838.51/3945: Telegram

The Minister in Haiti ( Mayer ) to the Secretary of State

83. For Duggan. Reference my telegram 65, May 20, 1 p.m. While Haiti’s future is extremely obscure, I submit that there is no immediate emergency, that a crisis is unlikely to develop within the next three months and that because of world conditions beyond Haiti’s control the future is so unpredictable that it would be impracticable and unwise at this moment to attempt to determine the amount and especially the character of the assistance that Haiti may require.

Haiti has two major problems; how to increase revenues and how to dispose of the coffee crop.

[Page 884]

With regard to the first problem, revenues as of May 31 were 258,000 less than budgetary estimates. However, this is more than offset by last year’s operating surplus of $310,000. Since the cash position of the Government is strong and the liquid position of the national bank has never been better the fiscal problem does not demand immediate solution.

The second problem is more serious because the exporters are unwilling to sell the remaining 8,000,000 kilograms of coffee at less than $6 per 50 kilograms, approximately 15 per cent higher than New York quotations. The exporters are trying to force the Government to reduce the export duty and indirectly are responding to German propaganda that an early German victory will provide higher markets shortly. Lower exports of coffee to May 31 are responsible for a decrease of $254,000 in export duties. The Department will recognize the urgency of moving the balance of the coffee which the French failed to purchase so that the export duties may be collected and a reasonable price may be paid to the peasant for the new crop beginning in September. If the price offered is too low the peasant will simply refuse to pick the crop.

As to measures that might be taken immediately to ameliorate the situation I recommend, (1), an immediate study of ways and means of moving the coffee crop; (2), the reversal of the previous decision of De la Rue so that the rate of expenditure of the remaining 2,000,000 of the Export-Import Bank credit may now be accelerated to the rhythm of last fall; parenthetically we understand that that rate represents the maximum which it is practicable to pump into Haitian public works without a very radical change in our policy; (3), the Haitian Government to take over communal revenues resulting in an annual net gain to the Treasury of approximately $250,000; (4), the reduction from 6 to 4% of the interest rate of the 1922 bonds saving approximately $170,000, and the elimination of the token amortization payment, $20,000; (5), the reduction from 5 to 4% in the interest rate on the Export-Import Bank credit more than $30,000; (6), a comprehensive recommendation for increasing internal revenues.

While the Legation is fully aware of the beneficial effects on Haitian economy in general of the expenditure here of additional Export-Import Bank funds, it must be emphasized that the anticipated worsening of Haitian fiscal conditions may easily require a direct loan to provide free funds for operating expenses. Therefore, it would seem that the efforts of De la Rue should be directed toward finding and tapping additional resources of the character above described, possibly supplemented by further direct assistance from the United States Government.

In the circumstances I suggest: [Page 885]

(1st)
that I be instructed to call upon President Vincent and assure him of our keen interest indicating that we are giving the matter our closest attention and expect shortly to be able to make concrete suggestions.
(2d)
that accompanied by Sparks8 I come to Washington the end of the month for several days so that the Department may obtain a comprehensive view of the whole situation and determine the action to be taken.

Mayer
  1. Edward J. Sparks, Second Secretary of Legation.