838.51/3242: Telegram

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

62. The Foreign Minister asked me to call on him this morning and by way of asking when I thought I might be receiving an instruction [Page 645] from the Department brought up the question of the bank plan and asked me if I would discuss it unofficially. In reply I said I felt that the plan he had submitted on November 27 was widely at variance from my understanding of what had been agreed upon in 1934 and that I felt sure that the Department would view it in the same light. Léger said that he did not see why this should be so as what he was trying to do was to adhere strictly to the provisions of the draft treaty and accompanying letters of 1934.

I then rehearsed the objections of his plan set forth in my despatch 350 of November 28 and emphasized that his draft legislation number 3 would automatically eliminate all the Americans now in the fiscal representative’s office which could scarcely result in the same measure of protection for the 1922 bondholders it now enjoyed. Léger replied that he was not sure that his plan would necessarily eliminate the Americans and that anyway his Government was under no obligation to pay de la Rue and Pixley the same salaries they now receive; according to the terms of the 1934 letters the bank was to carry on the service for the protection of the security of the 1922 loans on 2 per cent of the gross receipts of the Government and he had to draft his budget in accordance with that provision; what we were now asking was that Kirchner give to this service in the bank a sum greatly in excess of the possible proceeds of a 2 per cent commission on current netted receipts which would have to come out of budgetary funds. He added that for the salaries he had scheduled able men could be secured as inspectors.

I again emphasized that if all or substantially all the Americans at the head of this service which had admittedly rendered efficient service to Haitian finances were eliminated and less experienced subordinates put in their places, however Avell such a Haitianized service might work eventually, it was obvious that at the best there would for some time be an impairment of the protection of the security of the loans; my Government could not accept such a plan and fulfill its obligations to the bondholders.

Léger maintained an aggressive attitude throughout most of the interview, almost taking the overt position that his plan complied with all the obligations assumed by his Government in 1934 and that if we did not accept it we would not be living up to our own undertaking of that year. If instructions to me on this matter are in the process of formulation I venture to urge that it would be distinctly beneficial to have them couched in the stiffest terms the Department would be willing to employ.

Amplifying despatch by air mail Sunday.