341. Memorandum of a Conversation, Port-au-Prince, March 4, 19551

SUBJECT

  • 1) Electric Power Problem in Haiti
  • 2) Haitian Application for Loans to IBRD and Eximbank
  • 3) Coffee Situation

PARTICIPANTS

  • President Magloire of Haiti
  • ARA—Mr. Holland
  • MID—Mr. Newbegin

Mr. Holland opened the conversation by stating he understood there was a problem in connection with the electric power company (Compagnie d’Eclairàge Electrique des Villes de Port-au-Prince et du Cap Haitien). He inquired whether President Magloire would rather have him recite his understanding of the problem and fill in Mr. Holland as he went along, or whether he would care to review it himself. The President replied that he would prefer to hear from Mr. Holland first.

Mr. Holland emphasized that he had not spoken with anyone in the company and that he was bringing up the problem only because the President’s views would be very helpful to him on his return in discussing Haitian loan applications pending with the Eximbank and the IBRD. Mr. Holland said that he knew that certain questions would be asked him by officials of the banks and that certainly the situation of the power company would be among them. He asserted that according to his information the company’s contract would expire in seventeen years at which time the plant and equipment would revert to the Haitian Government. He said that under present circumstances it was his understanding that the company was unable to supply the amount of power needed unless it provided additional investment for equipment. President Magloire replied that the above was correct.

Mr. Holland continued, saying that it was also his understanding that it was not the policy of the Haitian Government to require the company to invest further unless (1) it could amortize its investment within the period of the contract, (2) recoup its investment, and (3) provide at the same time a reasonable profit for its stockholders. Mr. Holland stated that he wanted these points clarified because he knew that whatever the policy of the Haitian Government was it would have an influence on the thinking of the [Page 939] Eximbank and the IBRD officials. He pointed out that he wanted to make it very clear that a policy toward the company along the lines indicated would in no way be a “condition” to favorable action on the part of the banks. The President’s response was that the policy of the Haitian Government was definitely that indicated by Mr. Holland.

The President asserted that the difficulty with the company was that it would not make any new investment or expand unless the contract itself was extended beyond the seventeen-year period. He stated emphatically that this was one thing which his Government would not do. The validity of the contract had already been extended once as a result of what he indicated were bribes which reflected no credit on the company. His Government would have nothing to do with any further extension. He said the Government had been very considerate in its attitude toward the company. The latter had not met a number of the terms of the contract and the Government was accordingly in a position where it could have cancelled the contract at any time. This it had not done. Not only was it not the policy of his Government to require the company to do any of the three things mentioned by Mr. Holland, but it had actually made a proposal to the company that it administer the projected hydroelectric plant at Artibonite. He indicated that notwithstanding the above the Haitian Government was not getting anywhere with the company. He then mentioned that a group (he could not mention the specific names of the people involved) was now in negotiation with the company in an effort to buy it out. The company, however, was asking approximately $4 million whereas the group which proposed to purchase it felt that the antiquated plant and equipment was worth only something between $1 million and $1.5 million. Mr. Holland inquired what administrative agency of the Government was charged with price fixing. The President indicated that this was the Department of National Economy (?). Mr. Holland pointed out that this Department should be in a position to set a fair price which would permit the company to expand its operations, recoup its investment and make a reasonable profit for the shareholders. The President pointed out that he was not familiar with all the details of the situation and that Mr. Holland should talk further on the subject with Finance Minister Jumelle.2

Mr. Holland then reviewed briefly with the President the coffee situation, expressing the hope that some means might be found of stabilizing the price of coffee. He mentioned that coffee was a commodity which enjoyed an enviable position vis-à-vis certain other commodities inasmuch as there was no domestic production in [Page 940] the United States, that consumption remained relatively stable and, notwithstanding the tremendous increase in coffee prices last year, domestic consumption had not fallen proportionately, but only approximately 12 percent. He pointed out that adequate prices for coffee could be assured, were there to be an increase in consumption. He felt that the coffee-producing countries should get together and conduct an advertising campaign with this in view. The only advertising in the United States by the coffee interests was that designed to push a given brand rather than to increase overall consumption. Mr. Holland declared further that the State of Tennessee alone spent ten times more money on advertising its tourist attractions than did all the coffee-producing countries combined in any effort to promote coffee consumption.

  1. Source: Department of State, Central Files, 838.2614/3–455. Confidential. Drafted by Newbegin.
  2. Clément Jumelle, Secretary of State for Finance and National Economy.