The Chargé in Haiti (Finley) to the Secretary of State

No. 511

Sir: I have the honor to report that during my visit to the Foreign Office yesterday, when another matter was discussed, Minister Léger took occasion to raise the question of the 1910 bonds. He said he had just received the Department’s memorandum on this subject from M. Lescot.72 Since I had not yet received a copy of this memorandum, M. Léger permitted me to read the original he had received.

The Minister then said that he wished to discuss this question somewhat at length, and that he would instruct Lescot what reply should be made. Meanwhile he wished to tell me frankly what his views are. He said that when he assumed office last October the question of the disposal of the 1936 coffee crop was of pressing importance. He for one was rather pessimistic as to the possibility of selling enough Haitian coffee in the United States to compensate for the loss of the French market following the renunciation of the French commercial convention. Four days after he had taken office he had had a long conversation with Minister Gordon on this subject (see Legation’s telegram No. 46, October 27, 1 p.m., 193673) and he had asked the Minister what he thought the Department could do to aid Haiti vis-à-vis the French. Mr. Gordon, he said, had referred this inquiry to the Department, and that after several days the reply had come [Page 572]back that the Department felt that it had done just about all it could in this direction at that time.

Note. I am unable to find out how the Foreign Minister received this impression, for the Department’s telegram No. 24, October 28, 7 p.m., 1936,74 indicated that “it would be inclined to consider extending its good offices further on behalf of the Haitian Government vis-à-vis the French Government if the French demands should prove unreasonable or unduly exigent”.

M. Léger then went on to say that he understood at this time that Haiti would have to tackle this problem unassisted by Washington. He felt then as he does now that the French bondholders have no legal claim against Haiti, and neither then nor now does he have any sentimental or other reason which would influence him to pay them one franc. Money was too hard to come by these days.

But he did as Foreign Minister have to find ways and means of disposing of Haiti’s coffee crop, and in looking around for some way to appease the French it occurred to him that something more than $500,000 had been received by the Haitian Government as interest on the money which the French bondholders had declined to accept in depreciated francs. Since the American Government felt unable to assist him, could he not find a way to appease the French by a token payment of this interest amounting to about $500,000 or in terms of francs, Frs. 10,000,000? It was true that this money was not available in cash to the Haitian Government since this interest had been currently considered an ordinary revenue of the Government and only a small amount remained available. His idea, therefore, providing the French were found to be receptive, was to issue bonds for this amount bearing 4% interest and payable in 15 years which might be turned over to the French Government for distribution as it saw fit.

In order not to compromise himself with the French, he determined to sound out the French Minister through the intermediary of M. Lespinasse, President of the French Chamber of Commerce in Port-au-Prince. He asked M. Lespinasse to find an occasion to talk with M. de Lens, French Minister to Haiti, and incidentally and casually to inquire whether the Minister thought that Frs. 10,000,000 payable in 15 years would satisfy the bondholders of the French Government and thus put an end to this thorny question. The French Minister, acting upon this inquiry, referred the matter to his Government but received no reply thereto.

In due course, however, M. de Lens was authorized by his Government to open new negotiations for a commercial convention. Nothing was said as these negotiations proceeded with regard to the Frs. 10,000,000 settlement, and he, M. Léger, took this to mean that for all [Page 573]practical purposes the French had accepted this indirect offer and so he went on to conclude the modus vivendi and later to draft the new commercial convention. The latter is now practically in its final form and ready for signature.

However, when it came time to sign the convention, the French Government proposed that this conclusion be accompanied by a settlement of the 1910 question on the basis of Frs. 1,000, per bond or approximately Frs. 20,000,000 in all. This was double what the Minister had offered indirectly. M. Léger said that he called in M. de Lens and told him in so many words that his Government could “aller au diable”; if he decided to give them anything he would not give them one franc more than Frs. 10,000,000. There the matter apparently rests and the French are showing no haste in concluding the convention. The French Commercial Attaché has left for other parts and the French Minister to Haiti has retired to Kenscoff.

Meanwhile, Léger said that the 1937 coffee crop bids fair to be a large one. While American purchases of Haiti’s coffee continue to be satisfactory, they are not yet large enough to warrant the belief that Haiti can dispense with the French market during the coming season. Moreover, it appears that the prices paid for Haitian coffee in the French market are somewhat greater than those paid in the United States. He therefore feels he must have this convention concluded as soon as possible. At this point the Foreign Minister again pointed out that he had never admitted the legality of the French claim against Haiti; that Haiti had no legal obligation to pay them anything; and he did not want to pay them anything. In order to settle the perennial difficulty, however, he had told them indirectly that he might be willing to settle for Frs. 10,000,000 if that would put an end to the matter; accordingly, if the French signed the commercial convention, he would feel morally bound to pay this sum. In no case would he pay them more.

M. Léger then asked me to put these views before my Government and inquire whether the Department now felt that it could use its good offices with the French Government to help Haiti obtain its objective in the French coffee market. He pointed out that the Haitian Government could not increase its public debt without the approval of the United States; also that this question of the 1910 bonds had had its origin during our Occupation and he felt that Haiti ought to receive our help in lifting this iron from the fire. He said in terminating the conversation that he intends to call in M. de Lens and let him read the Department’s memorandum.

I told M. Léger that I had already reported the attitude of the Haitian Government on this subject in so far as he had made it clear to me, and that I would again be glad upon his request to amplify what had already been sent to the Department.

[Page 574]

In order to give the Department a clear picture of the present status of the 1910 bond account in New York, I have asked the Assistant Fiscal Representative75 to give me an inclusive memorandum which he has promised to do next week. Meanwhile, I enclose a statement76 showing the rate at which these bonds have been redeemed from January, 1935 through April 1937.

During our conversation yesterday M. Leger expressed himself as being angry with Bogdan77 and his associates in Paris for having entered into any discussion with the French Bondholders Council regarding this question. He said that Bogdan had no authorization from the Haitian Government to do this, and that experience has shown in the past that the 1910 bonds are redeemed at a relatively slower rate following any such hair-brained discussion as may have gone on in Paris this summer.

Respectfully yours,

Harold D. Finley
  1. Elie Lescot, Haitian Minister in the United States.
  2. Foreign Relations, 1936, vol. v, p. 680.
  3. Foreign Relations, 1936, vol v, p. 681.
  4. Rex A. Pixley.
  5. Not printed.
  6. Norbert A. Bogdan, Vice President of the J. Henry Schroder Banking Corporation.