The Haitian Legation to the Department of State



In reply to the Memorandum of June 22nd last, relative to the claim of the holders of the 1910 loan, the Haitian Government is happy to be able to dissipate the uneasiness which the United States Government appears to feel with respect to its attitude towards the claim of the said holders.

In fact, the Haitian Government is not conducting any negotiations with France that would imply the abandonment of the thesis which the Republic of Haiti, in full accord on this point with the Government of the United States, has always firmly maintained, that is, that the loan contract of 1910 does not involve any obligation to repay anything but paper francs.

The Haitian Government is just as much aware as the United States Government of the danger there would be in acknowledging the principle of a debt in gold francs, and it does not hesitate to give formal assurance that it will never acknowledge such an obligation against it.

The United States Government has been good enough to recall the good offices it has rendered the Haitian Government in the past, in the controversies on that subject that have existed. The Haitian Government highly appreciates this friendly attitude of the United States Government, and it does not fail to recognize either the scope of the assurances given the bankers who financed the 1922 loan. However, despite those good offices, it is undeniable that a serious controversy exists between the French Government and the Haitian Government concerning the 1910 loan. This controversy has had the consequence of leading France to denounce the treaty of commerce which bound her with the Republic of Haiti, which has provoked, as a measure of reprisal, the application of the maximum Haitian customs tariff to French goods and has resulted, in fact, in the almost complete breaking off of trade relations between the two countries.

The Haitian Government believes it should emphasize that the normal flow of the coffee crop is at the basis of the economic and [Page 576]fiscal life of the Republic of Haiti. Great efforts, crowned with a certain amount of success, have been made to introduce Haitian coffee into the United States market. It is the intention of the Haitian Government to continue these efforts and to neglect nothing, in order to win an advantageous position for the Haitian product in the United States.

Nevertheless, despite the efforts just spoken of, the United States market absorbed only the quantity of about fifty thousand sacks of Haitian coffee during the crop year 1936–1937 and at prices which, on the whole, have been a little below those given by Havre. On the other hand, despite the denouncement of the Franco-Haitian Convention, Havre was the largest purchaser of Haitian coffee during the last crop year. Such purchases have doubtless been made because of the hope which the trade of Havre had that a prompt solution would be found for the difficulties between France and Haiti. Those hopes have not been realized. The result is that a large part of the coffee purchased during the last crop year is still in stock in Havre warehouses. It is certain that if no agreement is reached the Republic of Haiti cannot count on purchases by Havre for the coming crop year and, consequently, that the Republic of Haiti will run the twofold risk of being unable, on the one hand, to count on the Havre market for the 1937–1938 crop year and, on the other hand, of seeing its French customers form the fixed habit of buying coffees of other origin.

For another thing, it is reported that the 1937–1938 crop is to be unusually large. But nothing indicates that the United States market will absorb the coffee coming from the new crop in a larger amount than last year. There is also to be pointed out the considerable drop in profit that would result for the Haitian trade by the loss of the French market; in fact, while New York generally pays only the Santos price, or a price even below Santos, for Haitian coffee, the Havre market has, on the contrary, always given Haitian coffee a premium over Santos.

The Haitian Government believes that the United States Government will agree that the circumstances just pointed out constitute a de facto situation which amply justifies the efforts it believes it must make to put an end to the difficulties with France.

The United States Government will likewise consider that it is not possible for the Haitian Government, responsible to the Haitian people for the management of its affairs, to remain indifferent to the danger which menaces the general Haitian economy. The Haitian Government found itself under all the greater obligation to seek for a solution, in that it had been informed in October 1936 by the United States Minister at Port-au-Prince that his Government did not think [Page 577]that it was possible for it to make any new effort, for the time being, to aid in settling the 1910 matter.

Negotiations have therefore been conducted with the French Government. These negotiations have not yet led to any definitive arrangement. The basis considered does not impair in any way the juridical position assumed in the past and which the Republic of Haiti continues to assume. The Haitian Government has taken into consideration the fact that from the approximately 25,000,000 frs. representing the sum of the 1910 obligations not presented for payment, it has, from 1923 to this date, received interest exceeding the amount of $500,000. The Haitian Government thinks that it might agree to pay to the holders of the 1910 [loan],79 through the French Government, a sum representing nearly the total of that interest. In order to avoid any embarrassment to the Treasury of the Republic of Haiti, the payment of 10,000,000.00 francs has been envisaged (which, at the current rate, represents a little less than the $500,000 collected), by means of an emission of obligations payable in fifteen years and bearing 4 percent interest. The Haitian Government wishes to dwell upon the fact that such an arrangement, if concluded, would not impair in any way its juridical position with respect to repayment in paper francs, would only return to the holders of the 1910 [obligations] money which the Haitian Government would never have received if the bonds had been presented for redemption and, if the terms are considered, would constitute a very slight burden on the Republic of Haiti, particularly in view of the advantages the national economy derives from the Havre market. The drop in profits which would result from the loss of the Havre market for as large a crop as that which may be expected for 1937–1938, would probably exceed for that one year the total amount of the compensation to be given the holders of 1910 [obligations].

Moreover, the Haitian Government can hardly see in what way such an arrangement could injure the rights of the holders of the 1922 loan. The Haitian Government highly appreciates the assurance that the United States Government has just been good enough to give it, that it does not intend to support any claim that its citizens might make on the occasion of the payment of the 1922 loan in devalued dollars. It notes with satisfaction that it does not seem that the holders of 1922 [obligations] are thinking of calling in question the Haitian Government’s absolute right to effect the payment in this way.

By reason of this assurance which the United States Government has been good enough to give it, the Haitian Government does not believe it necessary to set forth the reasons which, in its opinion, [Page 578]would render such a claim of the holder of 1922 [bonds] hard to maintain. It desires to lay emphasis on the fact that the arrangement with the French Government that is envisaged would, assuming that it is made, constitute neither favored treatment of the holders of 1910 [bonds] nor an act of discrimination against the holders of 1922 [bonds]. The arrangement contemplated would only permit holders of 1910 [bonds] who have not been paid yet to recover a part of the interest on the funds that were deposited in order to be paid to them. The question of determining whether in law, such interest does not belong to such holders is evidently a question that may give rise to controversy, but it is certain that as a matter of equity the holders of 1910 [bonds] have grounds for cleaning such interest. Hence it appears that such an arrangement would not give them any privileged treatment of such a nature as to disturb the susceptibilities of the holders of the 1922 loan.

The Haitian Government wishes to add that the agreement contemplated would definitively put an end to all controversies between France and Haiti with regard to the 1910 loan.

  1. Brackets here and elsewhere in this document appear in the file translation.