838.51/3286

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

No. 458

Sir: The Department refers to its instruction of March 6, 1937, transmitting a memorandum of a conversation12 on March 1, 1937, between the Chief of the Latin American Division and Mr. Norbert A. Bogdan of the J. Henry Schroder Banking Corporation; to your despatch No. 434 of March 8, 1937,12 concerning the activities of this company, and of Mr. Pierre Darnet; to your telegram No. 6 [5] of March 12, 2 p.m., and to your despatch No. 439 of March 9, 1937.13

The Department has given careful consideration to the remarks made by Mr. Bogdan with respect to the proposed loan plan in which Schroder and Company is interested. In keeping with its present policy, the Department will not express any views regarding the loan project to Schroder and Company. It does desire, however, to lay certain observations before the Haitian Government and to urge their most careful consideration. Accordingly, unless you perceive objection to the observations set forth hereafter, you should request, at the first opportunity, an interview with President Vincent, or if [Page 529] you deem it preferable, with the Minister for Foreign Affairs, and present to him orally the following views of this Government.

You may say that this Government is prompted to present certain considerations to the Haitian Government because of its truly sincere interest in the welfare of Haiti. It feels confident that the Haitian Government will receive these observations in the same spirit they are made, and will appreciate that they arise out of a desire that the Haitian Government be in possession of certain information and matured judgments before making any decision as to a loan. This Government, moreover, far from desiring to see any obstacles raised to the security of a refunding loan would welcome a loan that would terminate its financial responsibilities in Haiti.

I. After this preliminary statement, you may say that the Department understands that the sole interest of Schroder and Company in a loan to Haiti is to liberate all or part of blocked mark credits in Germany belonging to certain clients of Schroder and Company. Inasmuch as these blocked mark credits can be only employed for purchases in Germany, it is presumed that the Haitian Government would use them for the purchase of construction equipment and materials in Germany to be used in its public works projects, and, if possible, for the remuneration of the engineering and other services to be performed in connection with such projects by some European contracting firm such as Brown, Bouverie and Company.

It is the understanding of the Department, from various conversations which its representatives have held with representatives of the Haitian Government, that leaving aside for the moment the question of the refunding of the 1922 loans,14 the desire of the Haitian Government in contracting at this time for a public works loan, has been twofold:

First, to undertake projects which will augment directly the economic prosperity of the country, such as the building of new roads and the improvement of existing roads and trails, the construction of drainage and irrigation ditches, of drying platforms for coffee, and of harbor facilities in the ports of secondary importance.

Second, to provide ample funds for absorbing Haitian labor in these economically sound public works projects, pending the increased general prosperity so confidently expected as a result of President Vincent’s wise encouragement and development of the coffee, banana and other industries, which would be directly benefited by the public works in question.

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Public works projects of the type mentioned in the foregoing paragraphs require, as a general rule, a minimum of equipment and a maximum of labor. Aside from bridges, road construction equipment, tools, cement and other materials, and the services of a few foreign experts, the goods or services which need to be purchased outside of Haiti are limited. Unless the works to be undertaken are much vaster in scale than has so far been indicated, and unless the prices for the material to be imported are higher than those obtaining for such material throughout the world generally, it is consequently difficult to see how, from an economic point of view, any considerable quantity of blocked mark credits could be advantageously employed by Haiti. It is presumed that the Haitian Government is bearing this in mind.

II. It is well known that with the unfavorable exchange situation, and the imperative necessity for concentrating the best class of raw and finished materials and equipment to their own uses, some of the European Governments are exercising very severe control over the selection of commodities which are permitted to be exported against blocked exchange credits. In production, frequent resort is had necessarily to substitutes at the expense of quality in raw materials, and prices are apt to be substantially higher than those in countries whose currencies have international acceptance. Moreover, it is reported that certain countries are actually having difficulty in supplying non-armaments construction material. This uncertainty as to prompt deliveries of material, appears to increase in proportion to the emphasis that is being placed in these countries upon augmenting their own armaments.

III. It has been and is the policy of this Government to assist the Haitian Government and Haitian people in securing, at the earliest possible moment, complete control over the conduct of their own affairs. In keeping with this policy, the United States was happy to terminate, prior to the expiration of the treaty, its connections with Haitian affairs, with the exception of financial matters which were the subject of a special accord in 1933.15 A year later when President Vincent informed President Roosevelt of the widespread desire of the Haitian people for a modification of the accord, President Roosevelt indicated his entire willingness to negotiate a new accord16 by which the present United States financial control would be substituted by an arrangement for the retirement of official United States supervision over Haitian financial affairs. For this reason this Government cannot give credit to the representations alleged to have been made by [Page 531] Mr. Pierre Darnet to the J. Henry Schroder Banking Corporation on the basis of letters said to have been written by responsible Haitian officials to the effect that the Haitian Government would, in return for a refunding loan, consider offering the control of the recently acquired National Bank of Haiti and the collection of the Haitian national customs revenues to bankers with whom might be associated foreign bankers and through them foreign governments. In this connection, the Department recalls the frequently reiterated affirmations of various Haitians prominent in public and private life that once free, Haiti would never again submit to foreign control, fiscal or otherwise.

This Government was, accordingly, most heartened by the affirmation of the Minister for Foreign Affairs and for Finance to the Fiscal Representative that the Haitian Government did not at this time contemplate the assignment of customs control.

IV. In conclusion, and as an earnest of its confidence that Haitian policy still is directed towards the complete recovery of its financial sovereignty, this Government desires to reiterate that it stands ready at any time to continue the negotiation of a protocol to terminate official United States financial control in Haiti under such suitable guarantees as may adequately protect the holders of the bonds of the 1922 Haitian loan. The Minister of the United States is prepared to carry forward the negotiations at the convenience of the Haitian Government.

There is enclosed herewith a copy of a memorandum of conversation, dated March 13,17 between Mr. Bogdan of Schroder and Company, and Mr. Duggan.

Very truly yours,

For the Secretary of State:
Sumner Welles
  1. Not printed.
  2. Not printed.
  3. Despatch not printed.
  4. Loan contract of October 6, 1922, between the Republic of Haiti and the National City Company and the National City Bank, both of New York; for text (in French and English), see Le Moniteur, Journal Officiel de la République d’Haiti, October 30, 1922, pp. 533 and 537; see also Foreign Relations, 1922, vol. ii, pp. 472 ff.
  5. Agreement of August 7, 1933, Foreign Relations, 1933, vol. v, p. 755.
  6. See telegram No. 18, April 18, 1934, to the Minister in Haiti, ibid., 1934, vol. v, p. 352.
  7. Not printed.