838.51/3365a

The Department of State to the Haitian Legation

Memorandum

The Government of the United States has learned that the Haitian Government has under serious consideration the offer of a further settlement of certain alleged claims advanced by the holders of the outstanding bonds of the 1910 Haitian loan, in addition to the just and equitable payment offered to all bondholders of this loan at the time that the 1922 loans69 were floated.

It will be recalled that the Haitian Government has for many years consistently maintained that the 1910 loan contract and the bonds themselves did not stipulate payment in “gold” French francs, and that in the phrase “Haitian 5 percent gold loan of 1910” the word “gold” merely referred to the security for the loan which was stipulated in the contracts and the bonds as based upon the collection of one dollar United States gold for every 100 pounds of exported coffee and fifteen percent special surtax in United States gold on the imports created by the law of August 20, 1909.

The Government of the United States on its part has likewise consistently sustained the Haitian position that the service of the 1910 loan was not payable in gold francs, and as the Haitian Government is well aware, the Government of the United States has on numerous occasions in the past, and as recently as 1934 and 1935,70 lent its active good offices to the Haitian Government, when requested so to do by the Haitian Government, in making representations to the French Government on behalf of this position.

The Haitian Government will recall that in 1922 the United States underwriters of the loan to Haiti issued that year stipulated as a condition precedent to underwriting the loan that all outstanding Haitian loans should be retired. More specifically, the bankers stated that they could not approve the new loan unless they received assurances that the lien of the bonds of the 1910 loan upon Haitian revenues would be discharged by their call for redemption by the Haitian Government [Page 570]and the tender of the amount of the principal and interest thereof in French francs then in ordinary use and circulation. These assurances were given by the Department of State after consultation with the Haitian Government on November 22, 1922.

The Government of the United States is unaware of any subsequent developments in law or equity which would warrant an alteration of the attitude of the Haitian Government or of this Government towards the settlement of the 1910 loan. The Government of the United States is reluctant to believe, therefore, that the Haitian Government should so completely reverse its consistently maintained policy as now to be considering a further settlement with the intransigent holders of the outstanding bonds of the 1910 loan.

If the Haitian Government inclines to the view that a settlement on the outstanding bonds might create good will in French official and financial circles, it may be pointed out that the former holders of the bonds of the 1910 loan who accepted in good faith the just and equitable settlement offered them, would appear to have as good a right in equity to an additional settlement as have the holders of the outstanding bonds. It seems probable that far from disposing of the 1910 loan question the offer of a settlement when made, may cause a renewal of agitation in France for a settlement of the entire loan, and thus nullify any good will engendered by the restricted offer of payment.

It seems scarcely necessary to remind the Haitian Government that French investors who hold obligations of many other loans, including the Dawes and Young loans71 and various international issues floated under the auspices of the League of Nations, whose contracts provide for payment in “gold” of a fixed weight and fineness, have accepted payment in depreciated paper francs.

The Government of the United States wishes to remind the Haitian Government that while the 1910 contract and bonds did not contain any clause stipulating payment in gold, the 1922 loan contracts and bonds all contained very carefully worded gold clauses. Notwithstanding these last-named carefully worded “gold” clauses, the service of the 1922 loans both as respects interest and amortization has, following the devaluation of the dollar in 1933, been fulfilled in devalued dollars. The United States Government has in existing circumstances no intention of supporting any claim on the part of its citizens for service either as to interest or amortization of the 1922 bonds in United States dollars of the weight and fineness specified [Page 571]at the time that the 1922 loan contracts were made valid. Moreover, it does not appear that so far the bondholders of the 1922 loan have seriously questioned the action of the Haitian Government in maintaining the service of the loan by payments in the present United States dollar.

It will be obvious to the Haitian Government, however, should a special further settlement be offered to the holders of the outstanding bonds of the 1910 loan, and no corresponding additional settlement be offered to holders of the bonds of the Haitian 1922 issue, that the charge of discrimination in favor of the holders of the French loan probably would be raised by the holders of the bonds of the 1922 loan.

  1. 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 Répubulique d’Haiti, October 30, 1922, pp. 533 and 537. For correspondence relating to the loan, see Foreign Relations, 1922, vol. ii, pp. 472 ff.
  2. See ibid., 1935, vol. iv, pp. 650 ff and 667 ff.
  3. For the Dawes Plan, see British Cmd. 2105 (1924): Reports of the Expert Committees Appointed by the Reparations Commission; for the Young Plan, see British Cmd. 3343 (1929): Report of the Committee of Experts on Reparations.