A review of the finances of the Republic of Haiti, 1924-30; Sub. To the Am. High Commissioner: by Sidney De La Rue, Fin....

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A review of the finances of the Republic of Haiti, 1924-30; Sub. To the Am. High Commissioner: by Sidney De La Rue, Fin.-Adviser, Gen. receiver, 32, xii p. tables, diagrs.
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Mixed Material
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Port-au-Prince?, 1930

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4-trUS-1930
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HLL-D HAI 972 H/F30; H 004454752

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A Review of the Finances
of the
REPUBLIC of HAITI
1924-1930


A REVIEW of the FINANCES
OF THE
REPUBLIC of HAITI
1924-1930
SUBMITTED TO THE
American High Commissioner
by
S. DE LA RUE Financial Adviser-General Receiver
MARCH 3, 1930


CONTENTS
" pace
Revenues .................................................................. 1
Expenditures .............................................................. '
Public Works Service................................................... 8
Guard of Haiti......................................................... 10
Public Health Service................................................... 11
Agricultural Service .................................................... 11
Financial Adviser-General Receiver...................................... .* 14
Department of Public Instruction......................................... 16
Department of Justice................................................... 18
Other departments of the Haitian government............................. 19
Distribution of expenditures.............................................. 23
Public Debt ............................................................... 25
Conclusion ................................................................ 31
AppendixThe Trend of Agricultural Production in Haiti..................... 33


TABLES
pace
1. Actual Yearly Revenues and Estimated Yearly Revenues, 1924-25 to 1929-30.. 1
2. Quantity of Exports by Commodities, Fiscal Years 1916-17 to 1928-29........ 3
3. Internal Revenue Receipts, Actual and Estimated, 1924-25 to 1929-30........ 4
4. Actual Yearly Customs Receipts and Estimated Yearly Customs Receipts,
1924-25 to 1929-30 .................................................... 6
5. Per Capita Taxation, 1924-25 to 1928-29................................... 7
6. Per Capita Taxation, including Communal Receipts........................ 7
7. Expenditures, Actual and Estimated, Public Works Service.................. 8
8. Expenditures, Actual and Estimated, Guard of Haiti........................ 10
9. Expenditures, Actual and Estimated, Public Health Service.................. 12
10. Expenditures, Actual and Estimated, Agricultural Service, including the De-
partment of Labor.................................................... 12
11. Actual Expenditures, Agricultural Service and Department of Labor......... 13
12. Expenditures, Actual and Estimated, Financial Adviser-General Receiver...... 15
13. Percentage Cost of Collecting Customs Revenues: Haiti, Dominican Republic,
Nicaragua and the Philippine Islands................................... 16
14. Analysis of the Cost of Collecting Haitian Customs Revenues................ 16
15. Expenditures, Actual and Estimated, Department of Public Instruction....... 18
16. Expenditures, Actual and Estimated, Department of Justice................. 19
17. Expenditures, Actual and Estimated, other departments of the Haitian gov-
ernment ............................................................. 21
18. Distribution of Expenditures.............................................. 23
19. External Loans ......................................................... 25
20. Public Debt Per Capita.................................................. 28


CHARTS
pace
I. Actual Yearly Revenues, 1916-17 to 1929-30 and Estimated Yearly Reve-
nues, 1924-25 to 1929-30........................................... 2
II. Internal Revenue Receipts, Actual and Estimated, 1916-17 to 1929-30...... 4
III. Actual Yearly Customs Receipts and Estimated Yearly Customs Receipts,
1916-17 to 1929-30................................................. 6
IV. Total Expenditures from Revenue and Total Revenues, 1916-17 to 1929-30 8 V. Expenditures, Actual and Estimated, Public Works Service..............* 9
VI. Expenditures, Actual and Estimated, Guard of Haiti..................... 10
VII. Expenditures, Actual and Estimated, Public Health Service............... 11
VIII. Expenditures, Actual and Estimated, Agricultural Service, including the
Department of Labor.............................................. 13
IX. Expenditures, Actual and Estimated, Agricultural Service................ 14
X. Expenditures, Actual and Estimated, Department of Labor............... 14
XI. Expenditures, Actual and Estimated, Financial Adviser-General Receiver.. 15
XII. Percentage Cost of Collecting Customs Revenues........................ 17
XIII. Expenditures, Actual and Estimated, Department of Public Instruction...! 17
XIV. Expenditures, Actual and Estimated, Department of Justice.............. 18
XV. Expenditures, Actual and Estimated, other departments of the Haitian
government ...................................................... 22
XVI. Distribution of Expenditures, 1924-25 and 1928-29...................... 24
XVII. Public Debt Per Capita.............................................. 27
APPENDIX: CHARTS
I. Quantities of Coffee Exported......................................... v
II. Quantities of Coffee Exported......................................... vi
III. Seasonal Index of Coffee Exports..................................... vii
IV. Index of Coffee Exports.............................................. viii
V. Quantities of Cotton Exported...............'......................... ix
VI. Quantities of Cacao Exported......................................... x
VII. Quantities of Sugar Exported......................................... xi
VIII. Quantities of Sisal Exported.......................................... xii


A REVIEW OF THE FINANCES OF THE REPUBLIC OF HAITI 1924-1930


A Review of the Finances of the Republic of Haiti
1924-1930
Office of the Financial Adviser-General Receiver
Port-au-Prince, Haiti, March 3, 1930. The American High Commissioner, Port-au-Prince, Haiti.
Sir:
On October 17, 1924, my predecessor in this office submitted to you a detailed report which had for its primary object an analysis of the financial condition of Haiti and the formulation of a financial program over the period of five years which followed the fiscal year 1923-24. As we have now reached the fifth fiscal year following Dr. Cumberland's report, I believe the time is opportune to review the financial program of five years ago with the object of comparing actual accomplishments with what were then only possibilities.
Revenues
In 1924 it was estimated that with revised taxation and with continued development of Haiti's resources it should be reasonable to expect a yearly increase of three per cent in total revenue receipts. That this estimate has been largely borne out in fact is shown by Table No. 1, which lists the actual revenues of the country together with total yearly revenues as estimated five years ago.
TABLE No. 1
Actual Yearly Revenues and Estimated Yearly Revenues, 1924-25 to 1929-30
Actual total revenues Estimated total revenue*
Gourdes Gourdes
1924- 25.............................. 40,487,667.00 36,250,000
1925- 26.............................. 45,364,648.10 38,400,000
1926- 27.............................. 38,861,534.79 40,700,000
1927- 28.............................. 50,421,016.49 43,100,000
1928- 29.............................. 42,521,528.40 45,550,000
1929- 30.............................. 48,050,000


2
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
The close correspondence between actual revenues and estimated receipts is graphically shown in Chart I below. For sake of comparison and to show
CHART I
Actual Yearly Revenues, 1916-17 to 1929-30 and Estimated Yearly Revenues,
1924-25 to 1929-30
Mf/fians of Gourdes 60
so 46 JO 20 10

Ac.
t/mafec/


/S-/7 J7-/* IB-I /9-tOiO-2l Zf-K tl-13 15*4 14-lS 23-tt X-T7 Z7lt tt-O tt-M
more completely the secular trend, revenue receipts from the beginning of the receivership are indicated. It becomes at once apparent that the estimated increase not only approximates actual receipts over the five year period but that if the line of estimated receipts is carried back to the year 1916-17 it will show that a three per cent yearly increase in revenues has been characteristic of the entire period. Fluctuations of receipts are still evident, and they will continue as long as Haiti remains dependent on one cropcoffee, although the increase in proportion of internal revenues to customs revenues will have a stabilizing effect. One of the principal objects of the Administration policy from the economic point of view has been elimination of the violent fluctuations of the early years; but the economic changes necessary to accomplishment have of necessity been slower than had been hoped. Revenues serve as an excellent index of progress and prosperity in most cases, but here it is necessary to guard against false valuation of the economic progress made because more efficient collection has undoubtedly influenced the result recorded. Increasing revenues have made possible corresponding additions to the periodical appropriations for public services, improvements, and economic betterments, without which the country would now be in but little better condition than it was at the beginning of the occupation.
A study of Table No. 2, showing quantities of commodities exported, reveals the disappointing fact that with minor exceptions Haiti has not


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
3
noticeably added to production.* It would therefore appear that the rising trend of revenues is due not to increased production but to factors such as the artificial stimulation of coffee prices by the Brazilian price fixing experiment; by revised tariff schedules and the internal revenue taxation; and by improved methods of collecting revenues and increased administrative efficiency. For discussion of per capita taxation over the period under re-
TABLE No. 2
Quantity of Exports by Commodities, Fiscal Years 1916-17 to 1928-29
Average Average Average
1916-17 1921-22 1926-27 1927-28 1928-29 1916-17
Commodity 1920-21 1925-26 1928-29
Kilos Kilos Kilos Kilos Kilos Kilos
t t t t 516 t
19,179 2,910 4,095 3.063 4,522 9,394
Cacao .............. 1,958,938 1,908,678 1,629,979 2,393,486 1,365,707 1,902,096
t t 145,886 73,485 97,869 t
Coffee .............. 29,308,341 32,060,107 28,692,984 41,146,804 28,556,644 31,172,206
Cotton, raw ......... 2.488,291 3,895,790 4,900,945 4,427,337 4,754,579 3,538,713
Cottonseed .......... 2,480,810 5,604,338 4,746,216 787,149 359,766 3,562,990
t t 5,365,216 6,415,465 7,141,064 t
731.881 547,907 787,827 660,505 588,483 648,904
Lignum Vitae....... 4,036.786 2,710,876 693,804 603,794 819,190 2,758,085
Logwood ............ 54,889,424 27,816,496 28,084,183 36,361,678 23,402.456 38,567,532
t t 8,463 31,341 47,479 t
283,467 132,282 189,902 225,588 261,413 211,973
Sugar .............. 2,543,397 6,879,930 9,841,398 12,016,554 4,729,450 5,669,541
1,635 1,478 1,275 1,524 1,265 1,510
t No separate figures available. Bunches.
view see Tables 5 and 6 with the accompanying explanation, page 7 and following.
In the case of receipts from internal revenues a much wider variation is shown in the comparison than in the case of total revenues. This, however, is not at all surprising when one takes into consideration the fact that the internal revenue organization has been going through a period of complete reorganization and development. Internal revenue legislation was crude and inadequate in 1924, and although the intervening years have been marked by important additions to the taxes there is much which still remains to be done. The excise law of August 14, 1928, has been a step in the right direction and the results are already in evidence, but the process of enacting new legislation, collecting new taxes, and reorganizing the entire internal revenue structure has taken longer and the results have been less satisfactory than was hoped.
Table No. 3 shows estimated receipts from internal revenue since 1924-25 as compared with the actual figures for the same period.
The comparison is shown graphically in Chart II, from which will be noted the sharp rise during the past year due to the collection of the new taxes on alcohol and tobacco. The chart also clearly illustrates the relative uniformity of revenues derived from internal taxes and the fact that busi-
*See Appendix.


4
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
ness recessions appear to have had comparatively little effect upon the amount of revenue collected. The depression of 1920-21, which brought about such a sudden and severe loss in total revenues for that year, did not register any apparent loss as far as internal revenue receipts were concerned.
TABLE No. 3
Internal Revenue Receipts, Actual and Estimated, 1924-25 to 1929-30
Actual total revenues Estimated total revenues
Gourdes Gourdes
1924- 25.............................. 4,089,926.19 3,600,000
1925- 26 .............................. 4,155,170.28 4,800,000
1926- 27 .............................. 4,153,287.97 6,000,000
1927- 28.............................. 4,241,620.14 7,500,000
1928- 29.............................. 6,035,264.80 9,000,000
1929- 30.............................. 10,500,000
It was not until the year 1921-22 that the effects of the depression made themselves felt, and even then the loss was slight. In 1926-27, a comparatively bad year, total revenues fell off almost seven million gourdes, yet internal revenue receipts remained about the same. No better argument than this could be found for the reduction of customs duties and the levying of new internal revenue taxes in their place.
CHART II
Internal Revenue Receipts, Actual and Estimated, 1916-17 to 1929-30 Goordrs

Ac/
/S-/7 77-/S la-tt 13-TO ?&~Zt 21-22 2Z*3 23-2* 21-23 26** 2f-*7 2?~79 28-2929-10
The 1924 report held out the hope that by 1930 about Gdes. 12,000,000 or approximately one-third of expected customs receipts at that time would be derived from internal revenue taxes. Actually only half of that amount came from internal revenue in 1929, but if the rate of increase this year is


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
5
the same as last the total yield will be Gdes. 8,000,000 which will be a long way toward fulfillment of the program mapped out by Dr. Cumberland. However, the drop in coffee prices has seriously affected the per capita wealth of the country and it is quite certain that internal revenue receipts cannot continue to increase as rapidly as during the past year, if at all. The new excise tax receipts in particular will be affected, for it is already apparent that the consumption of alcohol and tobacco has decreased substantially and that revenues from those sources will correspondingly be reduced.
The development of internal revenue taxes until they constitute half of total reecipts is a policy in which I am heartily in favor, and I believe that taking into consideration the encouraging results of the excise tax law and the already substantial progress towards establishment of a land tax, that within the next five or ten years internal revenues will equal customs receipts. Too great dependence upon the customs for revenue discourages foreign trade and leads to economic stagnation. Haiti is a country of limited resources. It is the full development of these few resources which should be encouraged rather than the artificial stimulation through prohibitive tariff barriers of industries to which Haiti is not well adapted. The gradual replacement of customs duties by internal taxes will go far towards the accomplishment of that end, and it should in addition mean that the volume of revenues will no longer be so sensitive to fluctuations in business prosperity and the commodity price level. The statement is made in the 1924 report that the major part of the Haitian government's revenues consists of customs duties and that the greater part of customs revenues consists of specific rather than ad valorem duties, and that consequently revenues cannot be affected by price changes. This is to a certain extent true as regards price fluctuations of commodities imported, but unfortunately a large portion of Haiti's revenues is still derived directly or indirectly from coffee, cotton and cacao, and lower prices for commodities exported reduces Haitian purchasing power and results in corresponding losses in import duties and internal revenues.
Actual customs receipts as compared with the estimate given in the program of 1924 require little comment as they follow closely in every feature the figures for total revenue receipts already referred to. Table No. 4 gives estimated and actual figures for customs receipts, and Chart III gives a clear presentation of the relation between the two series. It will be noticed that the curve of estimated customs receipts rises more gradually than the estimate for total revenue receipts and that actual receipts have increased somewhat more rapidly than had been predicted.
It is evident that total revenue receipts including customs, internal revenues, and miscellaneous receipts, have followed the estimated receipts with surprising accuracy. However, internal revenue receipts have lagged considerably behind the estimate while customs receipts have somewhat ex-


6 REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
ceeded expectations. As customs duties are still by far the most important source of revenue the net result has been an increase of total receipts which
TABLE No. 4
Actual Yearly Customs Receipts and Estimated Yearly Customs Receipts,
1924-25 to 1929-30
Actual customs receipts Estimated customs receipts
Gourdes Gourdes
1924- 25.............................. 35,750,018.34 32,500,000
1925- 26.............................. 40,594,831.74 33,500,000
1926- 27.............................. 33,661,876.23 34,500,000
1927- 28 .............................. 45,082,092.80 35,500,000
1928- 29 .............................. 35,247,650.00 36,500,000
1929- 30.............................. 37,500,000

has very closely approximated the trend which my predecessor believed necessary for proper fulfillment of our treaty obligations.
CHART III
Actual Yearly Customs Receipts and Estimated Yearly Customs Receipts,
1916-17 to 1929-30
Afi/Jions of Gourdes
30
40
SO
to
/o o

Act Eshmahei i


/f-/7 /US IB-It /&> tO-U tilt 22-ZJ ti-t* 26-2* i*-2} 27-2S 23-B 2S-JO
It is interesting at this point to take figures for total revenue receipts and convert them into a series showing per capita taxation. The result is given in Table No. 5. In arriving at these figures it was assumed that the population of Haiti is two million inhabitants and no adjustment was made for a yearly increase in population. Actually, with steadily improving health conditions, it should be reasonable to expect a considerable yearly increase in population, and if this increase were known and were taken into consideration in arriving at the per capita figures, the most recent of these figures in all probability would show a reduction in amount.


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930 7
Table No. 6 gives the same data but with the inclusion of communal receipts which each year amount to about two million gourdes. The addition of these receipts results in slightly higher per capita figures.
It should be noted here that since revenue receipts depend chiefly upon customs, total receipts will be low in a year when exports and imports are low. The year 1926-27 was a poor year for foreign trade and total revenues were correspondingly low, with the result that the per capita taxation for that year is the lowest of the entire series. Conversely, 1927-28, the year of a big coffee crop and heavy exports, showed the highest total revenue receipts and the highest per capita taxation. It may therefore be stated that prosperous years tend to result in high taxation per capita, while poor years are marked by low per capita taxationnot an altogether undesirable situation from the point of view of the tax payer but most embarrassing to the budget maker.
TABLE No. 5 Per Capita Taxation, 1924-25 to 1928-29
Total revenue receipts Per capita taxation (excluding communal on a basis of
receipts) 2,000,000 population
Gourdes Gourdes
1924- 25.......;............................... 40,487,667.00 20.24
1925- 26....................................... 45,364,648.10 22.68
1926- 27....................................... 38,861,534.79 19.43
1927- 28.............i......................... 50,421,016.49 25.21
1928- 29....................................... 42,521,528.40 21.26
TABLE No. 6
Per Capita Taxation, Including Communal Receipts
Total revenue receipts Per capita taxation (including communal on a basis of
receipts) 2,000,000 population
Gourdes Gourdes
1924- 25....................................... 42,284,228.83 21.14
1925- 26....................................... 47,267,719.00 23.63
1926- 27 ....................................... 40,790,089.36 20.40
1927- 28....................................... 52,444,412.52 26.22
1928- 29 ....................................... 44,621,350.74 22.31
Expenditures
Total expenditures, by years, for the period of the receivership are shown in Chart IV and for sake of comparison the revenue curve already seen in Chart I has been included. The relation between the two curves clearly shows how funds accumulated during the two prosperous years following the war were absorbed by greatly augmented expenditures during the depression years of 1920 and 1921 and resulted in deficits as high as 14 million gourdes. That the last seven years of the receivership have witnessed a better adjustment between receipts and disbursements is quite evident, and the


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924 1930
small deficits that have occurred merely represent the expenditure of surplus funds already accumulated.
In order more completely to analyze the expenditures of the government, the various departments and services will be considered separately in the order of their importance with respect to total disbursements.
CHART IV
Total Expenditures from Revenue and Total Revenues, 1916-17 to 1929-30
fif/7//ons of Goorcfes
60
SO
40
SO
ZO
/O o

'crr.e s

/* J* eve nut s

1617 17/8 IB-IS 19-iO 204/ VZZ 11-13 fJ-ft 24-2S"ZS-X Z(i7 U-ZB Z8-ZS O\)0
Public Works Service
Except for disbursements in connection with the public debt, the Public Works Service takes a larger share of revenues than any other function of the government, and this share, including extraordinary expenditures, has been consistently greater than the estimate made in the report of 1924.
TABLE No. 7
Expenditures, Actual and Estimated, Public Works Service
Actual (including Actual (excluding Estimated (excluding capital expenditures) capital expenditures) capital expenditures) Gourdes Gourdes Gourdes
1924- 25..................... 7,533,943.51 3,875,954.87 4,398,000
1925- 26..................... 9,082,496.06 4,517,114.81 5,058,000
1926- 27..................... 7,166,798.42 5,280,673.12 5,717,000
1927- 28 ..................... 8,435,445.55 5,823,591.90 6,377,000
1928- 29 ..................... 9,621,862.65 5,426,518.23 7,037,000
1929- 30 ..................... 5,295,634.00* 7,696,000
* Budgetary allotment, including most recent revisions.
Table No. 7 gives the estimated expenditures together with figures for total disbursements and disbursements exclusive of extraordinary expenditures.
The relation between the three series can better be visualized from a study of Chart V. This chart, as well as the other expenditure charts which follow,


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
9
is constructed on an arithmetic scale, and it should be kept in mind when comparing one chart with another that the scales used are not all the same. The charts were constructed primarily for the purpose of facilitating analysis of individual objects of expenditure. The light line in each case represents the yearly expenditures as estimated by Dr. Cumberland, and covers operating activities and such relatively small capital outlays as can properly be
CHART V
Expenditures, Actual and Estimated, Public Works Service
Afff/ions of Ooun-fes
9 6 7 6 6 4
3
O'
24-25 2C-27 Z7-23 2S-29 29-30
charged to current receipts. The heavy line represents actual expenditures and is comparable with the curve of estimated disbursements in that extraordinary expenditures are excluded. The extension of this line to the present fiscal year shows the ordinary budgetary allotment for this year and does not, of course, represent actual expenditures.
In order to show total disbursements, a third curve has been introduced (indicated by a broken line) which includes extraordinary expenditures as well as those expenditures made from ordinary and supplementary credits.
Upon examination of the chart it is at once evident that ordinary expenditures have been somewhat less than the 1924 estimate, but that with the addition of large extraordinary expenditures each year the total disbursements of the Public Works Service have far exceeded expectations. The apparent decline in total disbursements during the year 1926-27 is of no particular significance as during that year non-revenue receipts amounting to Gdes. 3,889,422.08 and representing principally the unused balance of the Series B loan became available and were turned over to the Public Works Service for use on new projects.


10 REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
Guard of Haiti
Increasing revenues in 1925-26 and 1926-27 made it possible in those years considerably to surpass the generous rate of yearly expenditure increase allotted by the 1924 report. Total disbursements by the Guard in 1926-27 approached Gdes. 6,500,000 from which figure total expenditures for the last two years have slightly declined, as is shown in Table No. 3 and Chart VI.
TABLE No. 8
Expenditures, Actual and Estimated, Guard of Haiti
Actual (including Actual (excluding Estimated (excluding capital expenditures) capital expenditures) capital expenditures)
Gourdes Gourdes Gourdes
1924- 25..................... 5,579,242.54 5,474,494.51 5,392,000
1925- 26 ..................... 6,062,415.34 6,022,391.76 5,608,000
1926- 27 ..................... 6,496,006.55 6,415,153.98 5,823,000
1927- 28..................... 6,427,467.21 6,427,467.21 6,039,000
1928- 29..................... 6,368,579.33 6,368,034.33 6,254,000
1929- 30..................... 6,363,607.02* 6,470,000
* Budgetary allotment, including most recent revisions.
Expenditures of the Guard of Haiti reached their highest point during the year 1926-27, or three years in advance of the time set in the 1924 program for attaining the same figure. Withdrawal of some of the marines for service in Nicaragua made it necessary to speed up the development program.
CHART VI
Expenditures, Actual and Estimated, Guard of Haiti
M/'///ons of Got/rates
7
6
01 "I r 1 1-
S5-2& 26-27 27-23 26-29 29-30
Disbursements have remained practically stationary since 1926-27, but it will be necessary to increase appropriations in the future if development of the Guard to its proposed full strength is to be accomplished.


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
11
The chart indicates clearly that only a very small part of the Guard's expenditures have been made from extraordinary credits for capital improvements; also that the budgetary allotment for 1929-30 is somewhat less than the figure given in 1924 as an estimate of probable expenditures during the present year by that service. On the whole it is evident that the tendency during the five year period has been to appropriate greater allotments for use of the Guard than had been contemplated by the Financial Adviser in 1924.
Public Health Service The Public Health Service is another organization which has been able to make disbursements well in excess of 1924 expectations. Chart VII indi-
CHART VII
Expenditures, Actual and Estimated, Public Health Service
M/Z/ions of Gourdes
5
cates that although the first year of the five year period followed fairly closely the estimated trend of expenditures, the year 1926-27 was marked by a sudden increase of a million gourdes over outlays for the previous year, and this increase carried expenditures well over the estimated trend line. In addition, there were extraordinary expenditures of large amounts throughout the period. The fiscal year 1928-29 reflects the large increase in extraordinary expenditures occasioned by relief work on the part of the Public Health Service following the hurricane of August, 1928.
Actual figures of expenditures incurred by the Public Health Service are given in Table No. 9 on page 12.
Agricultural Service
The policy of devoting a large portion of the government's revenue to a program of agricultural expansion has been followed closely, and the


12
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
figures given in Table No. 10 clearly show that increasing amounts have been appropriated each year for the use of the Agricultural Service. It was planned in 1924 that expenditures by this service in 1930 should be 150 per cent more than in 1924, and we find from a study of the table that actual
TABLE No. 9
Expenditures, Actual and Estimated, Public Health Service
Actual (including Actual (excluding Estimated (excluding capital expenditures) capital expenditures) capital expenditures)
Gourdes Gourdes Gourdes
1924- 25..................... 2,223,059.14 1,851,767.57 1,846,000
1925- 26 ..................... 2,852,485.58 2,067,940.33 2,123,000
1926- 27..................... 3,444,301.76 3,045,794.69 2,400,000
1927- 28..................... 3,631,024.09 3,368,950.76 2,677,000
1928- 29..................... 4,435,428.67 3,564,438.55 2,954,000
1929- 30 ..................... 3,878,229.92* 3,230,000
* Budgetary allotment, including most recent revisions.
expenditures have exceeded that figure by a wide margin. The situation is more graphically shown in Chart VIII from which it appears that the Agricultural Service has not only benefitted by heavier ordinary appropriations
TABLE No. 10
Expenditures, Actual and Estimated, Agricultural Service, Including the
Department of Labor
Actual (including Actual (excluding Estimated (excluding capital expenditures) capital expenditures) capital expenditures)
Gourdes Gcurdes Gourdes
1924- 25..................... 1,801,285.33 1,083,188.81 1,080,000
1925- 26 ..................... 2,715,751.23 2,129,591.55 1,404,000
1926- 27..................... 3,009,581.06 2,552,000.68 1,728,000
1927- 28 ..................... 2,785,670.72 2,723,758.64 2,052,000
1928- 29..................... 3,411,076.17 3,045,532.08 2,376,000
1929- 30 ..................... 3,062,736.78* 2,700,000
* Budgetary allotment, including most recent revisions.
than had originally been planned, but that in the years 1924-25, 1925-26 and 1926-27, the service was assisted by extraordinary credits which materially added to its income. The last two years have shown reduced allotments in the form of extraordinary credits, and with an ordinary budget allotment this year of Gdes. 3,062,736.78 the expenditures of the Agricultural Service will approach more closely the figure established by Dr. Cumberland for expenditures in 1929-30.
The sharp rise in 1924-25 and 1925-26 largely was due to capital expenditures for the purchase of new equipment in connection with the development of technical agricultural schools. Technical education is nominally under the Department of Labor, but actually the schools are under the supervision of the Director of the Agricultural Service. For this reason the figures used in Table No. 10 and Chart VIII include expenditures listed under the Department of Labor. In this way the curves of actual expendi-


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
13
tures are directly comparable with the curve of estimated expenditures of the Agricultural Service since it was contemplated at the time the 1924
CHART VIII
Expenditures, Actual and Estimated, Agricultural Service, Including the Department of Labor
Af/f/ions of Gcurctsa



- 4
4-25 2S-26 2S27 27-28 28-2S 29&0
report was prepared that the vocational schools should be developed by the Agricultural Service.
In order to show separately the two functions of the Agricultural Service, Table No. 11 and Charts IX and X have been prepared giving data on the
TABLE No. 11
Actual Expenditures, Agricultural Service and Department of Labor
Agricultural Service Department of Labor (including capital (including capital
expenditures) expenditures) Gourdes Gourdes
1924- 25........................ 1,526,891.70 274,393.63
1925- 26........................ 2,185,104.58 530,646.65
1926- 27........................ 2,452,380.38 557,200.68
1927- 28 ........................ 2,170,007.41 615,663.31
1928- 29 ........................ 2,815,688.95 595,387.22
1929- 30 ........................ 2,351,666.60* 711,070.18*
Budgetary allotment, including most recent revisions.
Agricultural Service and the Department of Labor respectively. The latter chart indicates the increased emphasis which is being placed on technical schools and vocational training in keeping with the policy of the adminis-' tration.


14 REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
CHART IX
Expenditures, Actual and Estimated, Agricultural Service M/Wons of Gourdes
3 I-1-1-1-1-,-,
t
242S 25-26 26-27 27-28 28-23 29SO
CHART X Expenditures, Actual and Estimated Department of Labor
Thot/sonds of Gourdes
242S 25-26 26-27 27-28 28-23 29-30
The Financial Adviser-General Receiver Disbursements from the five per cent fund are classified for accounting purposes under the public debt and strictly speaking the office of the Financial Adviser-General Receiver should not be treated in the same manner as the other services. However, for comparative purposes, it has been


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924 1930
15
thought best to include at this point Table No. 12 and Chart XI showing estimated and actual expenditures of the service.
TABLE No. 12 Expenditures, Actual and Estimated Financial Adviser-General Receiver
Actual Estimated
. Gourdes Gourdes
1924- 25........................... 1,849,537.49 1,625,000
1925- 26........................... 1,698,379.86 1,675,000
1926- 27........................... 2,278,241.30 1,725,000
1927- 28........................... 1,884,994.88 1,775,000
1928- 29........................... 1,864,702.40 1,825,000
1929- 30........................... 1,430,000.00* 1,875,000
Budgetary allotment, including most recent revisions.
Except for the year 1926-27, expenditures did not vary greatly from the
1924 estimate. Accumulated funds made possible the construction in 1926-27 of the Palais des Finances and new warehouses for the custom house at Port-au-Prince, and these expenditures are reflected in a strong upward sweep of the expenditure curve during that year.
CHART XI Expenditures, Actual and Estimated Financial Adviser-General Receiver
Mf/Zians-of Gourxjes 3
The cost of collecting customs revenues, expressed as a percentage of total revenues collected, is shown in Chart XII. Similar curves for the Philippine Islands, the Dominican Republic and Nicaragua are included on the chart and they clearly reveal the fact that in cost of effecting collections, Haiti in recent years has shown lower costs than these three countries. It should also be noticed that the trend has been distinctly downward.


16
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
The statistical series from which the chart was constructed are given in Table No. 13. In order that the actual percentage cost of collection might be more comparable to that of the other countries listed, an adjustment was
Table No. 13
Percentage Cost of Collecting Customs Revenues Haiti, Dominican Republic, Nicaragua and the Philippine Islands
1924 1925 1926 1927 1928 1929
Per cent Per cent Per cent Per cent Per cent Per cent
Haiti ................ 5.35 3.17 2.80 3.97 2.66 3.62
Dominican Republic... 4.14 4.56 3.94 4.79
Nicaragua ........... 4.27 3.78 3.94
Philippine Islands .... 4.80 4.60 5.00 5.30 4.50
?Figures not available.

made in the case of Haiti so as to allow for the commission of one per cent paid to the Banque Nationale and the cost of permanent improvements effected from the so-called Five Per Cent Fund. Table No. 14 gives an analysis of the percentage cost of collecting customs revenues in Haiti and shows how the figures used in the chart were obtained.
TABLE No. 14
Analysis of the Cost of Collecting Haitian Customs Revenue's
Administration Permanent Bank
and operation improvements Commission Total
Per cent Per cent Per cent Per cent
1923- 24.............. 5.35 .... 0.98 6.33
1924- 25.............. 3.17 0.16 1.84 5.17
1925- 26.............. 2.80 3.80 1.00 4.18
1926- 27.............. 3.97 2.10 1.00 6.77
1927- 28.............. 2.66 0.52 1.00 4.18
1928- 29.............. 3.62 0.67 1.00 5.29
Department of Public Instruction. The Department of Public Instruction makes greater yearly outlays than any of the government departments under Haitian control, but disbursements in 1928-29 were only slightly more than those in 1924-25. Chart XIII shows the actual trend of expenditures for Public Instruction as well as the 1924 estimate, and it is at once apparent that expenditures have not followed the estimated trend. However, this does not indicate that in the matter of education Haiti has not progressed. On the contrary, expenditures for public instruction are probably more than twice as great now as they were prior to American intervention. It should be recalled that expenditures for the law school appear under the Department of Justice and that those of the medical school are classified under the Department of the Interior, while the Guard of Haiti also finances certain educational work in connection


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
17
with its organization. In addition, the development of technical schools by the Agricultural Service has gone far to improve the general situation as regards education. It may therefore be concluded that the chart does not
CHART XII
Percentage Cost of Collecting Customs Revenues
Per cent
6.00
500
AM
1924
I9ZS
1926
I06
CHART XIII Expenditures, Actual and Estimated Department of Public Instruction
Thousands of Gourdes
ASOO
24-25 ZS-2& Z6-Z7 27-28 2029 29-30
adequately represent the status of education in Haiti and that probably the estimate of 1924 very closely approximates the actual progress made in public instruction during the past five years.


18
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
Table No. 15 gives expenditures made by the Department of Public Instruction during the five year period as well as the estimate made by the 1924 report.
TABLE No. 15 Expenditures, Actual and Estimated Department of Public Instruction
Estimated Actual Gourdes Gourdes
1924- 25.......................... 2,031,000 1,942,599.20
1925- 26.......................... 2,437,000 1,965,167.09
1926- 27.......................... 2,843,000 1,996,720.01
1927- 28 .......................... 3,250,000 2,059,021.14
1928- 29 .......................... 3,656,000 2,053,664.29
1929- 30 .......................... 4,062,000 1,910,956.00*
Budgetary allotment, including most recent revisions. *
The Department of Justice Chart XIV and Table No. 16 give a complete picture of the relation between estimated expenditures and actual disbursements by the Department of Justice. Increased salaries of judges and officials of the depart-
CHART XIV Expenditures, Actual and Estimated Department of Justice
Thousands of Gourdes
ISOOi-1-1-1-1-1-
24-26 2S-26 26-27 27-28 28-23 29-30
ment resulted in greater expenditures in 1925-26. Since that date economies in the department have made possible smaller appropriations and the curve shows a gradual downward trend. Factors leading to decreased expenditures have been the elimination of two courts of first instance, the dissolution of the court of appeal, and the construction out of funds allotted


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
19
to the Public Works Service of the new Palais de Justice which made possible some saving in rents.
There is a wide variation between the 1924 estimate and the actual figures, but it should be remembered that the estimates were based on the assumption that the administration of justice as well as the educational system would be placed under American supervision.
TABLE No. 16 Expenditures, Actual and Estimated Department of Justice
Actual Estimated
Gourdes Gourdes
1924- 25.......................... 1,333,838.31 1,302,000
1925- 26.......................... 1,395,153.62 1,393,000
1926- 27.......................... 1,369,351.38 1,484,000
1927- 28.......................... 1,333,376.69 1,575,000
1928- 29.......................... 1,297,719.99 1,666,000
1929- 30.......................... 1,322,095.00* 1,758,000
Budgetary allotment, including most recent revisions.
Other Departments of the Haitian Government.
Table No. 17 and Chart XV give actual and estimated expenditures of other departments of the Haitian government. The Department of Agri-cultre has been omitted from the chart as the amount involved is insignificant, and expenditures of that department show little divergence from the estimate of the 1924 report.
The Department of the Interior has consistently shown expenditures well under the 1924 estimate. However, the expenditures have shown a steady though gradual increase. The rise in 1928-29 was the result of special activity in connection with defining the Haitian-Dominican boundary. As can be seen from the chart the revised budgetary allotment for this year is somewhat under actual expenditures for the past five years.
Included in the expenditures of the Department of Finance are pensions and payment of miscellaneous claims. Because claims vary widely from year to year there has been no uniformity in expenditures of this department; but their decline during most of the past five years points to increased regularization of financial organization. The upturn of the curve in recent years largely has been due to expenditures connected with the preparation of land legislation.
In the case of the Department of Foreign Relations a noticeable drop in actual expenditures took place in 1926-27 when payments to the international bodies of which Haiti is a member were transferred from the budget of Foreign Relations to the Public Debt budget. The following year expenditures increased somewhat, due principally to increased travelling ex-


20
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
penses of new diplomatic appointees. Since 1927-28 expenditures of this department have shown a downward trend, and the revised budgetary allotment for the present fiscal year is under the figures of actual expenditures for any of the five preceding years.
Expenditures of the Department of Religion closely follow the estimated trend until 1927-28, when expenditures turned upward due to the appointment of two new coadjutor-bishops and ten additional priests, the institution of three new Seminary scholarships and expenditures for travelling allowances for priests. Examination of the curve reveals a still sharper upturn in 1928-29 because of the addition of two new bishoprics during that year. A budgetary allotment somewhat under the 1928-29 figures is indicated for the present fiscal year.
The Department of Commerce also closely follows the estimated trend until the year 1928-29, when added cost of the postal administration incident to the new air mail service, and increase of the volume of the ordinary mail led to increased expenditures.
The very sharp downswing of the Ministry of Public Works curve from 1924-25 to 1925-26 was merely due to transferring cost of electric lighting for the cities of Port-au-Prince, Cap Haitien and Gonaives to the budget of the Public Works Service. In 1926-27 a further decline was registered by reason of the transfer of part of the technical personnel to the Public Works Service. Since then the expenditures of this department have consisted only of office disbursements by the Secretary of State for that department, and they have closely followed the indicated estimate of the 1924 report.


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
21
TABLE No. 17
Expenditures, Actual and Estimated Other Departments of the Haitian Government
Foreign Relations Public Works Service
Actual Estimated Actual Estimated
Gourde s Gourdes Gourdes Gourdes
1924- 25 ............ 619,953.31 619,000 703,416.57 42,000
1925- 26 ............ 635,084.64 637,000 92,287.98 43,000
1926- 27............ 555,375.62 656,000 34,789.54 45,000
1927- 28 ............ 579,224.57 675,000 34,110.49 46,000
1928- 29 ............ 555,875.63 693,000 43,575.89 47,000
1929- 30............ 511,300.80* 712,000 38,190.00* 48,000
Finance Agriculture.
1924- 25............ 1,197,945.96 879,000 44,258.88 42,000
1925- 26............ 1,062,756.19 905,000 41,426.15 43,000
1926- 27............ 827,576.63 932,000 43,039.34 45,000
1927- 28 ............ 634,374.38 958,000 43,611.39 46,000
1928- 29............. 721,811.41 984,000 43,105.13 47,000
1929- 30 ............ 885,980.00* 1,011,000 44,000.00* 48,000
Commerce Religion
1924- 25 ............ 230,051.46 242,000 367,136.75 397,000
1925- 26............ 247,935.91 249,000 388,617.22 405,000
1926- 27 ............ 255,063.06 256,000 387,544.26 413,000
1927- 28 ............ 257,730.29 264,000 424,493.79 421,000
1928- 29............ 329,739.51 271,000 516,093.20 429,000
1929- 30 ............ 338,360.00* 278,000 457,672.50* 437,000
Interior
1924- 25............ 1,208,067.76 1,252,000
1925- 26............ 1,224,369.56 1,289,000
1926- 27............ 1,229,080.99 1,327,000
1927- 28............ 1,241,170.42 1,365,000
1928- 29............ 1,265,557.13 1,402,000
1929- 30............ 1,155,808.10* 1,440,000
Budgetary allotments, including most recent revisions.


22
REVIEW OF FINANCESREPUBLIC OF HAITJ, 19241930
CHART N2 ZS EXPENDITURES ACTUAL AND ESTIMATED OTHER DEPARTMENTS OF THE HAITIAN GOVERNMENT
Thousands of Gourdes
I.500 |-1-1-1-,-1-,
24-25 25-26 26-27 27-23'2829 29-SO


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
23
Distribution of Expenditures Table No. 18 shows expenditures for each division of the government in 1924-25 and again in 1928-29, as well as the percentage of total expenditures attributable to each division. The office of the Financial Adviser-General Receiver and the Internal Revenue Service are listed separately in order to make comparison with the other services possible, but it should be remembered that for accounting purposes these two items are always
TABLE No. 18 Distribution of Expenditures
Financial Adviser- Expenditures from revenues 1924-25 Gourdes Per cent Expenditures from revenues 1928-29 Gourdes Per cent
General Receiver ... 1,849,537.49 4.72 1,864,702.40 4.23
Internal Revenue Service. 342,928.16 0.87 799,076.94 1.81
Public Debt .......... 12,240,937.65 31.21 10,791,635.60 24.46
5,579,242.54 14.23 6,368,579.33 14.44
619,953.31 1.58 555,875.63 1.26
1,197,945.96 3.05 721,811.41 1.63
230,051.46 0.59 329,739.51 0.74
1,208,067.76 3.08 1,265,557.13 2.87
Public Health ........ 2,223,059.14 5.67 4,435,428.67 10.05
Public Works ........ 703,416.57 1.79 43,575.89 0.10
Public Works Service.. 7,533,943.51 19.21 9,621,862.65 21.81
1,333,838.31 3.40 1,297,719.99 2.94
44,258.88 0.11 43,105.13 0.10
Agricultural Service ... 1,526,891.70 3.90 2,815,688.95 6.39
274,393.63 0.70 595,387.22 1.35
1,912,599.20 4.95 2,053,664.29 4.65
367,136.75 0.94 516,093.20 1.17
39,218,202.02 100.00 44,119,503.94 100.00
carried under the public debt. The item "Public Debt" in the table, therefore, includes all expenditures in connection with the public debt except disbursements by the Financial Adviser-General Receiver and the Internal Revenue Service.
The same is true of Chart XVI which gives the distribution of expenditures in percentages of total disbursements for each of the two years. Examination of the chart reveals that a much larger percentage of total expenditures was made by the Public Health Service last year than in 1924-25. The Agricultural Service also shows a large percentage gain, and smaller gains were registered by the Public Works Service, the Guard, the Department of Religion, Labor, Commerce, and the Internal Revenue Service. The principal reductions in percentages of total disbursements were registered by the items Public Debt, Finance and the Ministry of Public Works. The


24
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
PuMc Deif
PuMc Worts Service
Guorc/
Puh/ic f-ka/th Service ,ii
PlS/ic Jns/ruchon
financial Adviser Genera/Receiver
Agricu/ft/ro/ Service ni
Jus/ice -
In/error" 1
finance fM/nisrry] T
fore/jn ffe/o/ions
Pu6/ic Wonis (M/nt'shyJ
Peyton
fn/ernafRevenue Sen/ice b
Labor h
Commerce 1
Agncutfure /A/misfyJ
O 10 ZO .50 40
PER CENT
1924-25 HMMI 1926-29
3I


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
25
remaining items all show small decreases in percentages of total expenditures.
Of particular significance is the fact that service of the public debt now consumes an appreciably smaller portion of the country's revenue, while the principal gains were among those divisions of the government best calculated to improve the general condition of the country.
Public Debt
Before proceeding to a discussion of debt retirement during the past five years, I wish briefly to recall to your mind the events which led to the flotation of the three series of the present loan.
Table No. 19 shows the condition of the public debt at the end of each fiscal year from 1915 to 1929. In the case of Series A loan you will notice at once, the sudden drop of almost Gourdes 55,000,000 from September 30, 1919, to September 30, 1920. The apparent reduction merely meant that the gold value of the debt declined by that amount due to the abrupt fall
TABLE No. 19 External Loans
Series A Series B Series C
Gourdes Gourdes Gourdes
September 30, 1915......... 107,821,656.45 37,185,657.60
" 1916......... 113,455,856.35 38,974,237.85
" 1917......... 119,089,179.15 42,093,154.00
" 1918......... 124,722,501.95 45,014,560.65
" 1919......... 90,556,562.00 48,774,145.85
" 1920 ......... 33,487,414.30 51,078,637.35
" 1921......... 32,225,464.30 53,090,682.40
" 1922.......... 33,505,429.95 52,945,770.25
" 1923......... 79,235,000.00 25,000,000.00
" 1924 ......... 78,242,500.00 23,566,980.60 13,158,711.10
" 1925 .......... 75,183,419.30 21,747,462.30 12,640,072.70
" 1926 ......... 71,474,157.35 19,775,074.65 11,825,524.80
" 1927......... 68,939,916.15 14,552,976.44 11,401,640.00
" 1928......... 66,039,039.40 13,105,431.55 10,901,321.60
" 1929 ......... 62,751,128.35 11,603,630.80 10,352,636.85
in the value of the franc, in which currency the principal part of the foreign debt of the Republic was at that time outstanding. In fact, for several years prior to 1923 the debt of Haiti at any given moment was more dependent upon the value of the franc than on the operations of the Haitian treasury.
In 1922 a six per cent thirty year dollar loan not to exceed $40,000,000 was authorized by a law of the Haitian Government for issuance in series. In the same year bids were requested for $16,000,000 of this loan and bonds sold to the highest bidder, The National City Company, at 92.137. From this operation the Haitian Government effectively received slightly more


26
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
than $14,740,000. The proceeds of this loan were devoted to payment of arrears of interest upon the guaranteed bonds of the National Railroad Company of Haiti, payment of a loan granted by the National Bank of Haiti, settlement of claims, payment of arrears of interest on the internal funded debt, payment of the 1896 and 1910 French loans, public works and debt retirement. These funds were applied strictly in accordance with the announced intention.
During the fiscal year 1923-24 funding operations were completed by exchanging the former floating debt for Series B bonds in a ratio established by the International Claims Commission. The bonds were later used in fulfilling the awards of the Claims Commission. Finally, the bonds of the National Railroad of Haiti, which had constituted a long standing element of embarrassment in the financial position of Haiti, were exchanged, in accordance with an agreement reached with the majority of the bond holders, for direct obligations instead of contingent obligations of the state. The exchange was effected by the issue of the Series C loan. It should be noted here that 471 of the old railroad bonds have not been surrendered and to this extent the transfer is incomplete.
Of chief interest, of course, is the Series A loan. This loan was floated in 1922 in order to make the refunding operations effective and to take advantage of the decline in value of the French franc. As events turned out, the franc continued to decline after 1922 and a still further -saving might have been made if flotation had been delayed, but in 1922 it was impossible to foresee a further decline and it was thought best to take advantage of the opportunity which then existed.
The refunding of the French loan at the depreciated value of the franc saved several millions for the Haitian treasury, but the Administration was criticised in some quarters for not paying the debt in gold francs, and some of the French bond holders refused to accept payment in francs. Actually, however, the treasury was under no legal obligation to pay the loan in gold francs.
It was recognized in the 1924 report that a five year forecast of the condition of the public debt would be more difficult to arrive at than an estimate of revenues and expenditures. There were too many variable factors involved, such as the possibility of floating future loans, the possibilities of exceeding amortization requirements, the movement of the bond market and with it the changing cost of retiring bonds. In short, the report acknowledged that the five year program which it presented could hardly be more than a guess.
As the public debt situation has actually worked out, there is little relation between the accomplishment of the past five years and the program described by Dr. Cumberland. The 1924 plan was based on the supposition


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
27
that in the then near futureprobably by 1926a loan of about Gdes. 40,000,000 would be floated, half of which would be utilized for the proposed Artibonite irrigation project and the remainder for productive investment in developing Haiti's resources. Again, it was planned that at the end of the five year period the Series D issue of bonds for extending the National Railway would be issued. It was further planned and definitely declared as the future policy of the administration that the bonds then outstanding would be retired in excess of actual sinking fund requirements to the extent that surplus cash was available.
It is only in the latter respect that actual accomplishments resemble the projected financial program. The Series D issue is still only a future possibility. The Artibonite irrigation system was actively urged, then abandoned in favor of a private enterprise which in turn was allowed to become dormant, and to date nothing definite has been done to further the project.
However, with respect to supplementary amortization the administration has followed closely the 1924 plan. The following figures show debt retirement in excess of actual requirements during the last five years:
Gourdes
1924- 25 .................... 2,229,289.54
1925- 26 .................... 3,338,092.68
1926- 27 .................... 5,008,042.46
1927- 28 .................... 735,240.00
1928- 29 ..................'.. 907,757.70
and Chart XVII and Table No. 20 give the per capita debt reduction. The chart graphically shows the efforts which have been made during the five year period to reduce the public debt. Haiti has a public debt of $8.87 per
CHART XVII Public Debt Per Capita
Gourde a
70,-1-,-1-1-1-1
60
50
1924 1926 1826 1027 1928 1029
capita, whereas the United States has a debt of approximately $200.00 per capita.


28
REVIEW OF FINANCESREPUBLIC OF HAITI, 19241930
It would appear that the year of greatest effort in debt retirement was 1926-27 with a total excess over required payments of over five million gourdes. Actually, Gdes. 3,829,790.30 of this figure represent cancellation of the unissued Series B bonds following completion of the awards of the Claims Commission. Of greater significance is the fact that the following year (1927-28) less than a million gourdes of surplus cash was expended for debt retirement in excess of requirements. This drop was apparently due not to lack of funds for the purpose but to the fact that the bond prices had reached a level where difficulty was found in obtaining bonds at par or less.
Throughout the period we have therefore had the anomalous situation of an administration expressing the intention of carrying on a development program which would make necessary the flotation of one or more new loans at rates which could hardly have been more favorable than the original issue, and at the same time using surplus cash for the retirement of a loan which it had been fortunate enough in 1922 to secure on comparatively favorable terms.
Various arguments are advanced for a policy of debt retirement in excess of requirements, chief of which is the belief that such a policy im-
TABLE No. 20 Public Debt Per Capita
Per capita debt on basis
Total public debt of 2,000.000 population
Gourdes Gourdes
September 30, 1924.................. 121,048,501.20 60.52
" 1925.................. 115,231,263.80 57.61
" 1926.................. 108,307,079.30 54.15
" 1927.................. 99,706,855.09 49.85
" 1928.................. 94,438,115.05 47.21
" 1929.................. 88,677,396.00 44.33
proves the credit standing of the country. It will be granted that the purchaser of a new issue of Haitian bonds should be favorably impressed by the successful efforts of the country in the past to retire bonds in excess of requirements. On the other hand, he is far more interested in the broader aspects of the situation: in whether or not Haiti has resources capable of profitable development; in the possibility of maintaining revenues on an upward trend; in the political stability of the country and the probabilities regarding future changes; in the ratio between total revenues and interest charges on funded debt; and finally the proper management of an expendible cash surplus. The prospective purchaser of a new Haitian issue should prefer that surplus funds have been successfully turned into productive use rather than that they have been diverted to the retirement of outstanding indebtedness.
Again, it may be claimed that supplementary amortization affects retire-


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
29
ment of a considerable portion of the loan prior to the period when inevitable market appreciation imposes a practical limitation on extensive amortization activity. This is quite true, and the opportunity may be availed of if surplus funds are available. But the fact that surplus funds become available in the early years of the loan suggests that money recently borrowed is being used to pay off the debt without having been put to the productive use for which it was originally obtained. The main purpose of a bond issue is to make cash immediately available, with the hope that its immediate expenditure will result in a generous future yield. Because of this, the sinking fund schedules of bond contracts usually call for small payments in the early years increasing each year as the bond approaches maturity and expended funds become productive.
A third reason for putting all available surplus funds into debt retirement is that interest payments are thereby reduced and that the country is relieved of fixed charges. This is also quite true, but it amounts to an admission that under normal conditions the administration is unable to use borrowed funds for productive use. Furthermore, it is inconsistent with a policy which contemplates future borrowing for irrigation projects and other developmental purposes.
The conditions governing the debt administration in Haiti are hardly to be classed as normal because the finances of Haiti have been administered under the terms of a treaty calling for the eventual withdrawal of the American officials, and the turning back to Haiti of self administration. The past hundred years of Haitian history hardly reassure investors as to stability of political conditions or economic development, and this uncertainty has been constantly before our administration. Large public irrigation or development programs necessitating the passage of laws establishing land surveys, land courts, water taxes, and all the legal foundations and machinery of modern development and administration have been delayed time and time again by the Haitian government so that the long planned and hoped-for program has been changed and reduced. Under these conditions, in order to carry out the purposes of the treaty it was considered best to reduce the public debt of Haiti as quickly as possible to a point where the country would be little burdened by fixed charges, so that even with unforeseen reductions in revenuesas is actually occurring at the present timethe country would be well able to meet its foreign obligations after the American withdrawal. That object, in my opinion, has now been attained, and surplus funds should be turned to other uses.
Sinking fund clauses, in government bonds as in corporation bonds, serve the useful purpose of providing a market for the bonds throughout the life of the issue. They also add to the attractiveness of the bonds at the time the issue is sold and in that way the cost to the government is


30
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
lowered. The investor in Haitian bonds probably does not care when his bonds mature so long as the government fully maintains its ability to meet interest charges and repay the principal at maturity. The object of the administration should not be eventually to retire all public debt, but to refund the present debt as it matures. A permanent public debt is a perfectly normal situation in modern government finance; the object of its administrators should simply be to see that interest charges and amortization requirements are well within the ability of the country to pay them. In this respect Haiti has since the beginning of the receivership made an excellent showing, and there is no reason to suppose that even with major political changes or loss in the value of its principal product that Haiti will be Unable to support a public debt somewhat in excess of the present figure. Neither do I anticipate any difficulty in refunding the present issues when they mature, should this be desired.
The revenues of a country should be at least three times the interest on its funded debt. The following table showing the ratio between total revenues and service of the public debt not only includes interest charges but all amortization expenditures as well:
Per cent
1924- 25 ........................ 28.20
1925- 26 ........................ 23.41
1926- 27 ........................ 26.30
1927- 28 ........................ 21.22
1928- 29 ........................ -25.26
It can readily be seen that revenues throughout the period have been four and five times the entire debt service.
If interest alone is included, the following results are obtained:
Per cent
1924- 25 ........................ 15.75
1925- 26 ........................ 13.12
1926- 27 ........................ 14.76
1927- 28 ........................ 10.96
1928- 29 ........................ 12.02
and they show that revenues have been roughly from six to nine times actual interest requirements. Accordingly, I do not have the least fear but that, even with considerably reduced revenues, we can enter the market and successfully negotiate refunding loans or even additional loans for new productive enterprises. To be sure, political or economic uncertainties, as at the present time, may make negotiation inadvisable over a comparatively short period, but looking over the situation more broadly, I can see no reason why Haiti should be unable to borrow additional funds or refund present issues whenever it wishes to enter the market.
I therefore wish definitely to state that my policy with regard to the public debt contemplates retirement of present loans only to the extent that


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
31
contractual obligations require. Surplus funds accumulating in the treasury will be diverted as soon as possible for use in extending the various activities of the governmental services, and in amplifying and improving as fast as may be expedient the roads, harbors, buildings and public enterprises.
Conclusion
We have now reached the last year of the period studied in the 1924 financial program, and I believe that it is not too early to begin a thorough analysis of the present situation with a view to deciding upon a financial program for the next five years.
The problem which we now face is different both economically and politically from that in 1924. The drop in commodity prices has been a calamity from which it will take a long time for the country to recover. I do not expect that revenues this year will be much more than 35 million gourdes, whereas last yearwhich was considered a poor yearrevenues exceeded 40 million gourdes. There is no reason to believe that coffee prices will soon return to former levels; Haiti's revenues will remain low until production can be increased and a greater diversity of exports attained.
Politically the country faces the uncertainties which attend a national election in any country. The impending change in the Haitian administration may mean the end of the generous spirit of cooperation which has existed between the Haitian government and the American officials of the occupation. At any event it may mean the return of an elected legislative body with its 51 members which, from the financial point of view, will necessitate a material increase in government funds paid to salaried government officials. In my opinion the country is already overburdened with government officials who receive their compensation from the state, and in our program of economy I strongly urge that an effort be made to reduce the number of such officials. I refer particularly to the great number of employees who receive their salaries from the state but who in any normal state would receive their compensation from the community in which they work. Little or no part is taken by the communes in paying for education, sanitation or road maintenance; even many priests receive their salaries from the state.
Increased taxation cannot replace revenues lost through falling coffee prices. To urge this would impose too great a burden on a population whose paying power has been greatly impaired through the lower prices it gets for its output. Likewise, additional borrowing at the present time would be unwise, for economic and political uncertainties would preclude favorable terms.
I believe that even our strongest adversaries of the Opposition will agree with us that the influx of a certain amount of foreign capital, properly


32
REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930
restricted to prevent undue exploitation, would be a good thing for Haiti. In this it must be remembered that unrest and instability do not attract capital. Haiti needs a settled policy and guaranteed tranquility if such aid is to be expected. If private enterprise cannot borrow funds for the development of the country's resources, it can at least encourage the entry of foreign capital to a limited amount for a like purpose. One of the most urgent needs of the country today is an increase in the amount of money in circulation*. This can best be accomplished by making Haiti attractive to a limited amount of foreign enterprise, thereby bringing new money into the country and extending the number of opportunities for the Haitian people to be gainfully employed. Again I respectfully point out that the Haitians have not shown ability to join together in partnerships or joint stock associations, or to initiate any cooperative movement tending towards association of their capital for development of the resources of the country. The money here is too limited for much to have been expected but actually nothing has been done. They must have outside capital or continued economic stagnation can be predicted as a continuing condition in Haitian social economy.
Finally, I wish to emphasize that Haitian progress and prosperity is and always will be entirely dependent upon the value of the export trade. The finances of the country have shown satisfactory improvement during the past five years, but this improvement, it should be remarked, has coincided with a similar period of high coffee prices in the world markets. Increased administrative efficiency may have assisted, but it must be admitted that probably the most important factor in the recent progress of the country has been the artificial stimulation of coffee prices by the Coffee Institute in Brazil. That most interesting experiment has failed, and with its failure the prosperity of Haiti has suffered a reverse. Increased taxation or additional borrowing are, for the present, out of the question. With commodity prices down and with every prospect of continuing indefinitely at a low level, the only remedy for the situation is an increased and well diversified production. It is my firm conviction that this is the chief problem which faces the country at the present moment, and I strongly urge that if the present financial condition of the country is even to be maintained, every effort of the administration should be towards that end.
S. de la Rue, Financial Adviser-General Receiver.
*On September 30, 1929, total currency in circulation was estimated at only Gdes. 18,006,635.00.


APPENDIX


APPENDIX
The Trend of Agricultural Production in Haiti Only about two per cent of Haiti's agricultural exports at the present time is produced by the plantation method. It is therefore difficult to obtain accurate data showing the actual production of a representative list of Haitian commodities over a period of years. However, monthly figures of commodities exported are available since 1923, and yearly totals are available since the beginning of the receivership. As it may safely be assumed that domestic consumption of Haiti's agricultural production remains fairly constant, it follows that export data can serve as a reasonably accurate yardstick of agricultural production.
The charts which follow were constructed from export data for the purpose of showing whether or not efforts made since the beginning of the intervention to increase production have been successful. The commodities studied were in order of their importance, coffee, cotton, logwood, cacao, sugar, hides, honey, and sisal. The table below shows the relative importance of these products according to most recent figures, expressed as a percentage of total export values*:
Coffee ......................... 80.8 per cent
Cotton ........................ 8.1 "
Logwood ...................... 3.9 "
Cacao ......................... 3.2 "
Sugar ......................... 1.8 "
Hides ..........................9 "
Honey .........................4 "
Sisal ...........................3 "
All others ......................6 "
100.00
The charts show yearly exports of each of these commodities with the exception of logwood, hides and honey. These three are not, strictly speaking, agricultural products, and their inclusion would be misleading. Logwood, for example, is a forest product and is not cultivated.
*Six months figures, October 1929 to March 1930.


ii REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930APPENDIX
In studying the charts, it should be borne in mind that coffee exports are much more important than all the other exports together. An index of coffee production really constitutes an index of agricultural production, for the other commodities, with the possible exception of cotton, have very little influence on the total figures. They are included simply because if diversity of exports is ever to be attained it must be through the development of these export commodities.
In studying the charts (with the exception of Charts II, III, and IV) it should be remembered that only yearly totals were used and that apparently wide fluctuations from year to year in some cases merely represent a carry-over from one year to the next and do not represent correspondingly sharp declines or increases in actual production. For this reason, emphasis should be placed on the secular trend of exports over the entire period rather than on the sometimes misleading year to year fluctuations.
Coffee
The deceptive nature of yearly fluctuations is clearly shown in Chart I where in a single year, 1918, coffee exports climbed from less than 20 million kilos to almost 50 million kilos. This was, of course, due to the end of the European war which made it possible to export accumulated stocks of coffee. The correspondingly steep decline which occurred during the years 1920 and 1921 was very evidently due to the period of severe depression and low commodity prices which made coffee exportation unprofitable. The fiscal year 1921-1922 marked the end of abnormal post-war conditions, and the export curve fluctuates within much narrower limits.
Taking into consideration the entire period of the receivership, the coffee export curve reveals a very slightly ascending line of trend which is further carried out by this year's estimated crop of 32 million kilos. However, the trend is not at all marked, and in particular the last six fiscal years show little, if any, increase in coffee exports.
Monthly coffee export figures are only available from the fiscal year 1923-24, and when plotted on a simple arithmetic scale the result appears in Chart II. It is at once apparent that wide seasonal variations distort the curve to such an extent that the line of trend is difficult to establish. Coffee exports reach their maximum in November or December each year and decline to almost nothing in August and September.
In order to show the average seasonal fluctuation to be expected, Chart III was prepared by expressing average exports of each month taken separately as relative to the average of all months during the period 1923-24 to 1928-29. Thus, January exports for the six year period averaged 4,854,000 kilos, or 80 per cent more than 2,700,000 kilos, which was the average of all months. In the same way, May shipments averaged 1,620,000 kilos, or 40


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930APPENDIX iii
per cent less than the general average. By treating each month of the year in the same way, the curve shown in Chart III results.
It has already been seen that Chart II is unsatisfactory as an indicator of coffee production because of the wide seasonal swings. In order to show the secular trend more clearly, Chart IV was constructed by expressing actual monthly exports as relative to the average of 2,700,000 kilos and then adjusting for seasonal variation. This adjustment was made by subtracting from each relative the appropriate monthly seasonal index. Thus, in January, 1924, actual production was 5,040,000 kilos, or 186.7 per cent when expressed as relative to 2,700,000 kilos. It has already been found that the monthly seasonal index is 180 per cent. By subtracting the latter normal variation from the actual figure (186.7) the result is 6.7 per cent. In other words, exports in January, 1924, were 6.7 per cent above normal.
By treating each month of the six year period in the same way, the curve shown in Chart IV is produced. At first glance there does not appear to be a definite upward trend. There were two good years, 1925-26 and 1927-28. The poor years were 1926-27 and 1928-29, and the remaining years may be characterized as about normal. However, the two good years, and particularly 1927-28 showed a somewhat wider variation from normal than the two poor years, and for that reason it may be concluded that exports for the tieriod have shown a slight improvement.
Cotton
Chart V indicates that this crop has shown unmistakable signs of improvement and that the line of trend is distinctly upward. The early years show increased exports at the close of the war followed by a severe decline in 1921, as in the case of coffee; but recovery has been quick and the upward movement of the curve has continued. A good cotton crop is to be expected this year. Shipments for the first five months were 745,000 kilos.
Cacao
The effects of the 1921 depression are also evident in the case of cacao exports, and as Chart VI indicates, shipments of that commodity reached their lowest level for the period of the receivership in 1921. Although exports since that year have been on a higher level, the general trend from the beginning of the receivership has been downward. However, exports this year to date have exceeded by a good margin total exports of cacao for 1928-29, and as not all of the crop is yet shipped, the indications are that cacao exports are on the upswing.
Sugar
Sugar production before 1918 was negligible, for in that year the Haytian American Sugar Company came into operation. Chart VII shows


iv REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930APPENDIX
clearly a gradual upward rise in sugar exports, although the last fiscal year was distinctly disappointing. The very sharp decline in that year from previous high levels appears to be a decline in production rather than because of a large carry-over into the present fiscal year. Shipments in the early part of the present year were not heavy and it is probable that all of the 1928-29 crop was exported in that year. Nevertheless, with a reasonably good crop this year the general line of trend for the receivership will be slightly upward.
Sisal
The two boom years following the war were marked by greatly increased sisal shipments because of the great world demand and high prices prevailing at that time. The inflated values of sisal made it profitable in Haiti to gather wild sisal for export, and the heavy exports of those two years largely represent shipments of that variety. The low prices accompanying the depression year of 1920-21 killed the wild sisal industry and exports since then have been negligible, except for the last two years. This recent increase represents mostly plantation development, and production is definitely on the upswing. Shipments this year to date reached 157,000 kilos, or well over the total for the entire preceding fiscal year.


REVIEW OF FINANCESREPUBLIC OF HAITI, 1924-1930APPENDIX v
CHART I


QUANTITIES OF COFFEE EXPORTED


SEASONAL BASE
INDEX
PERIOD
OF CQFFEC EXPORTS 1923-24 TO 1928-29


INDEX OF COFFEC EXPORTS






MILLIONS OP KILOS
15
QUANTITIES OF SUGAR EXPORTED 1916-17 TO
16-17 17-15 18-19 19-20 20-Zl 21-22 22-23 23*4 24-25 25-& 26-27 27-2828-23 29-303W1 31-3*