of the desire of the National Association of French Bondholders to learn the nature and the importance of the modifications which the Financial Adviser of the Haitian Government proposes to make to the contract of concession of the National Railway Company of Haiti, as well as the means contemplated to meet the payment of the coupons in arrears as [and?] the current interest. Referring further to the earlier communication, you inform me that your Government is receiving frequent inquiries from the bondholders of the railway referred to and that you would appreciate it if I would ask the Financial Adviser of the Haitian Government about the status of the plan of reorganization of the railway and let you know if possible the approximate date when binding offers of settlement may be laid before the bondholders. With reference to the matter of the payment of the coupons in arrears, permit me to invite your attention to the favorable status in which it is placed by means of the Protocol between the United States and Haiti of October 3, 1919, to which the Ambassador referred, particular attention being called to Article III, paragraph 3, and Article VII. With regard to the current interest, the Financial Adviser states that it is his intention to verify and admit so much of it as may from time to time be an obligation of the Haitian Government, as a part of the public debt of Haiti, as soon as the income of Haiti warrants. With respect to the modification of the concession of the railway, which, as you doubtless are aware, is in the hands of a Receiver, by appointment of a court on the petition of certain creditors, I am informed by the Financial Adviser of Haiti that no formal discussions with the Haitian Government have yet taken place with regard to suggesting a modification for submission to the bondholders and to the Receiver. The Ambassador in his note referred also to the tax of the French Government, upon bonds, which became due on July 5, 1920. The Financial Adviser of Haiti is not convinced that the payment of this tax is an obligation of the Haitian Government. Accept [etc.] For the Secretary of State: 838.77/207a The Secretary of State to the Receiver for the National Railroad of Haiti (Roger L. Farnham) WASHINGTON, February 7, 1923. SIR: With reference to recent conferences between yourself and officials of the Department of State, I desire to inform you that the revised tentative plan for the readjustment of the relations between the Haitian Government and the National Railroad Company of Haiti which was drawn up during these conferences appears acceptable from the point of view of the Department of State. A copy of this plan is transmitted herewith for your information.40 I understand that you, as Receiver of the Railroad Company, will present this plan to the holders of the Railroad Company's bonds for their approval, after you have been informed that the plan in its tentative form is acceptable in principle to the President of Haiti. The American High Commissioner at Port au Prince will discuss the plan with the President of Haiti upon his return to his post. I am [etc.] For the Secretary of State: LELAND HARRISON 838.77/220: Telegram The High Commissioner in Haiti (Russell) to the Secretary of State PORT AU PRINCE, March 9, 1923—4 p.m. [Received March 10-10:35 a.m.] 30. President Borno has this morning informed me that he approves of plan of reorganization [of] National Railroad. . .. RUSSELL 838.77/251a: Telegram The Secretary of State to the Chargé in Haiti (Dunn) WASHINGTON, August 1, 1923—5 p.m. 86. For General Russell. Mr. Farnham informs the Department that the Association Nationale acting for the French bondholders have indicated that they are willing to accept the proposed plan for reorganization of National Railroad on condition that they receive $35.75 cash and $73.39 [$72.39] in new Government bonds for each $96.53 (500 francs) of railroad bonds with all coupons attached. He is convinced, after prolonged negotiation, that these are the best terms which can be secured. In order to reach final agreement with French bondholders he must be authorized to make a definite offer on these terms. To make possible a final agreement and to carry out the provisions of the plan drawn up last February and informally approved by 40 Not printed. President Borno, it appears necessary that the Council of State should pass a law containing the following provisions: (1) Authorizing the issue of $4,400,000 in C bonds, of which $2,660,000 are to be issued at once to be exchanged at the rate of $72.39 in C bonds for each 500 franc bond. The remainder to be issued for further construction as and when required as provided in the plan of reorganization. The issue of C bonds to be contingent upon the acceptance by the bondholders of the plan of reorganization. (2) Sanctioning the plan of reorganization, changing Articles I and III as follows: ARTICLE I: The present bondholders will contribute $600,000 of the money held by the Receiver for the payment of the interest. This sum shall be entirely devoted to new construction. ARTICLE III: The present bondholders shall exchange their railroad bonds for bonds of the Republic of Haiti to be issued as a part of the loan already authorized on the basis of $72.39 of Government bonds for $96.53 of railroad bonds. The railroad bonds received in exchange shall be either retired or cancelled as requested by the Receiver. (3) Authorizing the Government to enter into an agreement with the Railroad Company, embodying the plan of reorganization and providing for the exchange of bonds and the use of the funds contributed by the bondholders for new construction. The agreement would also provide for the subsequent negotiation of a new concession embodying the provisions of the plan of reorganization. The new contract will terminate all obligations of the Government with respect to its guarantee of the bonds of the Railroad and provide that the Railroad should not issue additional bonds in connection with new construction. It is very important that the law sanctioning the plan should be enacted immediately and the agreement with the Railroad Company signed as soon as possible thereafter in order that Mr. Farnham may again proceed to Paris to make final arrangements with the bondholders. He desires to have a conference with the bondholders in Paris about August 25th. Judge Mayer" also has arranged to be in Paris at that time and his presence would materially facilitate the negotiations. It is suggested, therefore, that authorization be given as soon as possible to the Haitian Minister in Washington to sign the agreement with the Railroad Company. It is contemplated that the payment of cash to the bondholders and the exchange of bonds should be handled by some bank in Paris acting as agent of the Haitian Government and responsible 41 "Julius M. Mayer, Judge of the United States Circuit Court of Appeals, Southern District of New York. The receivership of the National Railroad of Haiti was under the jurisdiction of this court. directly to that Government. The funds available for new construction will, in accordance with the plan, be placed in trust and withdrawn only with approval of the Financial Adviser on certificates of the Engineer-in-Chief as the construction progresses. The funds now available for sinking fund on the railroad bonds will be used for the payment of the debts and expenses of the Receivership and any balance will be added to funds available for new construction. You will impress upon the Haitian Government the necessity for prompt action in order to take advantage of the willingness of the bondholders to reach an agreement. The Department feels that an agreement along the lines proposed will be highly advantageous to the Haitian Government. HUGHES 838.77/254: Telegram The High Commissioner in Haiti (Russell) to the Secretary of State PORT AU PRINCE, August 21, 1923-1 p.m. [Received August 24-1:20 p.m.] 117. President Borno and Minister for Foreign Affairs have in official communications both informed me that in view of the limited time Haitian Government is unable to have National Railroad plan of reorganization approved by the legislative body but the following action has been taken: Minister of Foreign Affairs has by note informed French Minister here, Haitian Legation at Paris and me as follows (translation): "The Government of the Republic of Haiti, approving in principle the plan of reorganization authorizes by these presents Mr. Roger L. Farnham, receiver of the National Railroad of Haiti, to negotiate and conclude with the bondholders of the said company an agreement stipulating that by means of the funds already turned over by the Haitian State to the receiver of the company for guarantee of interest and sinking fund, less a minimum amount of $600,000, which might be retained for the continuation of the construction work of the railway concession, there will be paid to the bondholders in question sum of $35.75 per bond with all coupons attached, and that the bonds with the coupons attached bearing the guarantee of the Haitian State will be exchanged for 6-percent bonds of the Republic of Haiti of series C in the proportion of $72.39 for each one of the bonds of $96.53 of the National Railway of Haiti bearing the guarantee of the Haitian State for the payment of the interest and amortization." RUSSELL 838.77/256: Telegram The Acting Secretary of State to the Chargé in Haiti (Dunn) WASHINGTON, September 5, 1923—5 p.m. 109. Your No. 121, August 24, 1 p.m.2 Cable from American Embassy, Paris,2 states that Farnham considers authorization sufficient for negotiations with French bondholders, but that it will be necessary for Government of Haiti definitely to authorize issue of the bonds required in this transaction. Department assumes that law authorizing C bonds will be passed subsequently. PHILLIPS 838.77/284: Telegram The High Commissioner in Haiti (Russell) to the Secretary of State PORT AU PRINCE, December 28, 1923—2 p.m. [Received December 29-9:50 a.m.] 181. Plan for [reorganization] National Railroad and law authorizing issuance of series C bonds was passed yesterday by Council of State. Although some objectionable modifications have been injected into plan, I do not believe any of them to be serious. Have discussed them with the President who has assured me that construction work will be carried out as he and I desire. Believe passage of plan marks great achievement toward rehabilitation of Haitian finances and development of country. Complete details by mail should arrive Washington January 10th.48 RUSSELL BOUNDARY DISPUTE WITH THE DOMINICAN REPUBLIC "Not printed. (See volume I, pages 356 ff.) "Despatch no. 288, not printed. |