838.51/3979
The Minister in Haiti ( Mayer ) to the Secretary of State
[Received July 29.]
Sir: With reference to the Department’s telegram No. 97 of June 26, 6 p.m., 1940, concerning the loan to the Haitian Government guaranteed by the communal revenues offered by Mr. Eugene Groven, alias Gross, and to the Legation’s telegram No. 101 of June 29, 1 p.m., 1940, reporting that I had sent a private letter to President Vincent in the sense of paragraph two of the Department’s telegram No. 97 in order to make sure that the point of view of the Department might be clearly on record, I have the honor to transmit herewith a copy of that letter dated June 29, 1940, together with a copy and English translation of the personal letter of July 12, 1940, in which President Vincent made reply to my observations.19
It will be observed that President Vincent takes the position that his Government has not had for discussion any firm proposal made by [Page 893] Mr. Groven nor has it been confronted with the necessity of taking any decision which might be contrary to the provisions of the Accords between Haiti and the United States.
President Vincent then proceeds to interpret Article 17 of the Accord of August 7, 1933, in so far as it concerns the ordinary revenues of the Republic and the so-called communal revenues. He asserts that the communes, pursuant to the Constitution and Haitian tradition, “are entities governed by bodies which have an administrative and financial existence entirely separate from that of the Government which exercises solely the simple right of control over the operation of their budgets”. (The President explains that the word “control” is used in its French sense). In this connection the Deputy Fiscal Representative has expressed the opinion that under the new Haitian Constitution the communes no longer enjoy the autonomous character which they had under the provisions of the old Constitution. In these circumstances, it would appear to be no violation of a constitutional provision if the Haitian Government decided to exercise complete control over the collection and expenditure of these revenues.
President Vincent also observes that subsequent to the Accord of August 7, 1933, several of the communes have been authorized to contract loans by virtue of special enabling legislation. He also points out that the Fiscal Representative has never made any observation on this subject “because he has never thought that such operations could constitute a violation of an Accord” which refers to ordinary Government revenues and makes no mention of communal revenues.
While it would now appear that President Vincent is convinced that Mr. Groven is not in a position to obtain a loan in the amount of $4,500,000 on the basis of the net proceeds from communal revenues, it is thought that it would be inexpedient to allow the statements contained in his letter of July 12, 1940, to stand unchallenged. While under Article 9 of the Contract of October 9 (6), 1922,20 the Haitian Government agreed to create “a first charge upon all its internal revenues and customs revenues” to secure and guarantee the payment of the principal and interest of the bonds, and while no specific mention is made in the said contract of revenues collected and expended by the communes, it must be recognized that a dollar loan of the amount discussed between President Vincent and Mr. Groven could, under present financial and fiscal conditions in Haiti, impair if not destroy the guarantee of the Haitian Government as expressed in the said Article 9. It is quite obvious from the survey of Haitian [Page 894] economic, financial and fiscal conditions now under preparation by the Legation that Haiti now finds itself in a position where its international balance of payments may be unfavorable notwithstanding the new funds which are being made available under the Export-Import Bank credit. If this trend continues or becomes aggravated, which might very well be the case in view of the exceptional decline in export values and the closure of Haiti’s markets in Europe, the situation would be immediately rendered more critical if a loan arrangement such as that contemplated were in effect. In this connection it must be borne in mind that the communal revenues are exclusively in local currency and a loan arrangement of the type discussed would necessitate the conversion of the net proceeds into dollars which, in the absence of a material improvement in world conditions, might well exhaust the small foreign exchange availabilities of Haiti.
Respectfully yours,
- Neither printed.↩
- Copy of contract transmitted to the Department by the Financial Adviser to the Government of Haiti, in a letter of October 7, 1922, Foreign Relations, 1922, vol. ii, p. 515. For text of contract, see Le Moniteur, October 30, 1922.↩