Foreign Relations of the United States, 1946, The American Republics, Volume XI

838.00/1–546

Memorandum Prepared in the Department of State

[Washington,] January 5, 1946.

Haiti, Current Problems

1. Debt Negotiations.

Negotiations are underway in Port-au-Prince for the signature of a Supplementary Executive Agreement to the Executive Agreement of September 13, 1941,⁵⁹ in order to formalize the understanding that Haiti will pay $700,000 amortization during the current fiscal year on its 1922 and 1923 bonds,⁶⁰ it being understood that $300,000 of this will be paid only if it appears by the end of the first half of the fiscal year (March 31, 1946) that Haitian revenues will reach 35,000,000 gourdes.

President Lescot has indicated his dissatisfaction with the present schedules for repayment of Haiti’s foreign obligations and has not accepted a proposal by the Department and the Export-Import Bank for a 20-year consolidation and refunding of the J. G. White⁶¹ and SHADA⁶² credits by the Bank. He objects to the interest rate of 4 per cent and apparently feels that some adjustment should be made in the SHADA indebtedness on the grounds of American mismanagement of that organization.⁶³ He also seems to believe that an adjustment in Haiti’s third principal foreign obligation, namely the 6 per cent bonds of 1922 and 1923, should be made as part of a general revision of Haiti’s total foreign debt, even though this cannot be done as part of an Export-Import Bank refinancing plan.

As an indication of his dissatisfaction with the recent refinancing proposal of the Export-Import Bank and the present amortization schedules for the 1922 and 1923 bonds, President Lescot has authorized the New York law firm of Pruitt, Hale and Coursen to act as the Haitian Government’s representative in further negotiations with the Bank and the bondholders. The Department is informing the law firm and President Lescot that it cannot deal with any but the accredited diplomatic representatives of the Haitian Government in any problem between the two Governments.

2. Reorganization of SHADA.

As part of the 20-year refunding plan of the Export-Import Bank, it was proposed by the Bank that it should withdraw its representative from the SHADA board and return all SHADA stock to the Haitian Government. This is in line with the Bank’s and the Department’s policy of withdrawing from direct participation in foreign development corporations. Acceptance of this change has been held up by President Lescot’s dissatisfaction with the whole refunding plan. He has, moreover, expressed on several occasions his opposition to what he terms in effect “the Bank’s attempt to withdraw from further responsibility for SHADA operations at a time when its previous mismanagement of SHADA is placing the Haitian Government in a difficult position with regard to repayment of the loans.” Until his expression of dissatisfaction with the Government’s refunding proposal, however, it was believed he would accept the Bank’s withdrawal from direct participation in SHADA as part of the refinancing plan.⁶⁴

3. Relations with the Dominican Republic.

[Here follows comment on relations with the Dominican Republic, the political situation, and the Haitian negative reply to the Uruguayan proposal regarding the possibility of collective intervention in those American Republics which flouted fundamental human rights and international obligations.]

59. For documentation on the financial agreement of September 13, 1941, see Foreign Relations, 1941, vol. vii, pp. 322 ff.; for text, see Department of State Executive Agreement Series No. 220, or 55 Stat. (pt. 2) 1348. The proposed supplementary Executive Agreement was transmitted to Port-au-Prince in instruction 501, December 5, 1945 (not printed).
60. For terms of the Series A loan of $16,000,000 in 1922 and the Series C loan of approximately $4,000,000 in 1923, see Foreign Relations, 1922, vol. ii, pp. 515–516, and ibid., 1923, vol. ii, pp. 420–423.
61. The so-called J. G. White credit was a loan to the Haitian Government by the Export-Import Bank in 1938 for public works purposes (roads, water supply for Port-au-Prince, etc.). A contract of July 6, 1938, between the Haitian Government and the J. G. White Engineering Corporation of New York provided for the execution of the program (Le Moniteur, Journal Officiel de la République d’Haiti, July 7, 1938). (838.51/3651, 3673)
62. SHADA, Société Haitiano-Américaine de Développement Agricole, a Haitian corporation set up in 1941, largely at Haitian instigation, financed by a $5,000,000 credit from the Export-Import Bank for the purpose of diversifying and developing profitable Haitian enterprises; see Department of State press release of May 5, 1941, Foreign Relations, 1941, vol. vii, p. 366.
63. In a memorandum of May 22, 1946, Mr. Charles C. Hauch of the Division of Caribbean and Central American Affairs reported on a conversation with the Co-President, National Bank of Haiti, W. H. Williams, concerning Haitian Financial questions and SHADA. He indicated that Mr. Williams, a member of the SHADA Board, felt that some scaling down of the SHADA debt should be effected when the notes came due and based this assertion on overcapitalization and unwisely planned and unsuccessful hevea rubber projects carried out by the first American management of SHADA. He added: “It was pointed out that the Haitians perhaps bore equal responsibility for any mismanagement which may have taken place, since former President Lescot gave complete backing to the first American management until it proved a failure and the three Haitian members of the six-man Board were most reluctant to speak out against the unwise projects being undertaken.” (838.51/5–3146)

64. The proposed refinancing plan had been sent by Ambassador Wilson to the Haitian Foreign Office in December 1945 and was being considered by the Lescot administration at the time of its fall on January 11, 1946; for documentation on the question of recognition of the Military Executive Committee which assumed control of the Government, see pp. 902 ff.

    Ambassador Wilson noted in despatch 1415, April 15, that recognition of the Provisional Government of Haiti under direction of the Military Executive Committee rendered it possible to consider resumption of negotiations; he submitted data on the financial status of the Haitian Government and a proposal by Mr. Williams that the proposed Executive Agreement be modified so that the final payment of $300,000 due in 1946 might be payable in July, August, and September instead of May, June, and July (838.51 Cooperation Program/4–1546).