838.51 Cooperation Program/12–2446

The Ambassador in Haiti ( Tittmann ) to the Secretary of State

confidential
No. 200

Sir: I have the honor to refer to the visit of the Haitian Finance Minister and his colleagues to Washington for the purpose of discussing financial matters with the American authorities including possibly the so-called “Financial Liberation”. There are submitted below certain observations, recommendations and suggestions which the Embassy considers pertinent to the subject of “Financial Liberation” and which it is hoped the Department will find useful should the Washington conversations turn upon that subject. In this connection reference should be made to the Embassy’s despatch no. 168 of December 11, 1946, beginning with page 5.

It is the Embassy’s belief that the Minister of Finance is the most influential member of the Haitian delegation and that it will be in reality his views which will prevail among the three. He is probably the only Haitian who is competent to discuss the situation with any degree of understanding, both from the standpoint of his mentality and training, as regards the full implications of what the Haitians are asking for. The fact that he has been trained for many years by the present American head of the Haitian National Bank and that he is particularly gifted in grasping the full implications of the national economic facts and possibilities which face Haiti, has made his choice as a negotiator a happy one for both parties to the discussions.

The Delegation will undoubtedly endeavor to discuss the revision (and perhaps even the complete abrogation) of the Executive Agreement of 1941. The portion of this agreement which is most offensive to the spirit of Haitian Nationalism is Article V. By this paragraph there appears no doubt to the Embassy but that the Haitian Government which signed the Agreement irrevocably delegated certain of its sovereign powers to the Board of Directors of the National Bank. In short, it terribly galls Haitian pride that their government has not the power of making its own budget (which is a function of the power of taxation) independently. Article V reveals with no possibility of misunderstanding the intent, when it states (a) the Board of Directors of the Bank shall estimate the expected revenues; suggest limits within which the various ministries, including the Garde d’Haiti, shall operate, and shall fix by agreement with the Government of Haiti the expenditures which are necessary for the operation of the Bank in its fiscal functions.

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The sole power over its budget retained by the Haitian Government is (b) to estimate in detail the expenditures envisioned for each of the various ministries, including the Garde d’Haiti, within the limits suggested by the Board of Directors of the National Bank.

It is thus seen that the Haitian Government has in this Article V of the 1941 Executive Agreement delegated its sovereign power of the budgetary function to a power other than itself, a power that is, by international agreement, composed of one-half foreigners. Without the power to spend, the power of taxation (the very heart of Governmental power) is useless. In short this represents perhaps not taxation without representation, but a form of dependence which is just as distasteful to Haitians.

Based on the above observations the following are the recommendations of the Embassy which the Department may wish to take into consideration, with certain suggestions added:

Firstly, that the Executive Agreement of 1941 be revised so as to restore the full sovereign powers of budget making (and hence use of taxes after they are voted) to the Haitian Government.

Secondly, that the two Americans, now on the Bank Board, be retained in some capacity that will insure the monthly collection of the 1/12 of the annual principal and interest due to the bondholders as stipulated in Article VI of the present Executive Agreement and perhaps in a to-be-agreed upon advisory capacity.

Thirdly, that adequate machinery be included in the new Agreement for again installing the present or similar system of control at any time the required payments fail to be collected for any reason whatsoever.

In addition to the above recommendations, the following suggestions are added:

(a)
That there be included in the new Executive Agreement a provision to the effect that a competent Haitian be appointed to head the Haitian financial system and that such person must have prior approval of the American Government.
(b)
That should such appointee fail to meet the requirements for adequate safeguards regarding the repayment of the series A and C bonds, he be recalled on the demand of the American Government.
(c)
That a new appointment be made satisfactory to the American Government within a specified time.
(d)
That in the case of failure of the two governments to agree upon a man by the end of the specified time, the situation should then revert to the status of the 1941 Executive Agreement until such time as the two governments are agreed upon a new person.
(e)
That at all times when there is no Haitian acting as provided for in the new Executive Agreement, the two Americans, now on the Board and who will presumably be retained here in some capacity, shall fill the office to ensure that all functions are carried out efficiently in the interim.
(f)
That the American Government suggest that Gaston Margron be the Haitian employee to fill the financial office, as he is perhaps the only Haitian at this time who is considered to have the capacity to grasp fully the operation of Haitian finances (including any sound revision of present tax laws or any new sources of taxes), and to employ the necessary protective measures against political intrusions.

The Embassy is of the opinion that Margron personally would welcome an arrangement along the above lines rather than the outright complete abrogation of the present Executive Agreement, for the simple reason that he knows that once the complete control of Haitian finances is returned to Haiti, politicians will control all appointments. In the latter case, after his release from his present post as Secretary of State for Finance, his old job in the National Bank now being held open for him, would vanish into thin air. It should not be overlooked that he is a career employee in the Bank, and that such employment would disappear and with it his own financial security upon the complete return of financial control to the Haitian Government.

Respectfully yours,

Harold H. Tittmann