Former articles of this series described the Military Occupation of
Haiti and the crowd of civilian place holders as among the forces at
work in Haiti to maintain the present status in that country. But more
powerful though less obvious, and more sinister, because of its deep and
varied radications, is the force exercised by the National City Bank of
New York. It seeks more than the mere maintenance of the present status
in Haiti; it is constantly working to bring about a condition more
suitable and profitable to itself. Behind the Occupation, working
conjointly with the Department of State, stands this great banking
institution of New York and elsewhere. The financial potentates allied
with it are the ones who will profit by the control of Haiti. The
United States Marine Corps and the various office-holding "deserving
Democrats," who help maintain the status quo there, are in reality
working for great financial interests in this country, although Uncle
Sam and Haiti pay their salaries.
Mr. Roger L. Farnham, vice-president of the National City Bank, was
effectively instrumental in bringing about American intervention in
Haiti. With the administration at Washington, the word of Mr. Farnham
supersedes that of anybody else on the island. While Mr.
Bailly-Blanchard, with the title of minister, is its representative in
name, Mr. Farnham is its representative in fact. His goings and comings
are aboard vessels of the United States Navy. His bank, the National
City, has been in charge of the Banque Nationale d'Haiti throughout the
Occupation.[1] Only a few weeks ago he was appointed receiver of the
National Railroad of Haiti, controlling practically the entire railway
system in the island with valuable territorial concessions in all
parts.[2] The $5,000,000 sugar plant at Port-au-Prince, it is commonly
reported, is about to fall into his hands.
[Footnote 1: The National City Bank originally (about 1911) purchased
2,000 shares of the stock of the Banque Nationale d'Haiti. After the
Occupation it purchased 6,000 additional shares in the hands of three
New York banking firms. Since then it has been negotiating for the
complete control of the stock, the balance of which is held in France.
The contract for this transfer of the Bank and the granting of a new
charter under the laws of Haiti were agreed upon and signed at
Washington last February. But the delay in completing these arrangements
is caused by the impasse between the State Department and the National
City Bank, on the one hand, and the Haitian Government on the other, due
to the fact that the State Department and the National City Bank
insisted upon including in the contract a clause prohibiting the
importation and exportation of foreign money into Haiti subject only to
the control of the financial adviser. To this new power the Haitian
Government refuses to consent.]
[Footnote 2: Originally, Mr. James P. McDonald secured from the Haitian
Government the concession to build the railroads under the charter of
the National Railways of Haiti. He arranged with W. R. Grace & Company
to finance the concession. Grace and Company formed a syndicate under
the aegis of the National City Bank which issued $2,500,000 bonds, sold
in France. These bonds were guaranteed by the Haitian Government at an
interest of 6 per cent on $32,500 for each mile. A short while after the
floating of these bonds, Mr. Farnham became President of the company.
The syndicate advanced another $2,000,000 for the completion of the
railroad in accordance with the concession granted by the Haitian
Government. This money was used, but the work was not completed in
accordance with the contract made by the Haitian Government in the
concession. The Haitian Government then refused any longer to pay the
interest on the mileage. These happenings were prior to 1915.]
Now, of all the various responsibilities, expressed, implied, or assumed
by the United States in Haiti, it would naturally be supposed that the
financial obligation would be foremost. Indeed, the sister republic of
Santo Domingo was taken over by the United States Navy for no other
reason than failure to pay its internal debt. But Haiti for over one
hundred years scrupulously paid its external and internal debt--a fact
worth remembering when one hears of "anarchy and disorder" in that
land--until five years ago when under the financial guardianship of the
United States interest on both the internal and, with one exception,
external debt was defaulted; and this in spite of the fact that
specified revenues were pledged for the payment of this interest. Apart
from the distinct injury to the honor and reputation of the country, the
hardship on individuals has been great. For while the foreign debt is
held particularly in France which, being under great financial
obligations to the United States since the beginning of the war, has not
been able to protest effectively, the interior debt is held almost
entirely by Haitian citizens. Haitian Government bonds have long been
the recognized substantial investment for the well-to-do and middle
class people, considered as are in this country, United States, state,
and municipal bonds. Non-payment on these securities has placed many
families in absolute want.
What has happened to these bonds? They are being sold for a song, for
the little cash they will bring. Individuals closely connected with the
National Bank of Haiti are ready purchasers. When the new Haitian loan
is floated it will, of course, contain ample provisions for redeeming
these old bonds at par. The profits will be more than handsome. Not that
the National Bank has not already made hay in the sunshine of American
Occupation. From the beginning it has been sole depositary of all
revenues collected in the name of the Haitian Government by the American
Occupation, receiving in addition to the interest rate a commission on
all funds deposited. The bank is the sole agent in the transmission of
these funds. It has also the exclusive note-issuing privilege in the
republic. At the same time complaint is widespread among the Haitian
business men that the Bank no longer as of old accommodates them with
credit and that its interests are now entirely in developments of its
own.
Now, one of the promises that was made to the Haitian Government, partly
to allay its doubts and fears as to the purpose and character of the
American intervention, was that the United States would put the
country's finances on a solid and substantial basis. A loan for
$30,000,000 or more was one of the features of this promised assistance.
Pursuant, supposedly, to this plan, a Financial Adviser for Haiti was
appointed in the person of Mr. John Avery McIlhenny. Who is Mr.
McIlhenny? That he has the cordial backing and direction of so able a
financier as Mr. Farnham is comforting when one reviews the past record
and experience in finance of Haiti's Financial Adviser as given by him
in "Who's Who in America," for 1918-1919. He was born in Avery Island,
Iberia Parish, La.; went to Tulane University for one year; was a
private in the Louisiana State militia for five years; trooper in the
U.S. Cavalry in 1898; promoted to second lieutenancy for gallantry in
action at San Juan; has been member of the Louisiana House of
Representatives and Senate; was a member of the U. S. Civil Service
Commission in 1906 and president of the same in 1913; Democrat. It is
under his Financial Advisership that the Haitian interest has been
continued in default with the one exception above noted, when several
months ago $3,000,000 was converted into francs to meet the accumulated
interest payments on the foreign debt. Dissatisfaction on the part of
the Haitians developed over the lack of financial perspicacity in this
transaction of Mr. McIlhenny because the sum was converted into francs
at the rate of nine to a dollar while shortly after the rate of exchange
on French francs dropped to fourteen to a dollar. Indeed, Mr.
McIlhenny's unfitness by training and experience for the delicate and
important position which he is filling was one of the most generally
admitted facts which I gathered in Haiti.
At the present writing, however, Mr. McIlhenny has become a conspicuous
figure in the history of the Occupation of Haiti as the instrument by
which the National City Bank is striving to complete the riveting,
double-locking and bolting of its financial control of the island. For
although it would appear that the absolute military domination under
which Haiti is held would enable the financial powers to accomplish
almost anything they desire, they are wise enough to realize that a day
of reckoning, such as, for instance, a change in the Administration in
the United States, may be coming. So they are eager and anxious to have
everything they want signed, sealed, and delivered. Anything, of course,
that the Haitians have fully "consented to" no one else can reasonably
object to.
A little recent history: in February of the present year, the ministers
of the different departments, in order to conform to the letter of the
law (Article 116 of the Constitution of Haiti, which was saddled upon
her in 1918 by the Occupation[3] and Article 2 of the Haitian-American
Convention[4]) began work on the preparation of the accounts for
1918-1919 and the budget for 1920-1921. On March 22 a draft of the
budget was sent to Mr. A. J. Maumus, Acting Financial Adviser, in the
absence of Mr. McIlhenny who had at that time been in the United States
for seven months. Mr. Maumus replied on March 29, suggesting
postponement of all discussion of the budget until Mr. McIlhenny's
return. Nevertheless, the Legislative body, in pursuance of the law,
opened on its constitutional date, Monday, April 5. Despite the great
urgency of the matter in hand, the Haitian administration was obliged to
mark time until June 1, when Mr. McIlhenny returned to Haiti. Several
conferences with the various ministers were then undertaken. On June 12,
at one of these conferences, there arrived in the place of the Financial
Adviser a note stating that he would be obliged to stop all study of the
budget "until the time when certain affairs of considerable importance
to the well-being of the country shall be finally settled according to
recommendations made by me to the Haitian Government." As he did not
give in his note the slightest idea what these important affairs were,
the Haitian Secretary wrote asking for information, at the same time
calling attention to the already great and embarrassing delay, and
reminding Mr. McIlhenny that the preparation of the accounts and budget
was one of his legal duties as an official attached to the Haitian
Government, of which he could not divest himself.
[Footnote 3: "The general accounts and the budgets prescribed by the
preceding article must be submitted to the Legislative Body by the
Secretary of Finance not later than eight days after the opening of the
Legislative Session."]
[Footnote 4: "The President of Haiti shall appoint, on the nomination of
the President of the United States, a Financial Adviser who shall be
attached to the Ministry of Finance, to whom the Secretary (of Finance)
shall lend effective aid in the prosecution of his work. The Financial
Adviser shall work out a system of public accounting, shall aid in
increasing the revenues and in their adjustment to expenditures...."]
On July 19 Mr. McIlhenny supplied his previous omission in a memorandum
which he transmitted to the Haitian Department of Finance, in which he
said: "I had instructions from the Department of State of the United
States just before my departure for Haiti, in a part of a letter of May
20, to declare to the Haitian Government that it was necessary to give
its immediate and formal approval to:
1. A modification of the Bank Contract agreed upon by the
Department of State and the National City Bank of New York.
2. Transfer of the National Bank of the Republic of Haiti to a
new bank registered under the laws of Haiti, to be known as the
National Bank of the Republic of Haiti.
3. The execution of Article 15 of the Contract of Withdrawal
prohibiting the importation and exportation of non-Haitian
money except that which might be necessary for the needs of
commerce in the opinion of the Financial Adviser."
Now, what is the meaning and significance of these proposals? The full
details have not been given out, but it is known that they are part of a
new monetary law for Haiti involving the complete transfer of the Banque
Nationale d'Haiti to the National City Bank of New York. The document
embodying the agreements, with the exception of the clause prohibiting
the importation of foreign money, was signed at Washington, February 6,
1920, by Mr. McIlhenny, the Haitian Minister at Washington and the
Haitian Secretary of Finance. _The Haitian Government has officially
declared that the clause prohibiting the importation and exportation of
foreign money, except as it may be deemed necessary in the opinion of
the Financial Adviser, was added to the original agreement by some
unknown party._ It is for the purpose of compelling the Haitian
Government to approve the agreements, including the "prohibition
clause," that pressure is now being applied. Efforts on the part of
business interests in Haiti to learn the character and scope of what was
done at Washington have been thwarted by close secrecy. However,
sufficient of its import has become known to understand the reasons for
the unqualified and definite refusal of President Dartiguenave and the
Government to give their approval. Those reasons are that the agreements
would give to the National Bank of Haiti, and thereby to the National
City Bank of New York, exclusive monopoly upon the right of importing
and exporting American and other foreign money to and from Haiti, a
monopoly which would carry unprecedented and extraordinarily lucrative
privileges.
The proposal involved in this agreement has called forth a vigorous
protest on the part of every important banking and business concern in
Haiti with the exception, of course, of the National Bank of Haiti. This
protest was transmitted to the Haitian Minister of Finance on July 30
past. The protest is signed not only by Haitians and Europeans doing
business in that country but also by the leading American business
concerns, among which are The American Foreign Banking Corporation, The
Haitian-American Sugar Company, The Panama Railroad Steamship Line, The
Clyde Steamship Line, and The West Indies Trading Company. Among the
foreign signers are the Royal Bank of Canada, Le Comptoir Francais, Le
Comptoir Commercial, and besides a number of business firms.
We have now in Haiti a triangular situation with the National City Bank
and our Department of State in two corners and the Haitian government in
the third. Pressure is being brought on the Haitian government to compel
it to grant a monopoly which on its face appears designed to give the
National City Bank a strangle hold on the financial life of that
country. With the Haitian government refusing to yield, we have the
Financial Adviser who is, according to the Haitian-American Convention,
a Haitian official charged with certain duties (in this case the
approval of the budget and accounts), refusing to carry out those duties
until the government yields to the pressure which is being brought.
Haiti is now experiencing the "third degree." Ever since the Bank
Contract was drawn and signed at Washington increasing pressure has been
applied to make the Haitian government accept the clause prohibiting the
importation of foreign money. Mr. McIlhenny is now holding up the
salaries of the President, ministers of departments, members of the
Council of State, and the official interpreter. [These salaries have not
been paid since July 1.] And there the matter now stands.
Several things may happen. The Administration, finding present methods
insufficient, may decide to act as in Santo Domingo, to abolish the
President, cabinet, and all civil government--as they have already
abolished the Haitian Assembly--and put into effect, by purely military
force, what, in the face of the unflinching Haitian refusal to sign away
their birthright, the combined military, civil, and financial pressure
has been unable to accomplish. Or, with an election and a probable
change of Administration in this country pending, with a Congressional
investigation foreshadowed, it may be decided that matters are "too
difficult" and the National City Bank may find that it can be more
profitably engaged elsewhere. Indications of such a course are not
lacking. From the point of view of the National City Bank, of course,
the institution has not only done nothing which is not wholly
legitimate, proper, and according to the canons of big business
throughout the world, but has actually performed constructive and
generous service to a backward and uncivilized people in attempting to
promote their railways, to develop their country, and to shape soundly
their finance. That Mr. Farnham and those associated with him hold these
views sincerely, there is no doubt. But that the Haitians, after over
one hundred years of self-government and liberty, contemplating the
slaughter of three thousand of their sons, the loss of their political
and economic freedom, without compensating advantages which they can
appreciate, feel very differently, is equally true.
_From The Nation of September 11, 1920._