own behalf any claim on the point as to whether the securities must be redeemed in gold or paper francs." This is a purely gratuitous assertion, to the support of which there is brought no legal consideration of any kind, and furthermore, it rests on a misapprehension which the Government of the Republic wishes to dispel. It is any creditor's natural and obvious right to be allowed to look to his debtor when he believes his interests are injured on the strength of the very text of the instrument which constitutes the debt, that is to say, in this case, on the wording of the bond. Leaving aside the contract of loan to which they were not a party and by which they cannot in any way be bound, the bondholders are therefore in no way powerless to claim from their debtor the execution of engagements entered into by the said debtor. They always have at their command, since an action at law cannot be brought against a sovereign state, the facility of applying to their Government, which is qualified to vindicate their rights by all means placed at its disposal by the law of nations. But in this case this question does not arise. The bondholders indeed are not concerned in the case for the present. The dispute is merely between the borrowing Government and one of the banks of issue, bound to each other by a contract entered into on August 29, 1910. In the exercise of the right conferred upon it by article 30 of that contract, the Union Parisienne asks that the question of service of the loan in gold be referred to arbitration. In the letter which it addressed on this subject to the Minister of Finance of Haiti, it specified that it acted "in its capacity as bank of issue" and therefore as party to the contract. The Haitian Government has therefore no ground on which it can assert that the bank is acting "on behalf of the holders" and on that account deny it the right to intervene. The Union Parisienne claims a right which is positively conferred upon it by the contract of issue. The fact that this intervention happens to subserve at the same time the interests of the Union Parisienne and that of the bondholders is one that cannot make any difference as to the rights in the question. That action is absolutely independent of any recourse which in common law the bondholder may have against his debtor. The Minister of Foreign Affairs of Haiti, on the other hand, declares that "in its capacity as agent of the Haitian Government, the Union Parisienne is under the obligation to act in the interests of the Republic of Haiti and not in that of the lenders". There is nothing in the contract of issue to support that pretension. The banks of issue, of which the Union Parisienne is one, under The loan contract, authorized by the Council of the Secretaries of State on Aug. 29, 1910, was signed Sept. 5, 1910. took (article 24) to "buy outright" 130,000 five-hundred-franc bonds. By way of compensation for that undertaking, the banks of issue reserved to themselves certain advantages. For instance, under article 13, the Union Parisienne has charge of the service of the loan for the consideration of a fixed commission of 14 percent of the sums needed for the service. The contract determines the rights and obligations of each party in connection with one special operation, the issue of the loan, but goes no further. The above-mentioned commission, which is customary in such cases, does not place the Union Parisienne under any obligation to the Haitian Government of a general nature that would not be expressly provided by the contract. Mr. Camille Léon's argument would further lead to the unacceptable conclusion that article 30 (providing for arbitration) could never be invoked by the Union Parisienne and would exist for the benefit of the Haitian Government alone. In directing me to lay before Your Excellency the foregoing remarks, my Government instructs me to inform you of the great value which would attach to having the Government of the United States intervene so as to induce the Haitian Government to desist from its refusal to let the Bank of the Union Parisienne avail itself of the right which lawfully results from the contract signed by the two parties on August 29, 1910. Be pleased [etc.] ANDRÉ DE LABOULAYE 838.51/1707 The Secretary of State to the French Chargé (Laboulaye) WASHINGTON, September 25, 1924. SIR: I beg to acknowledge the receipt of your Embassy's notes of June 12, 1924 and September 5, 1924, discussing in detail your Government's views with regard to the request of the Bank of the Parisian Union that the question of redeeming in gold rather than in francs the bonds issued by the Republic of Haiti in 1910 be submitted to arbitration. The considerations which you present have received the most careful study in the Department of State. This Government had hitherto understood that the Bank of the Parisian Union had requested arbitration in this matter on behalf of certain holders of the bonds of 1910. As you have already been informally advised, this Government has expressed the opinion that the holders of the bonds of 1910, since they were presumably not parties to the loan contract, would not be in a position to demand arbitration under the provisions of Article 30 of that contract, and that the Fiscal Agent under the contract could not properly advance a claim for arbitration on their behalf. This Government has also expressed the opinion that the Fiscal Agent would not appear to have any right to raise an objection to the mandate which might be received from the Haitian Government in the matter of redeeming bonds upon presentation, or to do otherwise than to apply for the purpose specified any funds which it might receive. It is realized, however, that a new question would be presented for consideration if the Bank of the Parisian Union on its own account should present a demand for arbitration under the provisions of Article 30 of the loan contract. It appears from your communications above referred to that the Bank has now presented such a demand in its capacity as purchaser and distributor of the 1910 loan. In order that the question thus presented may receive appropriate consideration, therefore, I have caused copies of your notes of June 12 and September 5 to be transmitted to the American Legation at Port au Prince, with instructions to discuss the matter with the Financial Adviser and other appropriate officials of the Haitian Government, and to report his views thereon at his early convenience. Accept [etc.] For the Secretary of State: HONDURAS EFFORTS BY THE UNITED STATES AND THE CENTRAL AMERICAN REPUBLICS TO REESTABLISH CONSTITUTIONAL GOVERNMENT IN HONDURAS1 815.00/3077a: Telegram The Secretary of State to the Commissioner in the Dominican Republic (Welles) WASHINGTON, April 8, 1924—6 p. m. 14. Due to a three-cornered revolution in Honduras the situation there is chaotic and there appears no hope of a solution within the near future. Revolutionists are besieging Tegucigalpa and it has been necessary to send a landing force to protect American Minister and American colony. No faction appears able to dominate the situation and a condition of anarchy seems likely to develop. Under these conditions the Department finds it necessary to ask you to proceed at once to Tegucigalpa to report what steps should be taken to bring about a solution which will prevent further bloodshed and destruction of property. Guatemala, Salvador and Nicaragua have discussed offering joint mediation but their efforts in this direction have so far been fruitless because of failure to agree among themselves on plan. Department has expressed sympathy with their efforts but desires to be in a position to offer assistance whether these efforts result in holding a conference or not. Consequently it desires that you should be in Tegucigalpa or Amapala to assist at conference if that should be held, or possibly to offer direct mediation of the United States. Further instructions will be sent you by wireless. A destroyer is being ordered to proceed to Santo Domingo at once from Guantanamo to take you to Honduras. Please proceed as soon after her arrival as is physically possible. 1Continued from Foreign Relations, 1923, vol. 1, pp. 424-449. HUGHES 300 815.00/3077a supp. : Telegram The Secretary of State to the Commissioner in the Dominican Republic (Welles) WASHINGTON, April 9, 1924—4 p. m. 1. Supplementing the Department's cable of April 8, 6 p. m., the following is sent for your information: In the elections in Honduras last October none of the three candidates, Carias, Arias and Bonilla, received a majority and the Congress also failed to select a President, because of obstructive maneuvers by the various factions. When the President's term expired on February 1 Lopez Gutierrez established a dictatorship as a provisional measure. This Government proposed that changes in the cabinet should be made to make possible the holding of new elections which would be free and fair. Lopez Gutierrez agreed to this but failed to make satisfactory changes, and Carias refused to accept the Department's proposal and started a revolution. The United States therefore announced that it did not recognize any government in Honduras and would continue to conduct necessary business informally. Recently the generals controlling the several revolutionary armies, the most important of whom are Tosta, Ferrera and Carias, agreed to proclaim Fausto Davila as provisional President. This group now controls the entire north coast and the greater part of the Republic and has been besieging Tegucigalpa for four weeks without success. Lopez Gutierrez died of illness on March 10 and the Council of Ministers, headed by Zuniga Huete, succeeded to his authority in Tegucigalpa. Very recently Dionisio Gutierrez is reported to have started another revolutionary movement on behalf of Bonilla in southern Honduras. The President made unlawful the shipment of arms and munitions of war to Honduras by a proclamation dated March 22.2 Since the end of February Guatemala, Salvador and Nicaragua have been making efforts to agree on a plan for joint mediation, but these efforts have failed apparently because of inability to agree upon a place for holding the conference. The Department expressed its sympathy with the plan, and upon being invited to send a representative indicated that it would do so if invited by all three participants. The Department has little hope that the three countries can agree between themselves upon any plan for joint action. The President of Salvador has stated that he has abandoned the plan, and Nicaragua has asked the United States to take independent action. 'Post, p. 322. |