838.51/3665
The Chargé in Haiti (Finley) to the
Secretary of State
[Extracts]
No. 231
Port-au-Prince, July 13, 1938.
[Received July
14.]
Sir: I have the honor to refer to the
Department’s telegram No. 60, July 8, 7 p.m. (1938), concerning the
recently concluded Franco-Haitian Commercial Convention and its annexed
Protocol of Signature, and to transmit a copy of the aide-mémoire I left with Secretary for Foreign Affairs Léger
on July 9, as well as a copy and translation of an aide-mémoire which he handed me on July 11, 1938, concerning
this subject. My telegram No. 81 of July 9, 1 p.m.,45 reported the conversation of
July 9. The text of the Convention and Protocol as published in the
French Journal Officiel on June 26, 1938, has
been received under cover of a letter from Mr. Chapin.46
. . . . . . . . . . . . . .
The Legation believes that M. Léger is truthful when he stated that he
did not know, until after the convention had been signed, that it would
be accompanied by any document so formal and so closely linked to the
convention as the protocol of signature. As soon as he heard this, he
recalled Chatelain. He then devoted all his energies to keeping the
protocol secret.
Either the French would not listen to Chatelain—or Chatelain, angry at
his recall, may have failed to carry out the instructions which were
given him in this sense. The Quai d’Orsay may have wished to disturb
Haitian-American negotiations for a public works contract. M. Léger and
the French Government may still have some scheme in mind for the entry
of French interests into the Haitian public works field. In any event,
the protocol was published in Paris.
In spite of M. Léger’s seeming embarrassment at the denouement, … his
local position was not as bad as could have been expected.
[Page 617]
He could point to the fact
that almost simultaneously, he had been able to settle the French
commercial question and obtain $5,000,000 for Haiti from the United
States. The Legation’s feeling is that M. Léger believed he was playing
a very astute game and that in spite of difficulties which have arisen
or may arise, he has won the game.
It was inevitable, therefore, that M. Léger’s aide-mémoire in reply to the observations of the Department
(Department’s telegram No. 60, July 8, 7 p.m.) would be casuistic and
specious. I venture to think the Department will share our view that it
is that.
First, it hardly seems that, in the protocol, the Haitian Government has
only assumed the two obligations which M. Léger specifies; it would seem
that in addition the Haitian Government has formally accepted the scheme
whereby the proceeds of the surtax are to be distributed to the 1910
bondholders. The acceptance of such a scheme seems to us to imply that
the Haitian Government recognizes that something is due the bondholders.
It also seems evident that this can be and will be construed as a
recognition of the 1910 gold claim.
The Legation does not venture to guess how serious this tacit admission
of the 1910 claim may be, but it supposes that it will be of consequence
to the 1922 bondholders as well as to the Export-Import Bank.
With regard to the provision in the protocol that the 1910 redemption
fund be transferred from New York to Paris, it is supposed that
appropriate steps can be taken to prevent this transfer—the more
particularly since we are now assured by M. Léger that the transfer is
not contemplated.
Mr. Léger’s argument that no declaration of the final settlement of the
1910 matter could be included, and still satisfy the desires of the
American Government, seems specious to a degree. Our desire was that the
1910 claim should not be recognized by Haiti. Haiti seems in the
protocol to have done so, against our wishes. If the claim was to be
recognized in spite of our objection, it would certainly have been
desirable to have included a final declaration of clearance.
In view of this, there would seem to be no definite assurance that
“legally and in fact, the 1910 matter has disappeared from the Haitian
financial horizon”, or that the French Government will not continue to
support the 1910 holders as opportunity presents. Will not the holders
who have already redeemed their bonds press for a share in the
distribution of the surtax?
The Department may wish, in its reply, to take note of Léger’s profession
to me that the Fiscal Representative had no right under the 1933
Agreement47 to grant or withhold his approval of the
Convention
[Page 618]
on any other
grounds than the reduction in customs duties (see my telegram No. 81,
July 9, 1 p.m.48).
The text of the new Convention was published in Haiti-Journal yesterday afternoon. M. Léger informed me that
the protocol would not be published. It appears, however, that the
contents of the protocol are substantially known here for in Le Matin of July 11 there appeared the following
article:
[Here follows translation of article.]
With reference to the telephone conversation on July 12 between Mr.
Duggan49 and the Legation,
Minister Lescot50 was found almost immediately
and agreed to return to Washington at once. He then went to the Palace
to report his intention to President Vincent. It is believed that a long
conversation between the President, M. Léger and M. Lescot ensued.
Several hours later, M. Léger called on Mr. de la Rue.51 According to the latter, M. Léger stated that he had
tendered his resignation to the President. The President, however,
stated that, through M. Lescot, he had given assurances to Mr. Welles
that the 1910 matter would not be mentioned in the French Convention.
The President, according also to the same source, felt that he was
equally to blame with Léger, and begged Léger not to resign.
Meanwhile, the Haitian Legislature has been called into special session
on July 25, 1938. According to newspaper comment, it will take up the
revised budget and ratify the Franco-Haitian Commercial Convention. M.
Léger informed de la Rue (according to the latter) that he had no
intention of submitting the protocol for ratification. He had informed
the French Government of this intention, and has thus far received no
expression of objection.
Respectfully yours,
[Enclosure 1]
The American Legation
to the Haitian Ministry for Foreign
Affairs
Aide-Mémoire
From the text of the Franco-Haitian Commercial Convention published
in the French Journal Officiel of June 26,
1938, it is clear that the financial clauses relating to the 1910
loan controversy—contrary to the expectations of the United
States—are embodied in a Protocol of Signature forming, apparently,
an annexed document to the Convention if not, in fact, an integral
part thereof.
[Page 619]
The United States Government has been disappointed that, despite
assurances to the contrary, mention has been made of the 1910 loan
claims in the Protocol of Signature, and it has been somewhat
disturbed at the situation thus brought about, particularly since
the financial clauses referred to stipulate the transfer to a bank
in France, where they are apparently subject to French jurisdiction,
of funds which the United States Government and the Haitian
Government have always considered formed a just and full tender of
settlement to the outstanding holders of the 1910 bonds.
Irrespective of the implied renunciation of this principle that the
original tender was a just one, the United States Government notes
that the new convention does not appear to contain any guarantees
either to the effect that the funds to be transferred will not be
impounded or even that the payment of 500 francs per bond plus the
scrip for $26.00 will constitute a definite and final settlement of
the claims of the 1910 bondholders.
Attention is also invited to the fact that the position occupied by
the 1922 loans, whose issuance was originally made contingent on
assurance that full and equitable tender of settlement had commenced
for the outstanding bonds of the 1910 loan, may possibly be impaired
by the operation envisaged.
The United States Government will be pleased to receive at an early
date from the Haitian Government an indication as to the policy it
intends to pursue with respect to the above observations.
Port-au-Prince,
July 9,
1938.
[Enclosure 2—Translation]
The Haitian Ministry for
Foreign Affairs to the American
Legation
Aide-Mémoire
The Protocol of Signature published in the French Journal Officiel of June 26, 1938, charges the Haitian
Government with two obligations:
- (1)
- The agreement to accept, in spite of the terms of the
Commercial Convention, the imposition of a surtax of 22
francs (which eventually may be raised to 24 francs) per
quintal of Haitian coffee imported during a period of not to
exceed 15 years.
- (2)
- The engagement of the Haitian Government to transfer to
the Banque de l’Union Parisienne the necessary funds to
permit the reimbursement of the 1910 bonds in circulation at
the rate of Frs. 500 per bond.
The other provisions of the Protocol interest only the French
Government and the Banque de l’Union Parisienne.
[Page 620]
The Haitian Government had not failed to inform the American
Government of the arrangement in course of negotiation between the
French Government and itself, relative to the surtax of Frs. 22.,
and had let it be understood very clearly that from all the evidence
this arrangement will have to be consecrated by a written document
of some sort, an exchange of letters, or otherwise.
Desirous of meeting the points of view of the American Government on
this subject, the Haitian Government had given precise instructions
to its Minister in Paris that in no case was there to be recognized
or mentioned the gold claim produced by the French Government in the
name of the bearers of the 1910.
The Haitian Government recognizes without difficulty—in regretting
it—that there would have been more conformity in the assurances it
had given if the arrangement in question had not been the object of
so formal a document and one so intimately linked to the convention
as the Protocol of Signature, but it hopes that the American
Government will agree with it with respect to the happy results of
the efforts exerted by the Haitian Government in order to give
satisfaction to the Department of State in the essence of the matter
because not only does no clause of the Protocol imply the
recognition of the French gold thesis but also there is no specific
allusion made to the existence of this claim.
In so far as concerns the obligation to transfer to the Banque de
l’Union Parisienne the sums necessary to redeem the 1910 bonds at
the rate of Frs. 500 per bond, at bottom no new obligation is
assumed by the Haitian Government, and it is only the logical
consequence of the decision to redeem the 1910 loan.
The American Government expresses its anxiety with regard to the
subject of the possibility of seeing opposition practised with
respect to the funds which might have been deposited in France by
the bearers who might not be satisfied with the arrangement
concluded between the French and Haitian Governments. The Haitian
Government is happy to be able to give the necessary appeasements to
the American Government. In fact, following démarches made to the French Government by the Haitian
Minister at Paris, the French Government has indeed declared that it
does not insist essentially on the material transfer of funds—that
the remittance foreseen in paragraph 4 of the protocol may be
considered theoretic; that it will suffice that the Banque de
l’Union Parisienne is, if that is necessary, able to effect
redemptions in mass, something that could be regulated by an
agreement from bank to bank by means of the opening of a credit or
otherwise. It therefore remains understood that the funds will not
be transferred to France in advance of the redemption of the bonds.
The Haitian Government, as soon as the publication of the
Franco-Haitian commercial
[Page 621]
convention in the Moniteur has occurred, will
give precise instructions in this sense to the National City
Bank.
The American Government notes that the Protocol of Signature contains
no declaration that the arrangement arrived at constitutes a final
liquidation of the claim of the holders of the 1910. The Haitian
Government, in its desire to meet the views of the American
Government, having refused in the course of the negotiations to take
into consideration any explicit recognition of the existence of the
claim of the 1910 holders, it was difficult to have included a
declaration of the definitive liquidation of this controversy.
However, legally and in fact, the arrangement makes the claim
completely disappear—a claim, moreover, which was not annoying
except in so far as it received the support of the French
Government.
In so far as concerns the position of the holders of the loan of
1922, the Haitian Government thinks that far from being weakened by
the arrangement mentioned in the Protocol, it has, on the contrary,
been fortified. In fact, the menace which the claim of the 1910
holders constituted—supported by the French Government—disappears
from the Haitian financial horizon. The American Government will
understand that it would have been impossible indefinitely to resist
the demand of the French Government to submit the controversy which
existed between the two Governments with respect to the 1910 loan to
an international jurisdiction; it is scarcely necessary to underline
the expenses, the risks and the publicity which would have resulted
from this procedure. This menace has definitively disappeared.
Moreover, this arrangement has permitted the conclusion of the
Franco-Haitian convention whose tonic effect on coffee prices in
Haiti has been immediate. Whatever enriches the Haitian national
economy can only render more certain the guarantee of the holders of
the 1922 loan.
Port-au-Prince,
July 11,
1938.
