Office of the Historian

838.2614/6–954

Memorandum by the Director of the Office of Financial and Development Policy (Corbett) to the Assistant Secretary of State for Economic Affairs (Waugh)1

confidential
[Washington,] June 9, 1954.

Subject:

  • Haiti—Public Works Project

Estabrook and Company, Boston, and the Utah Construction International have inquired whether Eximbank would be willing to guaranty 80% of approximately $10 million financing needed for the dollar costs of a four to six year public works program proposed by Haiti.

Estabrook would form a syndicate of commercial banks, including First National of Boston, to undertake the financing. The syndicate would take risk on 20% of the bond value (about $10 million) outstanding at any one time and on interest payments.

The project calls for alternative programs of either (1) a $20.5 million works program or (2) $18.7 million program. Involved are 121 miles of highway improvement, expansion of electric power production and distribution, expansion and modernization of telephone systems, and dock and airport improvement at Port-au-Prince. Haiti would cover local costs with one dollar of its money for four dollars of foreign money made available. This is the ratio with Eximbank in the Artibonite project.

ARA thinks: (1) the loan guaranty requested of the Eximbank “would be in the U.S. interest and would contribute to our foreign policy objectives”; (2) the proposed projects are basic to Haiti’s needs for economic development and would further U.S. policy of encouraging sound economic development, primarily by private enterprise, in Latin America. The program’s success would contribute to the stability of the Magloire Administration which is presently friendly to U.S.

However, ARA has the following Reservations:

(1)
It is not clear whether Haiti fully understands Eximbank role in this proposal;
(2)
The exact scope of the program or its cost is not clear. The proposal too closely represents a line of credit which ARA believes would be undesirable;
(3)
Questions arise as to the relationship of power development to the private American Company and the possible installation of hydroelectric generators in Artibonite Dam;
(4)
The proposed draft contract between Estabrook and Haiti gives banking syndicate unwarranted rights, vis-à-vis Haitian Government which, if carried out, could result in political repercussions;
(5)
ARA desires prior consultation for political reasons if Eximbank decides to take definitive action on Estabrook’s request.

[Page 1279]

Recommendation: ED concurs with the ARA position including the reservations and recommends that the Department’s position should thus be approval in principle, but with any definitive action by the Bank to be subject to further prior consultation with the Department after the Bank has obtained more adequate information designed to clarify the economic merits of the proposal and to resolve the Department’s reservations.2

  1. Drafted by Phil R. Atterberry of the Office of Financial and Development Policy; cleared in draft by Chief of the Investment and Economic Development Staff Emerson A. Ross.↩

  2. In a memorandum to Assistant Secretary Holland, dated June 14, 1954, Assistant Secretary Waugh indicated his approval of this recommendation, and stated that, at ARA’s request, he would informally advise the Export-Import Bank of the Department’s position (103 XMB/6–1454).

    Information in Department of State files indicates that the Export-Import Bank made no decision on the Haitian request in 1954.

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