838.51/3291: Telegram
The Minister in Haiti (Gordon) to the Secretary of State
[Received 4:35 p.m.]
8. I have just presented orally to the Foreign Minister our Government’s views as set forth in the Department’s instruction No. 458 of March 15. In the ensuing conversation which lasted an hour the Foreign Minister made the following statements:
The Haitian Government has no intention of granting customs control in return for a refunding loan. If necessary, the Haitian Government would be prepared to set up something in the bank in the nature [Page 532] of an attenuated “bank plan” to guarantee the service of the loan; so far, however, nothing of the kind has been suggested and the Foreign Minister’s proposal to Schroder has only dealt with this point by stating that the bank would remain the exclusive agency for receiving Government moneys upon which there would be a first lien for the service of the loan.
The Foreign Minister has made the following proposal to the potential lenders: the Haitian Government to sell them a two-thirds interest in the bank for $1,000,000 in cash—all profits made by the bank to be distributed prior to the sale—the capital to be increased by $500,000, to be taken by the Haitian Government which would thus retain a one-third interest in the bank with proportionate representation on the Board of Directors; concessions under which the bank operates to be made conterminous with the life of the loan.
The Foreign Minister declared that he intended immediately to write Schroder to clear up the discrepancy arising from statements being made in the United States that the Haitian Government is willing to grant customs control.
The Haitian Government has no special interest in buying German construction material; if a reasonable refunding loan proposition were presented to the Haitian Government which included the purchase of American building material the Haitian Government would be better pleased. However, if the only feasible refunding loan proposition made to the Haitian Government comprises the purchase of German building material the Foreign Minister was willing to buy with blocked marks just as much of such material as he needed and no more; his position in this respect remains as he had stated it to the fiscal representative for communication to Schroder (see enclosure No. 2 to my despatch No. 426 of February 2518).
I spent some time stressing the considerations set forth in section II of the Department’s instruction under reference. The Foreign Minister said he understood these points and that he was prepared to take all necessary precautions. I told him that, speaking personally, I had had considerable opportunity to observe at first hand a [apparent omission] to unload blocked marks as well as to unfreeze exchange credits of other denominations and after pressing this point upon him in some detail he did seem to be somewhat impressed.
As regards the point of granting customs control to bankers with whom might be associated foreign bankers and through them foreign governments, the Foreign Minister said that he knew nothing of any foreign bankers being connected with the Schroder proposition. When I asked him about Brown Bouverie and reminded him that when the Debachy loan19 was being peddled about this firm had been [Page 533] represented as having both a contracting and a financing interest, he said that as far as he knew they were only in it as contractors and he was unaware of their having any interest in the financing of the scheme; he had thought that through the London house of Schroder some English money might be participating in the loan but he knew nothing definite even as to this and was unaware of any other foreign money being involved. It was evident that the Foreign Minister felt that he had made considerable progress in the Schroder negotiations and was quite sanguine of the loan going through. One interesting piece of information was that White, Weld and Co. had recently sent a representative to see him. The Foreign Minister said he told this representative that he had authorized Schroder to proceed with the formulation of a loan proposition and the formation of an underwritings group and had suggested that White, Weld might desire to participate in the Schroder group. I take it that a permissible inference therefrom is that White, Weld had nothing more attractive to offer than Schroder. The Foreign Minister agreed that if in spite of his expectations the loan were to break down on the question of customs control it was better to know it at once than to proceed further under a misapprehension, and it was desirable to clear this up and bring the matter to a head as soon as possible; he also admitted that if the loan were to break down it was high time to proceed actively with the negotiations for a protocol terminating our financial control.
- Not printed.↩
- See Foreign Relations, 1935, vol. iv, pp. 667 ff.↩