838.51/4119
Memorandum by Mr. Emilio G. Collado of the Division of the American Republics to the Under Secretary of State (Welles)
Mr. Welles: M. Dennis came to the Department by appointment originally made with Mr. Duggan and spoke with Messrs. Bursley,44 Barber45 and Collado. He stated that he had just been appointed Minister of Finance45a and that he was leaving Washington Monday evening for New York, to sail for Haiti on Thursday. He requested that an appointment be arranged, if possible, with Mr. Welles prior to his departure.
M. Dennis stated that before leaving he wished to ascertain the status of the items brought up in the memorandum presented to Dr. Berle46 at Habana by the Haitian delegation. There followed a brief discussion in which M. Dennis was informed that study of the possibility of revising the trade agreement was moving forward and that the Department had recently requested the Legation at Port-au-Prince to obtain additional information regarding the particular types of a number of products in which Haiti might be interested. M. Dennis was also informed that with respect to coffee financing the problem was being actively considered both in the Inter-American Financial and Economic Advisory Committee as respects a coffee arrangement, and by this Government. Any plan for coffee would be worked out on a general basis rather than with any particular country. M. Dennis indicated that he understood this and merely hoped that the coffee arrangements, both the coffee agreement and a financing plan, could be speedily worked out. With respect to M. Dennis’ inquiry regarding development credits, reference was made to the agreement [Page 916] recently entered into to continue J. G. White operations in Haiti through the present fiscal year. With respect to the possibility of refunding the Haitian debt at a lower interest yield, M. Dennis was informed that the present situation of the United States money markets was not such as would make such a refunding practicable, and that such operations were not within the scope of the activities of the Export-Import Bank. There followed some discussion of the rate of interest. At the conclusion of the conversation M. Dennis was informed that we would quickly look further into all of the matters which he had brought up and would discuss them with him again Saturday morning.
The memorandum handed to Dr. Berle brought up six points:
1. Development of agricultural production. The Haitian memorandum speaks of the advisability of irrigation and technical assistance. Irrigation is being provided under the J. G. White contract, and technical assistance is being provided by the loan of Mr. Fennell of the Department of Agriculture.
2. Public works. The memorandum speaks of continued public works as being essential. The Export-Import Bank has agreed to continue to finance J. G. White expenditures through the end of the present fiscal year, September 30, 1941.
3. Modification of the trade agreement with the United States. This is being actively pushed. The Department on October 8 sent an instruction to Port-au-Prince for additional information regarding a number of the minor commodities mentioned by the Haitians.
4. Loan for repurchase or conversion of the 1922 debt and reduction of the interest rate on the loan for public works. The conversion of the 1922 debt in the money market is of course impossible. A loan by the Export-Import Bank to permit the repurchase of this debt might be within the terms of the recent amendment, but in any case would be contrary to the policy of the Bank. I do not believe that the Department should sponsor such a loan. With respect to the present external debt, the Department has already entered into an exchange of notes for a continuation of the moratorium on amortization, this time not even requiring a token payment. We have already approached Mr. Francis White with a hint that a reduction in the rate of interest from 6% to 4% may be essential, and Mr. de la Rue has so stated in a letter to the Council. The matter of this reduction should be pursued at once.
With respect to the rate of interest on the J. G. White contract, the Haitian memorandum requests a reduction to 3%. The Export-Import Bank has already agreed to reduce the rate of interest to 4% as of July 1. The Bank has sent such a modification of its contract to the J. G. White Corporation which has not yet replied. Mr. Arey told me this morning that he would request an immediate confirmation from the J. G. White Corporation. The Bank meanwhile is accruing interest on its books at the rate of 4%, but no further interest payments are due until January 15, 1941. Mr. de la Rue has been informed of the Bank’s action in the matter. It is not evident from the reports submitted whether Mr. de la Rue has taken this reduction into account in compiling a budget although it is assumed that he has. In [Page 917] the latter case the Haitian Government must have been informed. In any case there would appear to be no reason why they should not so be informed.
5. Sugar. The Haitian Government has requested an increase in the United States import quota on sugar. This is of course impossible.
6. Coffee. The question of coffee is only touched on in the Haitian memorandum. As mentioned above, we have informed M. Dennis that the problem is being considered actively, and that the Haitian request for coffee financing, which was made subsequent to the memorandum in question, is being considered in conjunction with the general problem.