in the course of which the
latter had agreed with the idea that for treasury and administrative
services the Bank should take 2% of the gross receipts of the
government plus such an additional sum as might be necessary to
constitute a minimum [Page 618]
amount of . . . . . gourdes; the same idea to be applied to the
operation of the customs service (2% plus such amount as might be
necessary to constitute a minimum of . . . . . gourdes), and to the
operation of the internal revenue service (12% plus such amount as
might be necessary to constitute a minimum of . . . . . gourdes). At
this M. Léger smiled rather skeptically and said that he had not
seen anything in writing evidencing any such concrete agreement.
In conclusion M. Léger said that he had naturally wanted to give me
his general ideas and to get mine, but up to date we were
necessarily talking somewhat vaguely; when we had before us the
draft documents, which I had said I would submit to him in the near
future, we could discuss with more precision. In the meantime he
would let me know tomorrow the result of his discussion with the
President of the fundamental points above adverted to.
[Enclosure 2]
Memorandum by the American, Minister (Gordon) of am, Interview
With the Haitian Minister for Foreign Affairs (Léger), November 13,
1936
As indicated in my memorandum of yesterday’s interview with M. Léger
I called upon him by appointment this morning.
M. Léger said he was sure I would be glad to hear that since I had
seen him yesterday they had finally found the documents elaborated
in 1934. He said that a perusal of letters A and B had given him
great satisfaction because he felt now that we were very close
together and that there should be little difficulty in negotiating
an agreement to bring about the termination of financial control.
The Haitian Government was perfectly ready to stand by everything
set forth in letters A and B. He wished, however, to point out that
most of those provisions were undertakings to do something in the
future, but did not specify just how it was to be done. It was this
that he had in the forefront of his mind yesterday when he was
saying that there were no commitments on the Haitian side. He was
afraid that he had expressed himself badly inasmuch as what he meant
was that there were no definite commitments as to just how the
functions now performed by the Fiscal Representative’s Office were
to be transferred to the Bank—which, as he saw it, was the point as
to which there existed at present the most misunderstanding and
divergence of views.
He then read me an Aide-Mémoire setting forth
summarily the point of view of the Haitian Government, copy and
translation of which are transmitted to the Department as enclosures
to the despatch to which this memorandum is also an enclosure.
[Page 619]
M. Léger said that he still felt that the new set-up now envisaged by
him would insure the fullest measure of protection and security to
the 1922 bondholders, and he hoped and thought that we also would
feel that it did. After receiving the draft protocol and note, which
I told him I now would be in a position to submit to him on Monday
or Tuesday of next week, M. Léger said that in the near future he
would, by way of comment thereon, or reply thereto, submit to me his
proposed plan of organization of the fiscal services in question. As
I had indicated, when he had roughly outlined his plan to me orally,
Léger admitted that there was some duplication of work in his
scheme, but that this tended toward greater protection of the
bondholders, and also would achieve his other main objective of
building up a Haitianized fiscal service which would be able to
continue to operate efficiently after the 1922 loans had been fully
retired, instead of merely disappearing when the event takes
place.
[Enclosure 3—Translation]
The Haitian Ministry for
Foreign Affairs to the American
Legation
Aide-Mémoire
The Haitian State has never contested the fact that there were
negotiations in 1934 with the American Government, nor that there
was an agreement in principle on the subject of the conditions under
which the Office of the Fiscal Representative would be abolished.
The substance of the arrangements agreed upon is to be found
moreover, together with the limits which they envisage, set forth
explicitly in Article 13 of the Contract of July 8, 1935, for the
purchase of the Bank.
The Haitian Government does not intend to repudiate in any way this
agreement in principle or the measures agreed upon to be taken as a
guarantee to the 1922 bondholders. But the Government holds that the
arrangements of which it has just spoken have never implied the
engagement on the part of the Haitian Government to transfer the
organization of the Office of the Fiscal Representative almost in
its entirety to the new Services to be organized in the National
Bank of the Republic of Haiti.
The Haitian Government recognizes the very useful and beneficial role
that the Service of the Fiscal Representative has played in the
financial organization of the Republic; it desires to maintain a
similar organization as a permanent part of the financial
administration. It intends to create a Service of Control of
receipts and expenditures of the Republic of Haiti, by preserving
the entire Haitian personnel already trained, and to maintain this
new organization with the same attributes as those previously
exercised by the Office of the Fiscal [Page 620] Representative, at the same time abolishing,
naturally, the right of political control.
In so far as the guarantees to be given to the bondholders of the
1922 loan are concerned, the Government will create the necessary
services and organization to satisfy the engagements already
undertaken by it, as they are set forth in Article 8 (sic) of the Contract of July 8, 1935, while
taking into consideration the limits imposed by the total percentage
of 2% of the gross revenue of the Government allotted as a
remuneration to the National Bank of the Republic of Haiti by
agreement between the two Governments.
Port-au-Prince, November 13,
1936.
