Haiti. Bureau de représentant fiscal; Annual report of the fiscal representative for the fiscal year ….: publ., 18th, 19...

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Title:
Haiti. Bureau de représentant fiscal; Annual report of the fiscal representative for the fiscal year ….: publ., 18th, 1933.34 to 24th, 1939-40; 7 vols.,
Physical Description:
Mixed Material
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Port-au-Prince, Imprimerie de l’Etat, 1935-.

Notes

General Note:
4-trUS-1933-40
General Note:
Hollis 005938280

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Harvard University Library
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Harvard University Library
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All applicable rights reserved by the source institution and holding location.
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LLMC31883
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HAITI



ANNUAL REPORT

OF THE

FISCAL REPRESENTATIVE


FOR THE FISCAL YEAR

OCTOBER, 1933- SEPTEMBER, 1934




SUBMITTED TO THE SECRETARY OF STATE FOR FINANCE
AND COMMERCE OF THE REPUBLIC OF HAITI,
AND THE SECRETARY OF STATE OF THE
UNITED STATES OF AMERICA






S. DE LA RUE
Fiscal Representative

REX A. PIXLEY
Deputy Fiscal Representative

J. C. CRADDOCK
Inspector General, Internal Revenue Inspection Service






Imprimerie de I'Etat
PORT-AU-PRINCE, HAITI


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-CONTENTS

Pages
Foreign Commerce................................................. ........................ ............ 4
Balance of Trade................................................................................... ......... 6
Origin of Imports................................................ .......................................... 7
.Destination of Exports ............................................. ................................ 9
Ports of Entry for Imports............................................................................... 12
Ports of Shipment for Exports........................................... ......................... 13
Shipping ............................................................... ....................................... 14
Freight Rates................................. ....................................................... 17
Tourist Trade..................................................... ................................... 19
Foreign Commerce by Months............................................ ........................ 21
Commodities Imported.............................................................. 22
Commodities Exported ................................................... ..29
Coffee ........................................................... ..................................... 30
Cotton ......................................................... ...... .......................... .... ..... 35
Sisal ........................................ .................. .......................... ................. 37
Sugar ............................................................ ........................................ 38
Logwood ........................................................... .................... .............. 39
Bananas .................................................................................................... 39
Other Exports............................................................................... .... 41
Commercial Conventions...................................................................................... 44
Customs Administration................................................................................... 50
Internal Revenue Inspection Service...................................... ........................ 51
Government Revenues...................................................................................... 53
Total Revenues.................................................... ................................. 53
Customs Receipts.................................................. ................................... 55
Internal Revenue Receipts....................................................................... 58
M miscellaneous Receipts............................................................................. 61
Receipts form Communes....................................................................... 62
Government Expenditures...................................... ................................. 63
Expenditures for Public W orks.............................................................. 66
'Customs Service............................... .................. ........................................... 68
Internal Revenue Service.................................................. ................... 72
Treasury Position.................................................................................. ...... 73
Public Debt........................................ ....................... ................ .................... 77
Service of Payments................................ ................ ................ ..................... 79
Auditing ..................................................................................................... 80
Supplies ........................................................... ............................................. 81
The Budget and Financial Legislation.................................. ....................... 82
Currency ............................................................... ....................................... 84
Banking and Credit.................................................... ..................................... 84
Claims ................................................ .......................................................... 87
'Personnel ............................................................................................ ....... 87
Conclusion ......................................................... ............................................ 91
Tables ............................................................................................................ 97
Annex: Report of the Inspector General, Internal Revenue Inspection service.... 137
Expenditures .......................................................................................... 139
Personnel ............................................................................................ 140
Internal Revenue Receipts............................................................................ 140
Conclusion ......................................................................................... 142
Tables ................... ....................... .............................. 143
Appendix: Schedules .............................. ................. ........................ 149

III




A

Iv STATISTICAL EXHIBITS .

TABLES c,)
Pages
1. Value of Imports and Exports, and excess of Imports or Exports, Fiscal
years 1916-17 to 1933-34................................................................... 99
2. Value of Imports showing countries of Origin in Percentages, Fiscal years
1916-17 to 1933-34................................................................................ 99
3. Value of Exports showing Countries of Destination in Percentages, Fiscal
years 1916-17 to 1933-34...................................................................... 100
4. Value of Total Foreign Commerce by Countries in Percentages, Fiscal Years
1916-17 to 1933-34................................................................................... 100
5. Value and Percentage of Value of Imports, Exports and Total Foreign
Commerce by Countries, fiscal year 1933-34.......................................... 101
6. Value of Imports by Ports of Entry, fiscal years 1916-17 to 1933-34........ 102
7. Value of Exports by Ports of Shipment, fiscal years 1916-17 to 1933-34.... 102
8. Value and Percentage of Value of Imports, Exports and Total Foreign
Commerce by Ports, fiscal year 193t-34.............................................. 102
9. Net Tonnage of Steam and Motor VesSels in Foreign Commerce entered
and cleared by Registry and Months; Fiscal year 1933-34.................. 103
10. Net Tonnage of Sailing Vessels in Foreign Commerce entered and cleared
by Registry and Months, fiscal year 1933-34........................................ 104
11. Value of Imports by Registry of Carryink Vessels, fiscal year 1933-34........ 105
12. Value of Exports by Registry of Carryink Vessels, fiscal year 1933-34........ 106
13. Value of Imports by Months and Ports of Entry, fiscal year 1933-34
Compared with 1932-33.........................;...................................................... 107
14. Value of Exports by Months and Ports of Shipment, fiscal year 1933-34
Compared with 1932-33.............................................................................. 108
15. Value of Imports by Commodities, fiscal years 1916-17 to 1933-34........ 109
16. Quantity of Imports by Commodities, fiscal years 1916-17 to 1933-34....... 110
17. Value of Exports by Commodities, fiscal years 1916-17 to 1933-34........... 111
18. Quantity of Exports by Commodities, fiscal years 1916-17 to 1933-34........ 111
19. Quantity and Value of Five Principal Exhorts by Ports, fiscal year 1933-34
Compared with 1932-33...................i...................................................... 112
20. Percentage of Value of Exports by Commodities, fiscal years 1916-17 to
1933-34 ............................................. 113
21. Quantity and Value of Exports by Conhmodities and Months, fiscal year
1933-34 .......................................... ...................................................... 114
22. Fiscal Representative Funds, fiscal years 1916-17 to 1933-34................... 115
23. Expenses of Fiscal Representative by Objects of Expenditures, fiscal years
1916-17 to 1933-34.........................J...................................................... 115
24. Classification of Total Expenditures of the Fiscal Representative Fiscal year
1933-34 .............................................. ...................................................... 116
25. Classification of Administration and Opiration Expenditures of the Fiscal
Representative, fiscal year 1933-34....................................................... 116
26. Distribution of Expenditures From th6 Fiscal Representative 5 0/0 of
Customs Fund, fiscal year 1933-34........................................ ............ .. 117
27. Cost of Customs Operations by Ports and Cost of Administration, Repairs
and Maintenance, Acquisition of Prbperty, and Fixed Charges, fiscal
years 1919-20 to 1933-34.................................................................... 118
28. Total Cost of Collecting each Gourde of Customs Receipts, fiscal years
1919-20 to 1933-34............................................................................... 119
29. Operating Allowance of Internal Revenue Service, fiscal years 1923-24 to
1933-34 ..................................................... ......... 119
30. Revenue of Haiti by Sources, fiscal years 1889-90 to 1933-34................... 120







STATISTICAL EXHIBITS


Pages
31. Relation between Import and Export Values and Customs Receipts, fiscal
years 1916-17 to 1933-34 ...................................................................... 121
32. Customs Receipts by Months, fiscal years 1916-17 to 1933-34................... 121
33. Customs Receipts by Ports, fiscal years 1916-17 to 1933-34....................... 122
34. Customs Receipts by Sources and Ports, fiscal year 1933-34........................ 122
35. Customs Receipts by Sources and by Months, fiscal year 1933-34............... 122
36. Distribution of Customs Receipts, fiscal years 1916-17 to 1933-34.......... 123
37. Miscellaneous Receipts by Sources and Months, fiscal year 1933-34............ 123
38. Total Receipts of Haitian Government by Sources, Months and Ports, fiscal
year 1933-34 ............................................................................................ 124
39. Ordinary, Supplementary and Extraordinary Appropriations From Re-
venue, fiscal years 1930-31 to 1933-34................................................... 125
40. Revenues and Expenditures, fiscal years 1931-32 to 1933-34................... 126
41. Functional Classification of Expenditures, fiscal year 1933-34................... 127
4-2. Classification of Total Expenditures by Departments and Services, fiscal
year 1933-34 ......................................................................................... 128
43. Classification of Administration and Operation Expenditures by Depart-
ments and Services, fiscal year 1933-34................................................ 129
44, Reimbursements to appropriations, fiscal years 1930-31 to 1933-34........... 130
45. Receipts and Expenditures, fiscal year 1933-34.......................................... 131
46. Revenues and Expenditures and Excess of Revenues or Expenditures, fiscal
years 1916-17 to 1933-34.................................................................... 132
47. Treasury Assets and Liabilities................................................................. 132
48. Public Debt .................................................................................................. 133
49. Expenditures from Revenue for the Public Debt and Relation of such Ex-
penditures to Revenue Receipts, fiscal years 1932-33 and 1933-34........ 133
50. Profit and Loss Statement Bureau of Supplies, fiscal year 1932-33........ 134
51. Balance Sheet Bureau of Supplies............................................................ 134
52. Notes of the Banque Nationale in Circulation by Months, fiscal years 1919-
-20 to 1933-34 ................................................................................. .... 135
53. Loans and Deposits of Banks in Haiti by Months, fiscal year 1933-34........ 135
CHARTS
1. Value of Total Imports, Total Exports and Coffee Exports, by Months,
fiscal years 1929-30 to 1933-34........................................................ 22
2. Quantities of Leading Commodities Exported and Imported, fiscal years
1916-17 to 1933-34.................................................. ....................... 25
3. Coffee Prices, fiscal years 1932-33 and 1933-34.................................... 30
4. Total Revenue Receipts of Haiti, fiscal years 1889-90 to 1933-34............ 54
ANNEX: INTERNAL REVENUE INSPECTION SERVICE
TABLES
1. Internal Revenue Receipts by Sources, fiscal years 1919-20 to 1933-34.... 145
2. Internal Revenue Receipts by Collection Districts, fiscal year 1919-20 to
1933-34 .................................................................................................... 146
3. Internal Revenue Receipts by Sources and Districts, fiscal year 1933-34.... 147
4. Internal Revenue Receipts by Sources and Months, fiscal year 1933-34.... 148
APPENDIX: SCHEDULES
1. Quantity and Value of Imports into Haiti by Countries of origin October,
1933 September, 1934............... ..... .......................................... 151
2. Quantity and Value of Exports from Haiti by Countries of destination Oc-
tober 1933 September 1934.................................................................... 178
3. Customs Receipts by Sources, by Ports and by Months, fiscal year 1933-34 185





















HAITI

ANNUAL REPORT OF THE FISCAL REPRESENTATIVE
SFOR THE FISCAL YEAR
OCTOBER, 1933 SEPTEMBER, 1934










HAITI
ANNUAL REPORT OF THE FISCAL REPRESENTATIVE
FOR THE FISCAL YEAR
OCTOBER, 1933- SEPTEMBER, 1934


OFFICE OF THE FISCAL REPRESENTATIVE

Port-au-Prince, Haiti, February 8, 1935.

THE SECRETARY OF STATE OF THE UNITED STATES OF AMERICA,
THE SECRETARY OF STATE FOR FINANCE AND COMMERCE OF THE
REPUBLIC OF HAITI.

Sirs:
I have the honor to transmit herewith the eighteenth annual report on the
commerce and finances of the Republic of Haiti. The report covers the fiscal
year ending on September 30, 1934, supplementing and enlarging upon the
monthly reports required by Article VII of the Treaty of September 16,
1915, between the United States of America and the Republic of Haiti, and
by Article VIII of the Agreement of August 7, 1933, between the two
governments.
This is the first of these reports prepared by the organization under the
Fiscal Representative which, since January 1, 1934, has carried on, in
modified form, the services of the Financial Adviser-General Receiver, as
provided in Section II of the Agreement of August 7, 1933.
For the second year in succession there has been recorded a notable rise
in foreign commerce, and an excess of exports over imports.
Although exports increased in value in 1933-34, compared with the
previous year, declines were recorded in the quantities of the leading
commodities exported from Haiti. The coffee crop was above average in
size, but below the total of the record shipments of the year before. Cotton
and raw sugar were exported in smaller quantities than in 1932-33.
The rise in prices of the leading export commodities, which had been
noticed toward the end of the previous fiscal year, continued through
1933-34 and added to the value of the export trade and to the purchasing
power of the country. Imports increased in quantity, as well as in value,
and reflected the greater ability of the country to purchase imported
merchandise.
Government revenues were somewhat lower than in 1932-33, due to the
smaller coffee crop; but total receipts, nevertheless, were well in excess of
ordinary government expenditures, including full service of the public debt.






2 HAITI: REPORT OF FISCAL REPRESENTATIVE

Budget estimates of ways and means were surpassed by nearly five
million gourdes. This surplus was expended during the course of the year
through the establishment of many extraordinary appropriations from
which funds were drawn to permit the continuance of the Government's
public works program. The expenditure of these funds has added to the
amount of money in circulation, and to some extent has stimulated business
activity. Many. of the expenditures from extraordinary appropriations were
for roads, irrigation, drainage and similar purposes. The completion of
these projects should give needed aid to agricultural production and speed
development.
Much was accomplished in overcoming the preponderant effect of the
coffee crop in the economy of the country. A further gain in sisal exports
during the year added more than a million gourdes to export values. This
rapidly growing industry has become firmly established in Haiti.
Bananas for the first time could be classed among the important export
commodities, although results to the present time represent only a fraction
of what it is hoped can be attained within another year. Nourishing this
inceptive industry through a difficult period of incubation is perhaps the
biggest task before the Government today. Success in the undertaking
cannot fail to have beneficial consequences of far-reaching effect.
Rum appeared upon the list of commercial exports for the first time in
many years. Proper protection of the industry within the country and
perseverance by private enterprise in establishing a market abroad may
bring another valuable addition to the commodities which Haiti produces.
successfully in competition with other countries.
In spite of lower revenues and increased government expenditures, the
condition of the treasury at the end of the year was quite as satisfactory as
at the end of the previous fiscal year. It remains important, however, that
the treasury surplus should be built up close to the level of 1929 as soon as
revenues permit. Financial security to the extent necessary to finance
expenditures in poor crop years can only be attained by husbanding revenues
in years of relative prosperity.
In accordance with past practice, interest and amortization payments
were made to the fiscal agent of the external loans well in advance of
contractual requirements. Retirement of the bonds progressed rapidly,
and continued to be accelerated by the low prices at which the bonds could
be purchased for amortization purposes in the open market. The market
price of the bonds recovered slowly during the year, but quotations still fail
to reflect accurately the high credit standing of the Republic and its
undoubted ability under present conditions to continue full service of the
debt without interruption.
The Government's plan of extinguishing the internal loan by offering to
exchange Series A bonds against those of the B issue is meeting with
success. Bonds having a face value of slightly more than $100,000 still





HAITI: REPORT OF FISCAL REPRESENTATIVE


q'main in the hands of the public, but it is hoped that these remaining
bonds also will be retired shortly. In spite of advantages offered by the
Government, a small group of bondholders, thus far has failed to exchange
its bonds. Complete extinguishment of the issue will relieve the budget.
of yearly charges for interest and amortization exceeding Gdes. 1,800,000.
The operation of the Customs Service under the new arrangement in
effect since January 1, 1934, has been satisfactory. Haitian directors
appointed to administer the custom houses of the Republic have in every
instance carried out their new responsibilities creditably. The complete'
separation of the inspection function from the administration and collection!
of internal revenues has worked well in practice. In general the changes
put into effect through the operation of the Agreement of August 7, 1933,
have clarified and defined responsibilities and have eliminated friction.
The outstanding accomplishment in the field of new fiscal legislation
during 1933-34 was the liberalization of the Homestead Law. Aside from
this improvement, attempts to secure needed legislation respecting the
finances of the Republic were barren of results. The legislative and executive'
branches of the Government were unable to agree on the budget for 1934-35,
and the previous year's budget had to be prorogued. Except for routine
finance laws such as those creating new appropriations, no laws of any
kind were promulgated during the fiscal year which had any important
effect on the finances of the Republic. Projects recommended, particularly
those respecting negotiable warehouse receipts, irrigation taxes, excise:
taxes, and a head tax, either were disregarded or failed of promulgation.
Aside from a special commercial agreement made with France, no
accomplishments were recorded in the way of improving international
commercial relations. Failure was registered in an effort to obtain legislative
approval of a new contract with the largest private electric light company
doing business in Haiti. Modernization of the existing contract and lower
rates for electric current are badly needed. Finally, a contract for the sale
of the Banque Nationale de la R6publique d'Haiti to the State was left
pending at the end of the fiscal year. Ownership of the bank, and autonomy
in the operation of the treasury and revenue collection services, are natural
objectives of the Government. The contract of sale offered immediate
ownership, with a plan by which the attainment of full control was to be
spread over a period of transition during which the social economy of the
country could be prepared to handle effectively the highly technical and
specialized function of a government-operated national bank. It is believed
and hoped by this office that further consideration of the project will lead
to its adoption.
The dependence of the country on foreign trade made the improvement
of international commercial relations a matter of greatest concern during
the year. The Government subscribed to the majority viewpoint at the
Pan-American conference held at Montevideo early in the year, where it






4 HAITI: REPORT OF FISCAL REPRESENTATIVE I

was held that reciprocal reduction of trade barriers should be the commode
objective of the nations of the Western Hemisphere. In Haiti's case,
reciprocal reduction is complicated by the fact that the tariff of the country
is so preponderantly the source of government revenue, and reductions can
be effected only where maintenance of revenues is assured through a
prospective increase in volume of trade. Negotiation of a commercial treaty
with the United States, with these principles in view, was begun in
September, 1934, but was not completed by the end of the year under review.
Meanwhile, however, new commercial arrangements were entered into with
France which served to improve trade relations with that country. The
arrangements were temporary in nature, however, and the establishment
of relations on a more solid and permanent basis will have to await the out-
come of new negotiations.
On the whole, the fiscal year 1933-34 ended satisfactorily from a
commercial and financial standpoint. To summarize, foreign trade, and
prices of export commodities improved; revenues were maintained; business
enjoyed increased activity; progress was made in establishing new export
industries and increased agricultural production. On the other hand, the
end of the year brought with it the prospect of a very poor coffee crop in
1934-35. Diminished revenues appear certain. Ordinary expenditures have
increased. Maintenance of a balanced budget will necessitate caution in
disbursements, indicating a slowing down in the public works program of
the Government. Departure of the American forces in August, 1934, has
left a void of several million gourdes annually in the national income, and
it is questionable whether increased banana, sisal and rum exports can
immediately fill the deficiency. New proposals to increase freight rates
threatened the export trade. Commercial relations with the leading countries
engaged in trade with Haiti have not yet been placed on a permanent basis.
Needed financial legislation and important contracts have not yet received
legislative sanction.

Foreign Commerce
An increase was recorded in both the import and export trade of the
Republic in 1932-33, and again in 1933-34. In 1932-33, an exceptionally
large coffee crop accounted for a marked rise in export values. Imports
responded only to a moderate extent. In 1933-34, however, advancing
prices for the principal export crops produced a noticeable increase in the
purchasing power of the country which was reflected in a substantial rise
in amounts expended for imports.
The value of commodities imported touched a low point in 1931-32 when
the entire import list showed a value of only Gdes. 37,305,551. From
that figure, values advanced to Gdes. 38,333,943 in 1932-33, and to
Gdes. 45,685,208 in 1933-34. The increase of Gdes. 7,351,265 recorded in
the latter year amounted to 19.18 per cent. Importers purchased greater





HAITI: REPORT OF FISCAL REPRESENTATIVE


*quantities of most of the principal articles of foreign origin entering into
domestic consumption. An advance in gourde prices for imported articles
further accounted for the augmented value of the import trade.
With buying power definitely on an uptrend, merchants during the past
year were quick to respond to the demand for the staple articles which make
up a large part of the import trade. Cotton piece goods, manufactured
cotton goods, flour, fish, and rice were imported in greater quantities.
Cement, lumber, iron, and steel products entering into building construction
showed the effect of greater building activity as well as government
purchases of construction materials used in the many public works projects
undertaken by the State.
An increase in purchases from abroad of such proportions would not
have been possible without a considerable gain in sales of export com-
modities. The value of total exports in 1933-34 increased by Gdes.4,895,825,
or by 10.49 per cent, from the figure for the previous year. The export
trade was valued at only Gdes. 36,106,394 in 1931-32, from which figure
it rose to Gdes. 46,650,366 in 1932-33 and to Gdes. 51,546,191 in 1933-34.
The latter figure is greater than that reported in any fiscal year since 1929-
30, but it is still considerably less than the average annual exports of
Gdes. 70,400,000 recorded during the period of eighteen years beginning
with 1916-17. The foreign commerce of the country, therefore, has far to
go before it will compare favorably with commerce in the years preceding
the depression; but the fact that for two years it has improved steadily
and rapidly is decidedly encouraging and indicative of a fundamental
improvement in trade. Moreover, it should be borne in mind that the
favorable results of the past year were produced without the aid of
abnormally large crops. On the contrary, the all-important coffee crop was
more than 18 per cent smaller than in 1932-33, and both cotton and sugar
were exported in smaller quantities. It was the price factor which largely
was responsible for the gains in export values, and to a lesser extent the
production of new articles of export such as sisal and bananas. These two
commodities alone accounted for more than a third of the total increase in
export values in 1933-34 compared with the previous year. Whereas total
exports increased in value by Gdes. 4,895,825, sisal and banana exports
increased in value by Gdes. 1,654,367. The increase in the value of cotton
exports, notwithstanding a smaller crop, accounted for Gdes. 2,210,016 of
the remainder.
Whether the import trade can hold, or improve upon, the gains already
made will depend directly upon the value of the export trade. Exports in
turn are subject to the vagaries of prices, the size of the annual export
crops, and the ability to maintain, increase, and diversify production.
Permanent and important gains already have been made with respect to
a diversified production, in that sisal recently has become one of the
leading articles of export, with bananas rapidly attaining a like position.





.-AITI: REPORT OF FISCAL REPRESENTATIVE


Production of coffee, cotton, and sugar can be maintained despite conditions
which have been disastrous in other countries, as was demonstrated in 1932.
Crops vary with climatic conditions, and a poor year usually is followed
by a good year. There remains as the only serious threat to the foreign
commerce of the Republic the factor of the prices which are offered in
the markets abroad for the commodities which Haiti wishes to sell abroad.
Allied to the price factor, and perhaps of even greater importance, is the
willingness or unwillingness of foreign market countries to permit Haiti
to sell its products freely in those markets. At the present time the prices
of the raw materials which Haiti sells abroad appear to be improving.
At least, a repetition of the mid-depression level of prices is not in sight.
With an improvement in the commercial relations of Haiti with the countries
with which it trades, assurance will be given of a continued stability of
foreign commerce which is so vital to the progress of the country.

Balance of Trade
The total value of exports in 1933-34 exceeded total import values by
Gdes. 5,860,983. A favorable balance of trade also was recorded in the
previous year, when exports exceeded imports by Gdes. 8,316,423.
A remarkable indication of Haiti's good fortune in overcoming the worst
effects of five years of world depression is given by the record of the
Republic's balance of trade during that period. In three of the five years
export values exceeded import values by wide margins. During the other
two years (1930-31 and 1931-32), imports exceeded exports by compara-
tively small amounts, aggregating Gdes. 4,263,655. The net favorable
balance of trade during the five years reached Gdes. 16,428,454. No more
conclusive evidence is necessary to show that during this difficult period
the country has maintained a proper adjustment of export values in relation
to import values and it has done so without resorting to artificial barriers
against imports, or to exchange control, even though foreign market
countries in many ways have impeded the free movement of Haitian
merchandise abroad.
Equally striking is the record of the past ten years, when exports
exceeded imports in value by Gdes. 26,506,778. Moreover, the trend over the
period has been definitely toward an increased margin of exports over
imports.
Haiti is a debtor country, and it is of course essential to a sound financial
condition that export values in the long run should exceed import values.
The manner in which Haiti is able to meet successfully its foreign
indebtedness and pay for its purchases of foreign merchandise has been
set forth in detail in the last annual report of the Financial Adviser-
General Receiver.* In that discussion it was shown that while the invisible

*Page 5, Annual Report of the Financial Adviser-General Receiver, fiscal year 1932-33.





HAITI: REPORT OF FISCAL REPRESENTATIVE 7

debit and credit items are important in the balance of international
payments, the exchange of merchandise in the last analysis is the pre-
dominant factor in determining whether the net movement of capital is
towards, or away from, Haiti. With the exception of United States
government expenditures in Haiti, there was little change in 1933-34, com-
pared with 1932-33, in the items other than merchandise exchanges entering
into the international balance of payments. Consequently, since exports
again exceeded imports by a considerable margin, we may conclude that the
net inward flow of capital recorded in 1932-33 has continued through
1933-34.
Net United States government disbursements in Haiti were somewhat
less in 1933-34 than in the previous year, due to the fact that withdrawal
of the American forces took place six weeks before the close of the fiscal
period. Nevertheless, they still constituted an important source of income,
and their absence from the balance sheet in 1934-35 will leave a gap in the
credit side of the account which must be filled. It was pointed out last year
that no particular problem is presented provided that merchandise sales
abroad can be increased permanently by an amount approximating
Gdes. 3,000,000. Sisal already has added more than a million gourdes to
the annual income of the country, and banana production, if successful,
should easily furnish the balance needed. The need for assuring the
permanency of these new sources of income is essential, however, and every
effort should be directed toward that end. The part taken by this office
in cooperating with the Government's endeavor to establish a strong banana
industry, capable of retaining the interest of foreign markets in the Haitian
product, is a matter of great satisfaction. The recognition of the current
need for new sources of national income, and the efforts now being made
to develop them, is a splendid assurance of future prosperity. If the
Government's efforts are successful, a continuance of the present satisfactory
situation with regard to the balance of trade and international payments
may be confidently expected.


Origin of Imports

Japan in 1933-34 made astonishing gains in its sales of merchandise to
Haiti. Imports from Japan increased in values from Gdes. 1,156,152 in
1932-33 to Gdes. 8,829,263 in 1933-34 as a result of the success of Japanese
merchants in underselling American and British manufacturers of cotton
goods. The United States formerly had supplied Haiti with most of its
purchases of cotton goods, which form the most important single group of
commodities purchased by Haiti from abroad.
The gains made by Japan placed that country in 1933-34 next to the
United States as the leading supplier of commodities imported by Haiti.


- ^





8 HAITI: REPORT OF FISCAl REPRESENTATIVE

The share of the total import trade taken-by Japan increased from 3.02 per
cent in 1932-33 to 19.33 per cent in 1933-34. Previous to 1932-33, imports
from Japan had been as negligible as Japanese purchases of Haitian goods
are today.
The United States prior to 1926 had furnished Haiti with more than
eighty per cent of total goods purchased from foreign countries. Since 1926,
the American share of the import trade has steadily declined, and in 1933-34
it dropped to only 48.39 per cent of the total. The table below shows the
American share of total yearly imports and the downward trend of
American sales to Haiti over a period of years:
Per cent
Average, 1916-17 to 1925-26........................ 82.58
1926-27 ............................................................. 76.56
1927-28........................................................... 75.30
1928-29 ............................................................ 69.85
1929-30.......................... ...... 70.09
1930-31 ............................................................ 68.69
1931-32 ............................................................ 67.58
1932-33 ............................................................ 62.22
1933-34 ............................................................ 48.39

The entrance of Japan into the Haitian market also has effected
purchases from Europe. Only 26.63 per cent of total imports were purchased
from European countries in 1933-34, compared with 29.49 per cent in
1932-33. Cotton goods shipments to Haiti from the United Kingdom,
France and Germany fell off in value in 1933-34 when comparison is made
with the previous year. Although the total import trade increased con-
siderably in value in 1933-34, purchases from the United Kingdom declined
in value from Gdes. 4,869,132 in 1932-33 to Gdes. 4,780,024 in 1933-34.
France, Germany, the Netherlands, Belgium and Italy, on the other hand,
increased their sales to Haiti in the latter year.
The United States in 1933-34 continued to furnish Haiti with the greater
part of its imports of foodstuffs, machinery, manufactured articles of iron
and steel, automobiles, and lumber.. Japan obtained more than half of the
trade in cotton goods, with the United Kingdom and the United States
supplying most of the remainder. The United Kingdom, as usual, continued
to supply Haiti with the bulk of its soap imports. France benefited from the
new commercial agreement signed in March, 1934, and increased its sales
to Haiti of wines, liquors, and chemical and pharmaceutical products, and
it continued to furnish Haiti with the greater part of its purchases of
perfumes and cosmetics. Germany's gains in trade during 1933-34 were due
mainly to increased sales of machinery and miscellaneous articles.
The United States, Japan, the United Kingdom, France and Germany
supplied Haiti with 87.64 per cent of its total imports in 1933-34, compared
with 88.56 per cent in 1932-33. The Netherlands, including Curacao,.
Belgium, and Canada furnished most of the remainder.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Destination of Exports

In order of importance, the six countries which purchased nearly the
entire export production of Haiti in 1933-34 were: France, the United
Kingdom, the United States, Italy, Belgium and Denmark. These six
countries alone provided a market for 95.82 per cent of total exports in
1933-34, compared with 94.01 per cent in 1932-33 and 94.07 per cent in
1931-32.
France, as usual remained by far the most important market for Haitian
products. Exports sold in France in 1933-34 comprised 53.70 per cent of the
total export list, compared with 54.18 per cent in 1932-33. The United
Kingdom remained second in importance with 11.71 per cent of the total,
compared with 11.48 per cent the previous year. In third place, the United
States, with 8.78 per cent of the total, advanced from sixth place in 1932-33.
Next in importance in 1933-34 were: Italy with 7.99 per cent; Belgium with
7.22 per cent; and Denmark with 6.42 per cent. Denmark had been third
in importance in 1932-33, with 8.22 per cent of the total.
France in 1933-34 purchased from Haiti the following products:
Gourdes
Coffee ........................................................ 24,003,217
Cotton........................................................ 3,269,575
Logwood.................................................... 292,302
H oney........................................................ 72,994
All others.................................................. 42,729
27,680,817

Coffee shipped to France in 1933-34 amounted to 66 per cent of the total
value of coffee exported during the year. The corresponding share taken
by France in 1932-33 was 65 per cent, and in 1931-32, 56 per cent. France
also provides an important market for cotton, logwood and honey. In
value, nearly 48 per cent of Haitian cotton shipments in 1933-34 were
destined for France, compared with 30 per cent the previous year. Logwood
exported to France comprised 35 per cent of total logwood shipments.
France also took 41 per cent of honey exports in 1933-34.
The rising importance of France as a market for Haitian cotton is of
particular interest. France in 1933-34 purchased raw cotton valued at
Gdes. 3,269,575, compared with Gdes. 1,394,274 in 1932-33. France has
become nearly as important as the United Kingdom as an outlet for this
commodity.
Sugar continues to find a market principally in the United Kingdom.
Slightly more than 91 per cent of all raw sugar exported in 1933-34 was
shipped to the United Kingdom. Cotton purchased by the United Kingdom
in 1933-34 was valued at Gdes. 3,462,042, or 51 per cent of total cotton
shipments. The cotton market, therefore, was divided nearly evenly between
France, with 48 per cent, and the United Kingdom with 51 per cent of total
cotton exports.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Cottonseed cake also is sold chiefly in the United Kingdom. Exports of
this by-product of the local lard-substitute factories were valued at
Gdes. 458,997 in 1933-34, and of this total, cottenseed cake valued at Gdes.
358,900, or 78 per cent of the total, was sold in the United Kingdom.
Raw cotton, cottonseed cake, and sugar comprise almost the entire list
of commodities shipped to the United Kingdom. Other exports to the
United Kingdom were valued at Gdes. 15,693 in 1933-34, and total exports
were valued at Gdes. 6,038,306, compared with Gdes. 5,357,180 in 1932-33.
The United States made an even greater gain as a market for Haitian
exports. Shipments to that country were valued at Gdes. 4,527,643 in
1933-34, compared with Gdes. 2,919,092 in 1932-33. Exporters are finding
that the United States offers opportunities for marketing new products
which are unequalled elsewhere. The chances of developing this market
for the sale of bananas and rum are constantly improving.
The value of exports shipped to the United States in 1933-34, by
commodities, is given below:
Gourdes
Sisal .......................................................... 2,191,061
Logwood .................................................. 471,063
Cacao ....................................................... 462,643
Goatskins ................................................. 427,850
Bananas ................................................... 319,960
Coffee ...................................................... 248,453
M olasses .................................................. 185,644
Rum .......................................................... 162,564
All others........ .......................................... 58,405
Total.............................................. 4,527,643

The United States furnished a market for practically all of the cacao,
goatskins, bananas, molasses, and rum exported from Haiti in 1933-34.
In addition, it purchased 84 per cent of total sisal exports, and 56 per cent
of logwood exports.
The sisal industry in Haiti is still expanding, and with a further increase
in exports, the United States should gain in importance as a market for
Haitian products. Bananas also, as production is increased, will find a
ready market in that country. During the ten years ending in 1926 the
United States purchased nearly thirty per cent of total Haitian exports. If
proper attention is directed to the development of production, there is no
reason why that figure should not soon be exceeded. Ocean transportation
to the United States is quick and convenient. The large centers of popula-
tion on the eastern seabord and Gulf coast of the United States offer an
enormous market which can be easily reached from Haiti. Communication
by airmail facilitates business transactions between the two countries.
Moreover, the United States probably imposes fewer restrictions on imports
of the raw materials which Haiti produces, excepting sugar and cotton,
than any other large country. Coffee, cacao, logwood, sisal, and bananas
can be imported into the United States free of all duty or other trade


I'





HAITI: REPORT OF FISCAL REPRESENTATIVE


Restrictions. In short, this nearby market gives to exporters in Haiti all
of the opportunities and advantages which are needed for the extension and
diversification of Haitian production for export. Already, this market is
-expanding rapidly as Haitian sisal, bananas, and rum are becoming better
known.
The export trade with Italy increased in value from Gdes. 3,003,323 in
1932-33 to Gdes. 4,117,140 in 1933-34. Italy is an important consumer of
Haitian coffee, and exports of that commodity to Italy in 1933-34 increased
in value by more than a million gourdes compared with the previous year.
Exports of other commodities to Italy were negligible in value in 1933-34.
Belgium purchased Haitian products valued at Gdes. 3,718,443 in 1933-
34, compared with Gdes. 3,463,954 in 1932-33. As in the case of Italy, coffee
is the only commodity purchased by Belgium in any quantity, although
small shipments to Belgium of logwood and cottonseed cake were recorded
in 1933-34.
The export trade with Denmark declined from Gdes. 3,834,834 in
1932-33 to Gdes. 3,308,365 in 1933-34. Coffee is the only article of importance
on the list of exports to Denmark.
Exports to Spain declined in value from Gdes. 935,506 in 1932-33 to
Gdes. 631,844 in 1933-34. Coffee was the only commodity shipped to that
country in the latter year.
Germany is fast becoming negligible in importance as a market for
Haitian products. In the ten years ending in 1931, Germany's purchases
from Haiti averaged 5.18 per cent of total exports. In 1932-33 Germany's
share, of the export trade had fallen to 1.20 per cent, and in 1933-34 it
further declined to 0.72 per cent. Values of Haitian products shipped to
Germany declined from Gdes. 559,524 in 1932-33 to Gdes. 373,650 in 1933-
34. Coffee, honey, cotton, cottonseed cake, and cacao were shipped to
Germany in small quantities during the latter year.
The market in the Netherlands also has been practically closed to
Haitian exporters. Shipments to that country were valued at only Gdes.
110,823 in 1933-34, compared with Gdes. 669,930 in 1932-33. Coffee and
honey were the only shipments made in commercial quantities. Considering
the excellent steamship service connecting Haiti with the Netherlands, and
the many years of mutually advantageous commercial relations between
the two countries, together with the fact that Haiti regularly buys each
year from the Netherlands articles totalling in value more than a million
gourdes, it is to be regretted that a better reception there is not given to
Haitian products. Curacao, which is a colony of the Netherlands, similarly
buys little from Haiti, but finds a good market in Haiti for gasoline.
Exports to Curacao were valued at Gdes. 170,694, chiefly corn and sugar,
but imports from Curacao amounted to Gdes. 781,852.
Even. more striking is the disparity in merchandise exchanges with
Japan and Germany. Japan in 1933-34 sold to Haiti goods which totalled






12 HAITI: REPORT OF FISCAL REPRESENTATIVE

in value Gdes. 8,829,263. The only purchases of Haitian products made by
Japan during the same period were several shipments of raw cotton with
a total value of Gdes. 36.107. Germany in 1933-34 sold to Haiti goods
worth Gdes. 2,025,638, and purchased goods worth Gdes. 373,650. The
trade advantages offered to these two countries by Haiti must find some
response in the form of greater purchases of Haitian merchandise by both
Japan and Germany.

Ports of Entry for Imports

The import trade in 1933-34 continued to show a marked tendency toward
concentration in Port-au-Prince. Merchandise received from abroad at
the capital city and largest port of the Republic in 1933-34 was valued at
Gdes. 34,127,707. This compares with Gdes. 26,468,054 in 1932-33, and
Gdes. 25,703,610 in 1931-32.
With the extension of roads and development of automobile and truck
transportation, it is only natural that Port-au-Prince should increase in
importance as a center of distribution. The fastest steamers connecting
Haiti with its principal sources of foreign merchandise call exclusively at
Port-au-Prince. The city possesses the finest harbor in the Republic, and
the only wharf where vessels may load and discharge cargoes without the
use of lighters. It is ideally located within easy distance of all sections of the
country. Roads now connect the Capital with all of the outports, and
extend into the interior. Trucks and small coastwise vessels offer a cheap
and efficient means of distribution, and enable importers to concentrate
their activities in a single port where ocean traffic is fast, orders can be
quickly placed, and arrivals are most frequent. This rise in the relative
importance of the Capital as a port of entry is one more indication of the
advance which Haiti has made commercially and economically.
Nearly three-quarters of the total import trade in 1933-34 was handled
through Port-au-Prince. During the past six years the share of the import
trade passing through that city has increased without interruption, as can
be seen from the following table:
Percentage of total
imports received at
Port-au-Prince:
Fiscal year:
1928-29............................ .......................... 58.75
1929-30............................................................ 62.77
1930-31 ............................................................ 64.09
1931-32 ............................................................ 68.90
1932-33.............................................................. 69.04
1933-34............................................................ 74.70

With one exception, the other ports are becoming of less importance in
the import trade. Saint Marc managed to increase its share of total imports
slightly in 1933-34. The figures were 2.96 per cent in the latter year and
2.92 per cent in 1932-33.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Cap Haitien in 1933-34 remained second in importance to Port-au-Prince
as a port of entry, but its share of the total declined from 9.54 per cent in
1932-33 to 7.18 per cent in 1933-34. The poor coffee crop in the North was
a factor in reducing imports through that city. In value, imports at Cap
Haitien declined from Gdes. 3,655,479 in 1932-33 to Gdes. 3,279,882 in
1933-34, notwithstanding the general rise in import values in the country
taken as a whole.
At Cayes, import values fell from Gdes. 1,977,194 in 1932-33 to Gdes.
1,892,402 in 1933-34, and the share of total imports declined over the same
period from 5.16 per cent to 4.14 per cent.
In order of importance, the leading ports of entry in 1933-34 were:
Port-au-Prince, Cap Haitien, Cayes, Gonaives, Saint Marc, Jacmel, J6r6mie
and Port-de-Paix. There was no change in the order of importance from
the preceding year.

Ports of Shipment for Exports

Exports quite naturally are more evenly distributed among the ports than
is the case with imports. It is cheaper and more convenient to have bulky
cargoes of coffee, cotton and sisal picked up by merchant vessels at seaports
nearest the areas where these commodities are grown. Perishable articles
like bananas must be quickly transported, without too much handling, from
the source of production to ocean carriers. We find, therefore, that outports
like Fort Liberte, Port-de-Paix, Petit Goave, and Jer6mie, where little
direct importing is done, nevertheless account for a substantial share of the
export trade.
Port-au-Prince, however, is by far the largest port of shipment. It is
in the center of a large coffee-producing region. All of the sugar exported
from Haiti is shipped from Port-au-Prince. Cotton, goatskins, rum, and
bananas add to the total.
Exports from Port-au-Prince in 1933-34 were valued at Gdes. 14,152,523,
compared with Gdes. 10,657,461 in 1932-33. The share of the total export
commerce handled through that port increased from 22.85 per cent in 1932-
33 to 27.46 per cent in 1933-34.
Jacmel was second in importance with 12.08 per cent of the total; Go-
naives third, with 11.76 per cent; and Cayes fourth, with 9.27 per cent.
Cap Haitien, in fifth place, exported commodities worth only Gdes.
4,686,903 in 1933-34, compared with Gdes. 7,118,913 the previous year. The
exceptionally good coffee crop in the Cap Haitien section in 1932-33 was
not repeated during 1933-34. In the prior year, Cap Haitien had been second
in importance to Port -au-Prince in value of exports.
Exports from Fort Liberte, due to the remarkable development of sisal
production at that port, more than doubled in value in 1933-34 compared
with 1932-33, and reached a total of Gdes. 2,227,944, or 4.32 per cent of all
exports of the Republic. Saint Marc and Gonaives were favored by higher






14 HAITI: REPORT OF FISCAL REPRESENTATIVE

cotton prices in 1933-34, and exports at those ports increased in value by
more than thirty per cent. Cayes and Jacmel enjoyed the benefit of higher
coffee prices combined with relatively good crops, and export values increas-
ed by 25.43 per cent and 11.88 per cent respectively. At Petit Goave, J6re-
mie, and Port-de-Paix, export values in 1933-34 registered a decline when
comparison is made with the prior year. Banana purchasing for export
came too late in the year to enable Port-de-Paix to make the better showing
which may be anticipated for the coming year. Total shipments from that
port were valued at Gdes. 1,875,327 in 1933-34, compared with Gdes.
2,156,102 in 1932-33. Even worse results were reported at Jeremie, where
exports declined from Gdes. 3,594,461 in 1932-33, to Gdes. 2,434,368 in
1933-34. Sh
Shipping
Shipping facilities in 1933-34 were entirely adequate for the needs of
commerce. In fact, means of communication between Haiti and foreign
countries have never been so highly developed as at the present time. The
volume of shipping available to Haitian commerce has never been so great,
even in more prosperous years.
The addition, in November, 1932, of a new steamship service connecting
Port-au-Prince with New York, Jamaica, Panama, and Colombian ports,
has given to Haiti a fast, modern, means of ocean transportation which
undoubtedly has been instrumental, both directly and indirectly, in bringing
about the improvement noticed in business and foreign commerce. Other ,
steamship companies also have improved the transportation facilities offer-
ed. Moreover, Port-au-Prince continues to be a stopping point for airplanes
on the direct line from Miami to South America, and for the weekly air
service between Kingston, Santiago (Cuba) and Santo Domingo City.
These services directly aid Haitian foreign commerce in that orders can
be placed quickly, and merchandise can be received promptly by air express
or by fast vessels sailing on regular and frequent schedules. Then too,
more ships now than heretofore are equipped with modern refrigeration and
ventilation which enables them to transport perishable fruits, such as
bananas, in perfect condition to the markets in New York.
This combination of speed, regular and frequent sailings, refrigeration
and the best of modern passenger accommodations until comparatively recent-
ly had never been furnished to Haiti by the shipping companies. To be
sure, sufficient cargo space for the needs of commerce, in recent years at
least, always has been available. But an island nation, dependent for
progress upon its water-borne commerce with the outside world, needs
every facility of modern transportation to be able to meet the competition
of countries more favorably situated, or of countries whose material
progress already has secured to them the advantages of easy communi-
cation.
The indirect advantages of improved communications are quite as im-
portant as the more obvious advantages already mentioned. An observer '


,.






HAITI: REPORT OF FISCAL REPRESENTATIVE


cannot fail to note the fact that foreign businessmen, promoters, capitalists,
journalists, scientists, artists and writers are today taking a greater and
more serious interest in Haiti and its possibilities. Haiti is becoming much
better known to the rest of the world. Many factors have brought about
an interest in the constructive development of the country, and among
them perhaps the most important single factor is the recent improve-
ment in communications. Casual visitors, transient passengers on tourist
cruises, businessmen on their way to other ports, have had an opportunity
tosee Haiti and to appreciate its advantages. Many of them have returned,
not as tourists, but as persons seriously interested in Haiti as a country
which perhaps has not had its fair share of economic development and-
which now offers a new field of endeavor for commerce and investment.
Innumerable contacts have been made which would have been lost if
communication had been less easy. It is evident that the present interest
in Haiti as a banana-producing country has arisen as largely as a result
of its improved shipping facilities and ease of communication, as by reason
of its obvious climatic and other advantages.
The new shipping facilities were made available to Haiti because of the
belief on the part of the ship-owners that Haiti offered possibilities: that
there were good prospects of commercial expansion, and that eventually a
real need for cargo space and passenger accommodations would develop.
The demand did not already exist.
Unfortunately, the demand for cargo space has not yet approached the-
supply. These new facilities are a great convenience to Haitian commerce.
They have in part produced the gains recorded in business and foreign
commerce. But a proportionate gain has not accrued to the ship-owners:
That this is true is evident from an examination of the relation between
the yearly tonnage of vessels calling at Haitian ports and the value:of
merchandise entering into Haiti's foreign commerce. In 1927-28, 629 vessels
called at Haitian ports. The aggregate tonnage of these ships amounted
to 1,235,393 net tons. They carried merchandise to and from Haiti valued
at Gdes. 214,577,513. In 1933-34, total foreign trade valued at only Gdes.:
97,231,399 was carried by 718 vessels having a net registered tonnage of
1,743,392 tons.
During the past ten years the number of vessels calling at Haitian ports,
and the aggregate tonnage, has steadily increased. This can be seen. from
the following table: Number of
Year: ships entered: Net tonnage:
1924-25.............................. 503 912,756
1925-26.............................. 565 1,123,486
1926-27.............................. 635 1,117,195
1927-28.............................. 629 1,235,393
1928-29.............................. 602 1,310,304
1929-30.............................. 605 1,364,524
1930-31.............................. 551 1,313,725
1931-32.............................. 595 1,296,361
1932-33.............................. 681 1,589,012
1933-34.............................. 718 1,743,392




I


16 HAITI: REPORT OF FISCAL REPRESENTATIVE

Whatever satisfaction may be found in this steady improvement in
shipping facilities is tempered by the fact that it indicates a fundamentally
unsound condition in the shipping business. The present situation cannot
exist without intense rivalry between the steamship lines. To Haiti this
means continual controversies over freight rates and the danger of combi-
nations which attempt to force rates upward and out of line with rates
elsewhere. Also, the existence of surplus tonnage means that sooner or
later one or more of the lines established in Haiti may find it more profitable
to abandon the field altogether, with consequent loss to Haiti of something
that has been gained. It is a situation which demands the closest attention
on the part of the Government. The obvious remedy, of course, is to
increase production for export to the point where the foreign commerce
offered to the steamship lines is sufficient to utilize surplus tonnage. This
increase already is in sight. Bananas, sisal, rum and cotton should provide
the needed increase, and quickly enough to put an end to apprehensions
concerning the stability of Haitian shipping.
Figures showing the distribution and volume of shipping serving Haiti
in 1933-34 are particularly illuminating in the light of the above comments.
We have already seen that the number of vessels entered in the latter year
increased to 718 from 681 in 1932-33. The net aggregate tonnage of these
vessels increased by nearly 10 per cent. The tonnage of American vessels
calling at Haitian ports increased by almost 12 per cent over the total for '
the previous year. Vessels of German and Netherlands registry fell off
sharply in number, while British and French steamship companies increased
their callings at Haitian ports. More than 56 per cent of vessels entered
were under the American flag. Dutch ships provided approximately 13 per
cent of the total tonnage, with German, French and British ships, in the
order named, supplying most of the remainder.
American ships carried 59.75 per cent of the import trade in 1933-34,
compared with 54.31 per cent in 1932-33 and 51.60 per cent in 1931-32.
Netherlands ships were second in importance in the import trade with
19.89 per cent in 1933-34, and 22.95 per cent the previous year. Next in
importance, in 1933-34, were ships of German registry (5.97 per cent),
Norwegian registry (4.39 per cent) and French registry (4.07 per cent).
American carriers in 1933-34 brought into Haiti 64 per cent of total
merchandise imports of American origin, 70 per cent of merchandise of
British origin, and 84 per cent of merchandise shipped from Japan.
Netherlands ships handled practically all of the imports from the
Netherlands, 24 per cent of American merchandise imported, and 16 per
cent of British goods imported.
Netherlands ships continued to handle a greater share of the export trade
than the ships of any other nation. More than 30 per cent of total exports
in 1933-34 were carried in ships of Netherlands registry. Approximately
45 per cent of the export merchandise carried in Netherlands ships was .
A.






HAITI: REPORT OF FISCAL REPRESENTATIVE


consigned to merchants in France. The remainder was consigned princi-
pally to merchants in Italy, Denmark, and the United Kingdom.
Vessels of American registry carried 22.43 per cent of the export trade
in 1933-34, compared with 18.55 per cent in 1932-33. Exported commodities
carried in American bottoms in 1933-34 were valued at Gdes. 11,560,616,
of which 37 per cent was destined for France, 23 per cent for the United
States, and 16 per cent for Italy.
German vessels carried 17.32 per cent of the export trade in 1933-34,
compared with 21.49 per cent in the previous year. Merchandise exported
in German bottoms (Gdes. 8,929,776) was consigned chiefly to French
(69 per cent) and British (12 per cent) importers.
British ships handled 15.65 per cent of the export trade in 1933-34. Of
the share handled by British carriers, valued at Gdes. 8,068,228, 62 per cent
was destined for France and 31 per cent for the United Kingdom.
Ships flying the French flag carried 12.45 per cent of the export trade in
1933-34, as against 11.93 per cent in 1932-33. More than 75 per cent of the
export goods carried by French ships was consigned to importers in France.

Freight Rates
The possibility of a general increase in freight rates remained as a
constant threat to Haitian commerce throughout the year under review.
While no important changes in rates were made, the danger of an upward
revision gave rise to much uneasiness in governmental and business circles
acquainted with the situation, and shortly after the close of the year steps
actually were taken by the steamship lines engaged in the Haitian trade to
bring about a rate increase.
Fortunately, earnest representations made to the responsible officials
of the steamship lines interested served to prevent any immediate action,
and at the present time rates still remain at their previous figures.
Nevertheless, the causes of this agitation, which already have been touched
upon in this report, still exist and will continue to be a source of trouble
until means have been found to utilize the superabundance of cargo space
made available to Haitian trade. As alternatives, there must eventually be
either an increase in rates, or one or more of the established steamship
lines must abandon the Haitian field. It would be unfortunate if the latter
alternative were chosen, but it would be preferable to an increase in rates.
The obvious solution, as already pointed out, is to increase export pro-
duction to a point where the steamship officials would have no reason to
feel dissatisfied with the volume of their Haitian business.
This office is convinced that Haiti's foreign commerce can, and will, be
increased quickly to the extent necessary, and that the ship-owners in the
long run will obtain a far greater return to themselves by helping the
country sell its goods abroad at a cost of transportation commensurate
with that obtained by countries with similar hauls and selling similar






18 HAITI: REPORT OF FISCAL REPRESENTATIVE

articles. To be sure, the shipping companies have passed through five-
years of meagre earnings, and the temptation is strong to obtain an
immediate profit by applying high rates to such volume as now exists.
That the shipping companies are inclined to take this attitude is easily
understandable. Nevertheless, Haiti has a right to demand the treatment
accorded to other countries, and it should be permitted to pursue the course
it has already adopted of reaching eventually a proper adjustment of
freight volume to cargo space through increasing the production of its
exportable commodities. Only in that way can a period of real prosperity
be assured, and prosperity in Haiti automatically will bring to the shipping
companies the profits they need and hope to gain.
It should not be thought that difficulties with the shipping companies,
have arisen because Haiti has failed in any way to keep in step with the
progress made by competing countries. On the contrary, Haiti began to
recover earlier, and progressed farther along the road to recovery, than the
countries with which it competes. If Haiti today is provided with more-
than-adequate shipping facilities, it is because the shipping companies them-
selves are engaged in an intensive trade rivalry which brings their ships into
foreign ports regardless of the cargoes available and the supply of cargo
space. Most of the shipping on the seas today is semi-owned by the
respective governments or is heavily subsidized, directly and indirectly, by
those governments. Profits, or lack of profits, depend largely upon the
amount of government assistance granted to the shipping companies. These
subsidized ships are sent to carry freight on the trade routes where each
government believes its field for trade expansion lies. It is inevitable, there-
fore, that there may arise situations, such as now exist in Haiti, where this
forced expansion leads to a complete lack of balance, and it is both un-
reasonable and unjust to expect Haitian commerce to pay the penalty -of
unconscionably high freight rates, and to run the risk of retarding the
.country's progress towards recovery, in order to give an immediate profit
to a dozen foreign steamship lines engaged in a struggle for foreign
commerce.
Haiti has the right to demand that its freight be carried at rates
comparable with those accorded the commerce of other competing countries,
rather than by the relation between the volume of freight and the supply
of cargo space available at its ports. To obtain the money with which are
purchased the articles of foreign origin which are needed, Haiti sells in
various foreign markets the relatively few raw materials which it is best
able to produce. The values which it obtains for its output are fixed not
by the supply and demand for the relatively small quantities offered for
sale by Haiti, but by the supply and demand for all of the coffee, cotton
and sugar, let us say, that is produced all over the world and offered for
sale in the big centers of consumption. Whether or not Haiti offers for
sale its total annual production of coffee would have little or no effect on the


iAt






HAITI: REPORT OF FISCAL REPRESENTATIVE


world price of coffee because of the enormous quantities produced elsewhere.
Consequently, any increase in freight rates cannot be passed on to the
consumer. Instead, it must be absorbed by the producer, which means that
the Haitian peasant who grows coffee, or cotton, or sugar cane in the long
.run would find that his income would be reduced by exactly the amount by
which the cost of transporting his product to market is increased by an
upward revision of freight rates. Any increase in rates, therefore, would
inevitably reduce the purchasing power of the Haitian people, and have a
corresponding effect upon the quantity and value of goods imported.
Haiti's prosperity, therefore, is bound up in the maintenance of equitable
freight rates. This does not mean that the lines serving Haiti can properly
consider as equitable a freight rate based on the fact that it enables countries
with a longer haul from the port of shipment to the port of destination to
sell their goods in the world market at the same cost for transportation
as is applied by the shipping companies to Haitian freight. Haiti has a right
to expect and demand a rate comparable and proportionate to the length
of haul. The shipping companies should base their rates between Haiti and
foreign ports on the rates already in force between other foreign ports,
making due allowance for differences in the length of haul. It costs nearly
as much to ship an automobile from the United States to China as it does
from the United States to Port-au-Prince. Such disparity is obviously
-unfair to importers and consumers in Haiti. Any increase in the freight
rates on commodities exported would be equally unfair to the Haitian
producers who in the long run must pay the price of the increase.

Tourist Trade
Haiti still has far too small a share of the visits to West Indian ports
of the larger tourist ships on special cruises. Of the hundreds of such
callings during the last winter season, Haiti's share was only ten. During
the previous year, nine similar visits were recorded. The net tonnage of
these ships amounted to 132,032 tons in 1933-34, as against 130,133 tons
in 1932-33, and these figure are included in the tonnage totals given in the
preceding paragraphs. Since there was little change in the number or
tonnage of these tourist ships, when comparison is made between the two
years, their inclusion in the combined figures does not distort the results
obtained. In other words, a net increase was recorded in both the number
of cargo vessels serving Haitian commerce, and the amount of tonnage
available.
Of the ten tourist ships mentioned, five were of Swedish registry, three
were British, one was of Netherlands registry, and one French. The largest
of the tourist ships was the Empress of Britain (22,545 net registered tons)
which called at Port-au-Prince on December 30, 1933.
While Haiti should welcome the visits of these'special cruise ships, too
much importance should not be attached to this aspect of the tourist trade.






20 HAITI: REPORT OF FISCAL REPRESENTATIVE

These ships spend only a few hours in port, and give visitors little
opportunity to become acquainted with the country. Of far more importance
to Haiti economically are the visits of the smaller vessels, with both cargo
and passenger accommodations, which made a specialty of regular tours to
Haiti. A Netherlands steamship line advertises extensively in American
newspapers, and offers special rates to tourists visiting Haiti on vessels of
its line. Another steamship line advertises "vagabond cruises" on regular
schedules to a number of Haitian ports including Cap Haitien. Other ships
of the same line, to which reference already has been made, arrive every
Monday at Port-au-Prince from New York and touch at that port again,
on the north-bound voyage, every Thursday. The importance of this
innovation in the schedules of passenger steamships calling at Port-au-
Prince is that it enables businessmen and travelers to make brief visits
to Haiti with assurance of return accommodations. As a result, the number
of persons who stop over in Haiti for several days or more has increased
considerably. Hotels in Haiti have found it necessary and profitable to
add to their accommodations.
At the present time, Port-au-Prince is well provided with a number of
small hotels which offer excellent accommodations to a limited number of
guests. The new steamship schedules have given the incentive needed for
the improvement of hotel facilities, and Port-au-Prince today, for a city
of its size, is as well provided with these facilities as most cities in the
Caribbean area. The better hotels, however, on many occasions have been
filled to capacity, making it evident that there are excellent opportunities
for the profitable investment of capital in a new modern hotel, or in a
casino, golf course, and other attractions which must be a part of any
serious program for the development of Haiti as a resort for tourists. Also,
as has been pointed out before, it is essential that a small hotel at Cap-
Haitien should give to tourists an opportunity to visit a part of Haiti
which, from a traveler's or tourist's point of view, is the most fascinating
and beautiful part of the country. A commercial airplane service already
connects the capital city with Cap .Haitien, which also can be reached by
road.
A unique opportunity is presented to Haiti at the present time to take
its deserved place among the better-known countries of the Caribbean area.
Unsettled conditions in Europe and the exchange rates between the dollar
and European currencies have reduced the trans-Atlantic passenger trade,
and tourists from the American continent who otherwise would visit Eu-
rope are traveling southward to enjoy the attractions of the West Indian
islands. Most of these tourists are Americans and among them are many
businessmen actively interested in knowing more of this part of the world
where there is a logical market for manufactured goods, and from which
are purchased great quantities of the raw materials which are needed by
American consumers.

*"






HAITI: REPORT OF FISCAL REPRESENTATIVE 21

The countries represented at the last conference of the Pan-American
Union at Montevideo reached the conclusion that reciprocal agreements to
increase the interchange of goods and services between the countries of the
western hemisphere provided the best means of recovering prosperity. The
tourist traffic is one form of "service" which results in an inward flow of
capital to the countries able to obtain such traffic; and to countries like
Cuba and Panama it has been, and still is, an important source of income.
The tourist trade can become no less important to Haiti, and can play an
important part in the economic development of the country.

Foreign Commerce by Months
Seasonal activity in the export trade in 1933-34 did not begin until
November, 1933, or a month later than usual. A late coffee crop and heavy
rains in October, which interfered with preparation, delayed shipments of
the new crop in quantity and produced a marked concentration of exports
in the November-March period. Notwithstanding higher prices for cotton,
sugar, sisal, and other late-season exports, total shipments of commodities
during the last six months of the year registered a smaller value than total
shipments during the last half of the previous fiscal year.
Coffee shipments during the 1932-33 period had been distributed over the
year with exceptional uniformity. The large size of the crop had been a
factor in bringing about substantial shipments even in the later months of
the year when coffee exports ordinarily are negligible. Shipments during
1933-34 were normal in this respect with a peak reached in December and
continuing through to March, followed by a rapid drop from then on to
August and September, when exports rose slightly under the influence of
early shipments of the 1934-35 crop.
Cotton shipments, as usual, came chiefly in the March-June period in
1934. The rise in cotton prices during the months of heaviest deliveries
was instrumental in sustaining total export values in these months of the
year to a level comparable with the 1933 figures, despite reduced volume of
cotton exports.
Raw sugar exports were concentrated largely in the first six months of
1934. The 1933 crop had been shipped chiefly in March, April, May and
September of that year.
Sisal and logwood exports were distributed fairly evenly over the year
both in 1933-34 and in 1932-33.
The combined effect of commodity exportations, by months, during the
course of 1933-34 is shown in Chart No. 1. Total export values reached
their highest points in December and March and then declined sharply to
a low point in July. It has often been pointed out that such extreme
periodicity in the export trade is highly undesirable. Ships calling at
Haitian ports find little to carry away in the form of export cargoes during
six months of the year. Merchants are obliged to carry large stocks during






HAITI: REPORT OF FISCAL REPRESENTATIVE


the few months when money is plentiful, while during the "dead season"
business is almost at a standstill. This condition offers one more argument
why an export trade in bananas would be particularly helpful to the country.
Bananas are an all-year crop, but the mature fruit is especially abundant
during the months when total exports are at their lowest. Even during the
fast three months of 1933-34, when the new banana industry was still in
its. early stages of development, shipments of the fruit comprised no less
than eleven per cent of total export values recorded during the same period.
The import trade in 1933-34 continued along the same upward trend
which it has followed consistently since the low point reached in July, 1932.
The value of monthly imports showed little variation during the first half
of the fiscal year, but in April, May, and June a notable rise in activity


VALUE OF TOTAL


CHART No. 1
IMPORTS, TOTAL EXPORTS AND COFFEE EXPORTS, BY MONTHS
FISCAL YEARS 1929-30 TO 1933-34


MILLIONS OF
OUPRDeL








1 .1 1 13 I\ W

". 0% corr .. ..".4/
EXPORT ''
1929-30 19330-31 1931-32 1932-33 1. 33-34
occurred followed by a sharp drop in the last three months of the year.
Discouraging reports of a poor coffee crop in 1934-35 tended to restrict
purchases of merchandise toward the end of the year.
The marked gain in importing during the late spring months, as shown
by the chart, is not characteristic of the import trade in Haiti. It was due
chiefly to speculation in cotton goods by merchants eager to acquire large
stocks in anticipation of the higher prices which were expected. Especially
large shipments of cotton goods were received in June when importers and
merchants taxed the limit of their resources to accumulate inventories.
The existence of these stocks in the face of a poor coffee year in 1935
indicates the probability of a decline in the import trade during the latter
year. Commodities Imported

It has been pointed out that the favorable results of the past fiscal year
were due mostly to the gain in the import trade. Statistics for the year
show that both in value and in quantity gains were recorded in nearly
every important group of commodities purchased abroad.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Textiles and foodstuffs, as usual, made up more than half of the import
list in 1933-34. The outstanding importance of these two groups, and their
relation to other groups of imported commodities, are shown in the table
below, in which values of imports, by commodities, are expressed as
percentages of total import values. For sake of comparison, figures are given
both for 1933-34 and for 1932-33: 1933-34 19233
Per cent Per cent
Cotton textiles........................................ ........ 26.2 26.8
Other textiles, clothing, etc...................................... 9.0 8.0
Foodstuffs ................................................................ 19.7 20.5
Gasolene, kerosene, etc............................................ 5.9 6.5
Iron and steel products........ ... ............................... 4.1 3.5
Soap ........................................................................ 2.7 3.5
Automobiles and trucks.......................................... 2.5 2.7
Lumber .................... ................................................ 2.1 1.8
Household utensils, etc........................................ 2.0 1.9
Chemical and pharmaceutical products.................. 1.9 2.0
Liquors and beverages.............................................. 1.3 1.3
All others............................................................. 22.6 21.5
100.0 100.0
No outstanding change in the relative importance of the individual groups
was recorded except in the case of iron and steel products, lumber and soap.
Iron and steel products, together with lumber imports, represent chiefly
materials entering into building construction. Government public works
and private building activity during the year produced a notable rise in
imports of building materials. Soap imports continued the decline of
recent years. The figures indicate that the local industry is succeeding in
supplying a greater part of the domestic requirements of this commodity.
Textile imports in 1933-34, as in the previous year, constituted roughly
a third of the import trade. In the last report of the Financial Adviser-
General Receiver* it was pointed out that normally only a quarter of the
money expended for imported merchandise goes abroad for the purchase
of textiles and clothing. The increase in textile imports in 1932-33, compar-
ed with the previous year, of nearly 40 per cent, was explained as being due
to a strong demand for textiles accumulated during the past several years
of limited buying power, and which was released when the first good coffee
crop and rising prices for exports brought augmented purchasing power.
It is to be expected that the increased income provided by good crops and
rising prices would be directed first toward the purchase of necessities such
as textiles and clothing for which no substitutes are produced in Haiti,
rather than toward the purchase of imported foodstuffs.
While this explanation satisfactorily explains the high level of textile
importations in 1932-33, it does not account for the further advance of
textile importations in 1933-34. In that year, imports of cotton textiles
increased in quantity from 3,359,265 kilos in 1932-33 to 3,613,516 kilos in
1933-34. In value, imports in this group increased by Gdes. 1,682,386, or
by 16.37 per cent.
*Page 19, Annual Report of the Financial Adviser-General Receiver, fiscal year 1932-33.






HAITI: REPORT OF FISCAL REPRESENTATIVE


In each of the past two years imports of cotton textiles have exceeded
average yearly requirements by a wide margin. Even in periods of com-
parative prosperity imports of cotton textiles do not exceed an average of
three million kilos per year. For example, in the five year period ending in
1931, which may be considered a representative period, imports under this
group averaged only 2,707,000 kilos. If this figure is taken as representing
the average yearly requirements of the country, imports of cotton textiles
during the past two years have exceeded domestic requirements by
1,559;000 kilos, having a value of approximately Gdes. 5,160,000. Of this
excess, a large part already had been absorbed by consumers by the end of
the fiscal year under review, but there remained in the hands of merchants
excessively large stocks of cotton goods which were moving very slowly.
As has happened frequently in the past, the most important retail trade in
Haiti has found itself badly over-stocked in the face of a year when a poor
coffee crop, and with it a greatly lessened demand for textiles, is in
prospect.
Enthusiasm with improvement in business following the good coffee
crop of 1933 brought excessive imports of cotton goods. To the impetus
thus given to the trade was added speculation in textile buying in 1934
when Japan entered the local market and merchants sought to take
advantage of what might prove to be a temporary condition. Commitments
were made which taxed the resources of the importers and placed the
textile trade in a precarious position as a continued demand on the part of
consumers failed to materialize. In part, the falling off in the demand for
cotton goods has been due to a general lowering of the quality of
merchandise offered for sale and consumer resistance to purchasing these
inferior grades of cotton goods in a period when prices were rising.
The cotton goods importing and retail trade in Haiti will continue to run
into difficulties periodically until it learns to adjust purchases from abroad
more closely to anticipated demand. Greatly increased purchases of cotton
goods in the latter part of 1933-34 were inexcusable in view of the many-
factors then in evidence which made it certain that there would be an early
drying-up of consumer demand.
! The United States prior to 1934 had supplied Haiti with the greater part
of its requirements of cotton goods, with Great Britain next in importance:
In 1933-34, the gains made by.Japan in the-Haitian import trade resulted.
in that country obtaining almost a monopoly. in the important cotton goods
trade. Japan in 1933-34 led all other countries by a wide margin in sales of
cotton piece goods, cotton hosiery, blankets and knit goods. Japan also
became the leading supplier of silk goods of all kinds, porcelain articles,o
chinaware and earthenware.
Foodstuffs in 1933-34 continued to be purchased chiefly in the United
States. Every important comestible excepting rice is obtained principally
from that country. Rice in 1933-34 came mostly from the Netherlands with






HAITI: REPORT OF FISCAL REPRESENTATIVE

CHART No. 2
QUANTITIES OF LEADING COMMODITIES EXPORTED AND IMPORTED,
FISCAL YEARS 1916-17 TO 1933-34


EXPORT/
MLLOrio o-r KILOcy
/ COrFEL

MILLIONj Or KILO/










MILLION or I rLO/f
8 -------- -------A


COTrT ON












MtlUor/ OF KILO/
mIL.LION! or IL-.o











17 -IUI A1 I526-7-8Z- -1333-
-0 A"



SLOGWOOD



MLl-loN./" or K IL._of





CACAO

171819 20 12524 2627 899031323334


IMPOQITf


NUMBER

AUTOfAND
TRUCK/



1718 19 EOlE230 2 25262722o93031323334






26 HAITI: REPORT OF FISCAL REPRESENTATIVE

Belgium supplying important quantities. In the previous year, the
Netherlands and France had supplied the Haitian market about equally.
Wheat flour in value is regularly the chief foodstuff imported into Haiti.
In value, flour imports increased from Gdes. 2,866,115 in 1932-33 to
Gdes. 3,698,565 in 1933-34, and in quantity from 11,362,903 kilos to
13,010,805 kilos. Although imports increased, they are still far below the
average, as can be seen from Chart No. 2.
Fish imports also increased in 1933-34. In value, imports of that com-
modity increased from Gdes. 1,487,469 in 1932-33 to Gdes. 1,893,113 in
1933-34, or by 27.27 per cent. The increase in quantity amounted to 13.64
per cent. Purchases from abroad of meats declined in value by 17.05 per
cehc, and decreased in quantity from 793,566 kilos in 1932-33 to 636,964
kilos in 1933-34.
. Mineral oils, including chiefly gasoline and kerosene, comprise the third
most important group of commodities purchased from abroad. In value
imports under this classification increased from Gdes. 2,496,200 in 1932-33
to Gdes. 2,703,310 in 1933-34. Gasoline imports in the latter year increased
by 1,367,551 liters, or by 18.31 per cent, while kerosene imports increased
by 313,071 liters, or by 7.87 per cent.
Gasoline imports serve as an excellent index of business conditions in
Haiti. Chart No. 2 shows the steady rise of gasoline imports in the years
preceding the depression, with a peak of over ten million liters reached
in 1929-30. From that point the curve descends steeply through the two
worst years of the depression, followed by a quick recovery in 1933 and
1934 to a figure close to the former level. The rise is significant. At the
same time, it should be borne in mind that imports do not necessarily bear
a close relation to consumption, since the leading importers have facilities
for storing large quantities of gasoline. This factor may in part explain
the failure of automobile and truck purchases to keep pace with gasoline
imports. Passenger automobiles received in Haiti declined in number from
286 in 1932-33 to 226 in 1933-34. Imports of trucks, on the other hand, in
the latter year were more than double the figure in 1932-33. They numbered
116 in 1933-34 and 54 in the previous year. In value, automobile and truck
importations, combined, totaled Gdes. 1,132,143 in 1933-34, as against
Gdes. 1,048,266 in 1932-33, indicating an increase of Gdes. 83,877 or 8.00
per cent. The United States is practically the only source of automobiles
and trucks imported into Haiti.
Gasoline in 1933-34, as in the previous year, came mostly from Curacao,
with important quantities also being shipped to Haiti from the United
States, Venezuela, and Puerto Rico.
SCommon laundry soap always has been among the more important articles
of importation. Since 1929, however, imports of this commodity have been
steadily diminishing. The local soap industry has been able to supply an


5i






HAITI: REPORT OF FISCAL REPRESENTATIVE 27

-increasingly greater part of domestic requirements. Imports of soap declin-
ed in quantity from 3,300,260 kilos in 1932-33 to 2,659,935 kilos in 1933-34.
Iron and steel products, including mainly articles entering into building
construction, increased in value from Gdes. 1,328,208 in 1932-33 to Gdes.
1,896,999 in 1933-34. Lumber imports increased similarly in value from
Gdes. 712,167 to Gdes. 976,473. Cement imports increased in value by Gdes.
:20,217 in 1933-34, and paint imports by Gdes. 6,735.
Both iron and steel construction material and lumber come almost en-
tirely from the United States, although Belgium in 1933-34 supplied im-
portant quantities of material classified as iron or steel rods and sheets.
Cement was imported chiefly from Denmark, and paint from the United
States.
Imports of kitchen utensils of various kinds increased in value in 1933-34
along with most groups of commodities on the import list. Articles in this
category were valued at Gdes. 916,332 in 1933-34, compared with Gdes.
758,626 the previous year. Chinaware, earthenware, glassware and cutlery
are included in the figures. All showed substantial increases.
Glass and glassware are supplied principally by the United States;
cutlery by Germany; chinaware and earthenware by Japan and Germany;
and other miscellaneous household utensils chiefly by Germany.
'The group of imports classified as chemical and pharmaceutical products
increased in value from Gdes. 771,665 in 1932-33 to Gdes. 856,691 in 1933-
34. Crude chemicals and miscellaneous pharmaceutical products came
mostly from the United States, and medicines from France.
Imported liquors and beverages increased in value from Gdes. 484,254
in 1932-33 to Gdes. 603,486 in 1933-34, or by 24.63 per cent. Imports of
French wines and distilled liquors increased in value by Gdes. 157,036.
'A considerable increase in purchases of agricultural machinery, tools,
and implements is an encouraging sign of recovery. Imports under this
classification increased in value from Gdes. 350,337 in 1932-33 to Gdes.
637,939 in 1933-34. Of total imports in the latter period, the United
Kingdom supplied articles valued at Gdes. 248,759; the United States,
Gdes. 239,953; and Germany, Gdes. 130,810.
Jute bags form an important group on the import list. Purchases
increased in value from Gdes. 551,481 in 1932-33 to Gdes. 680,629 in 1933-
34. Most of the imports of jute bags came from the Netherlands, Belgium
and the United States.
Imports of shoes increased in value from Gdes. 330,574 in 1932-33 to
Gdes. 421,271 in 1933-34. The United States continued to supply most of
the domestic requirements of shoes of foreign manufacture.
Leather imports valued at Gdes. 252,759, were double the value of leather
imports the previous year.
Books and other printed matter imported from abroad remained in
value practically the same in 1933-34 as in the previous year. Imports in






HAITI: REPORT OF FISCAL REPRESENTATIVE


this group were valued at Gdes. 357,604 in 1933-34. Of the total, 43 per
cent came from the United States and 38 per cent from France.
Imports included in the group covering machinery and apparatus were
valued at Gdes. 1,858,989 in 1933-34, as compared with Gdes. 1,279,713 in
1932-33. The increase of nearly 46 per cent was due to greater imports of
sugar machinery, electrical appliances and miscellaneous articles under the
general classification. More than 80 per cent of imports under this general
heading were supplied by American manufacturers, with France and
Germany next in importance.
Cigarette imports declined in number to 8,566,775 in 1933-34. Cigarettes
imported in the latter year were valued at only Gdes. 105,762. Cigars
imported legally into Haiti were negligible in quantity in 1933-34. The
excessively high taxation on foreign tobacco defeats its own purpose, since
it not only reduces imports, and with them customs revenues, but it fails
completely to provide the domestic tobacco industry with the assistance
which it is intended to give. If the margin of protection were narrower,
contraband would be unprofitable. Foreign tobacco would be imported
legally in reasonable quantities, to fill the more or less constant demand for
tobaccos of certain grades unobtainable in Haiti. The State then would
receive its proper share of revenue from imported tobacco, and the domestic
industry would receive adequate protection against competitive grades of
foreign tobacco. Under the existing tobacco taxes, the demand for foreign
cigars and leaf tobacco is supplied almost entirely by contraband imports
which cannot be controlled successfully because of the long, unguarded
frontier and the difficulty of distinguishing foreign tobacco from the
domestic product once it has successfully evaded the frontier guards. Proper
adjustment of the tobacco taxes is one of the urgent needs of the country.
For the most part, imported articles in 1933-34 increased in price when
comparison is made with unit prices during the previous year. Gasoline
was the only exception in a group of a dozen leading import commodities.
Kerosene showed no change in unit price.
The table which follows indicates the unit prices of leading imported
articles in each of the past three years as taken from customs records:

PRICES PERi UNIT
Unit 1931-32 1932-33 1933-34
Gourdes Gourdes Gourdes
Cement............................... Kilo 0.06 0.05 0.06
Fish..................................... Kilo 047 0.38 0.43
W heat flour......................... Kilo 0j25 0.25 0.28
Meats................................... Kilo 0.90 0.73 0.75
Rice..................................... Kilo 025 0.22 0.26
Liquors................................ Liter 1.32 1.27 1.75
Lumber............................... Cubic meter 89.00 85.95 99.95
Gasoline.............................. Liter 0.21 0.16 0.15
Kerosene..............................Liter 0.23 0.23 0.23
Soap...................................Kilo 0.48 0.41 0.47
Textiles...............................Kilo 3.31 3.06 3.31
Tobacco................................ ilo 1.90 1.93 2.31




- A


HAITI: REPORT OF FISCAL REPRESENTATIVE 29

Commodities Exported

The fiscal year 1933-34 was not particularly brilliant as far as quantities
of commodities exported are concerned. Coffee, cotton, and sugar, which
alone constituted nearly ninety per cent of total export values, were shipped
in smaller quantities than during the previous year. Sisal exports increased
considerably in quantity, and small gains were recorded in the case of
logwood and cacao. Canned and fresh pineapples practically disappeared
from the export schedules, but the loss was compensated by increased
shipments of bananas and rum, both of which for the first time attained
positions of some importance among articles of export. The possibilities
exhibited by bananas of attaining a place among the leading export products
was the most encouraging feature of the year.
While production for export is the one subject which is of greatest
significance in Haiti today, exports in terms of volume during 1933-34 were
not up to the figures recorded in 1932-33. Nevertheless, steady gains in
the prices of all leading export products, as already pointed out, brought
more money into the country, and produced a net gain in foreign trade in
1933-34 when comparison is made with the previous year.
* The relative importance of the leading articles of export in 1933-34 is
shown in the table below:
Gourdes Per cent
Coffee ................................................ 36,433,430 70.68
Cotton........... .................................... 6,844,876 13.28
Sisal ...................................... ...... 2,523,901 4.90
Sugar .......................................... .. 2,454,301 4.76
Logwood ................ .. ................. ... 837,356 1.62
Cacao .............................................. 479,862 0.93
Cottonseed cake................................ 458,997 0.89
Goatskins ....................................... 428,365 0.83
Bananas .......................................... 320,561 0.63
M olasses ........................................... 185,644 0.36
H oney ............................................... 176,699 0.34
Rum .............................................. 168,092 0.33
All other exports.............................. 234,107 0.45
Total.............................. ......... 51,546,191 100.00.
Of the twenty or more commodities entering into the export trade, coffee,
cotton, sisal and sugar alone accounted for more than 93 per cent of the
value of all articles exported during 1933-34. Decreased exports, notwith-
standing higher prices, gave to coffee a share of the total amounting to
only 70.68 per cent in 1933-34, compared with 77.71 per cent in 1932-33.
Cotton gained, relative to other exports, with 13.28 per cent of the total in
1933-34 and 9.94 per cent in the previous year.
The excellent gains made in the production of sisal during 1933-34 for
the first time placed that commodity in third place as an article of export,
ahead of raw sugar which for years had been third in importance. Sisal
exports comprised 4.90 per cent of total export values in 1933-34, compared
with 2.45 per cent in 1932-33. Sugar exports were figured at 4.76 per cent
of total values in both years.


4 -






HAITI: REPORT OF FISCAL REPRESENTATIVE


Although bananas and rum are entirely new developments, they together
comprised during 1933-34 nearly one per cent of total export values.

Coffee
Coffee exports in 1933-34 did not approach the record figure of 41,745,766
kilos registered the previous year. Nevertheless, shipments of 34,028,058
kilos during the year were well over the ten-year average crop of approxi-
mately 32,000,000 kilos. Shipments have exceeded the 1933-34 figure only
six times in the past eighteen years.


CHART No. 3
COFFEE PRICES--FISCAL YEARS 1932-33 AND 1933-34


CrANqr r'o
SO KBi/u


,O NN DEc Ji rev M "a-i M U J fAug OW 0 De J, rFeb M W M Je iU j Am i& i
1932-33 1933-34

The figure for total coffee exports is somewhat inflated by exports of the
1932-33 crop carryover which entered into the statistics for 1933-34. Most
of the crop for the last season was shipped during the fiscal period and
there was no carryover of importance at the year end.
Although coffee exports dropped off in 1933-34 by 7,717,708 kilos or by
18.46 per cent, the value of the crop actually increased when comparison is
made with the figure for the previous year. Total shipments of coffee in
1933-34 were valued at Gdes. 36,433,430, compared with a value of only.
Gdes. 36,252,152 applied to the considerably greater quantity shipped in the
prior year. Dollar prices for coffee rose steadily during the first half of


DOLUAQ1 PL92
14


W-AIJTI CONTACTT 2 (RO. ) .Q ,ali
IA



7*


~I-~L -71--T---r -- -r"-~---~--h






HAITI: REPORT OF FISCAL REPRESENTATIVE 31

the year and receded gradually during the last six months from the peak
reached in March. During most of the year coffee was sold F.O.B. Haiti
at prices ranging from $11 to $12 per 50 kilos. In 1932-33 exporters received
only $8 to $9 per 50 kilos during the greater part of the year.
Chart No. 3 shows both dollar prices for Haitian coffee, F.O.B. Haitian
ports, and quotations for the same coffee at Havre in gold francs. Inflation
of the United States dollar and the fixing of a new gold content of the dollar
in February, 1934, have had an obvious effect on the values received for
coffee exports. At the same time it should be noted that even in terms of
French gold francs coffee prices have recovered appreciably from the low
point reached in October, 1933. Dollar prices at the end of 1933-34 were
still more than twenty per cent higher than prices received at the beginning
of the year. If they are maintained at or above the $11 level the higher
prices ruling in 1934-35 should counteract to some extent the effects of the
exceptionally small crop which is now foreseen.
Future movements of coffee prices are difficult to predict since they are
largely determined by the disposition made of the enormous surplus stocks
held by Brazil. There is nothing in evidence at the present writing which
gives reason to suppose that prices for some months to come at least will
be pushed much higher than the $10 level. Consequently, the unit value of
1934-35 exports may not equal the 1933-34 figure.
Unit values for coffee exports, derived from customs records, were as
follows during the past six years:
Fiscal years: Dollars per 50 kilos:
1928-29 ............................................................ 22.60
1929-30 ............................................................ 15.20
1930- 31............................................................ 12.70
1931-32............................................................ 11.30
1932-33....... ......... ............................................ 8.80
1933-34 ....... ......... ............................................ 10.70

Taking the last year as a whole, coffee prices increased 21.6 per cent over
the unit price reported in 1932-33. If prices during 1934-35 average $10
per 50 kilos a drop of 6.5 per cent will be recorded. However, prices at the
current writing do not give assurance even that the $10 level will be
maintained, and meanwhile the evidence is accumulating to show that the
1934-35 crop will be very disappointing in size and may be as small as
21,000,000 kilos. At an average price for the year of $10 per 50 kilos, the
value of the 1934-35 crop would be only Gdes. 21,000,000, or considerably
less than the mid-depression crop of 1931-32 when a total value of Gdes.
26,335,228 was recorded.
Until something is accomplished to overcome the disproportionate effect
of the annual coffee crop on foreign trade and government revenues, the
recovery of prosperity in Haiti will continue to depend upon the caprice
of the weather and widely fluctuating coffee prices. A poor coffee crop
invariably results in reduced consumer demand, business stagnation, a




r C


32 HAITI: REPORT OF FISCAL REPRESENTATIVE

decline in importing, and lowered government revenues. This sequence is
inevitable and the effect on revenues is easily predictable. The only adequate
remedy is diversification of export products and concentration of efforts
upon the increased production for export of cotton, bananas, rum, cacao,
and other commodities which are easily adaptable to increased production
in Haiti and for which markets can be found abroad.
The climatic conditions which cause these wide variations in coffee
production cannot be overcome, but something at least can be done to
assure the sale of the coffee which is grown, to retain the existing markets
and to create new outlets for Haiti's principal exportable commodity.
Results up to the present time have been disappointing. Both the Govern-
ment and the leading coffee merchants have recognized that proper prepa-
ration of coffee before it is shipped would go far to establish the reputation
of the Haitian product and assure a good reception on the foreign market.
The Government has done its part by requiring the official grading of coffee
and applying lower rates of duty to coffee of the higher grades. Standardi-
zation of coffee has been in effect since 1929, but results to date have been
far from what had been hoped. Exporters have preferred to ship their
coffee practically in the form in which it is received from middlemen and
producers, rather than change their established habits by processing the
beans to the small extent necessary to assure their exportation under the
higher grades to which lower rates of duty are applied. A reduction in the
export duty amounting to no less than Gdes. 12.00 per sack can be obtained
by eliminating defective beans so that the coffee can be exported under the
highest official classification (Type 1) rather than under the lower grades
(Types 4 to 7) to which the maximum export tax of Gdes. 0.30675 per kilo
is applied.
Percentages of total exports by official standard types during the. past
three years are given in the table below:
Type: 1933-34 1932-33 1931-32
Per cent Per cent Per cent
1.......................................... .72 .57 1.20
2................................... ... 27 .17 .55
3......................................... 3.76 5.55 7.71
4.......................................... 10.57 11.86 15.32
5......................................... 74.16 72.47 66.77
6.......................................... 1.09 .91 1.12
7......................................... 9.43 8.42 7.33
Parchment coffee.................... ........ .05 ............
100.00 100.00 100.00

The percentage of inferior grades exported has increased rather than
diminished. Shipments of the superior grades benefiting from the reduction
in export duties totalled only 1,615,576 kilos in 1933-34 compared with
total shipments for the year exceeding 34,000,000 kilos.
Merchants are content to take whatever price is offered for their coffee
rather than to improve its preparation and eventually have their coffee





HAITI: REPORT OF FISCAL REPRESENTATIVE


accepted under higher price classifications. To be sure, the official type
standards under which coffee is exported are not yet accepted by the coffee
trade as the basis for quoting prices, but coordination between the two will
inevitably follow if exporters consistently endeavor to keep their coffee
within the higher official type standards.
One development of significance during the year was the fact that the
Coffee Syndicate at Havre has abandoned the requirement that the desig-
nation of the port of embarcation is a factor entering into the deterrai-
nation of the price classification. The fiction that coffee marked "Saint
Marc" is superior in quality to other varieties has existed for years, and
exporters have satisfied the demand in France for "Saint Marc" coffee by
simply marking any Haitian coffee, regardless of origin, as "Saint Marc"
coffee.
Haiti produces a mild coffee which is unsurpassed in flavor among coffees
of its kind. It maintains its reputation because it is intrinsically a superior
coffee, and in spite of the fact that often it appears upon the market
inadequately prepared and containing defects which impair its flavor. Yet
Haitian coffee is not the only variety which can fill the existing demand if
the quality of the Haitian variety is not maintained. Large quantities of
mild coffees similar to the Haitian varieties are produced in Colombia,
Venezuela and other coffee-growing countries. These coffees can easily
replace the Haitian varieties in blends wherever a demand exists for a
mild coffee of the Haitian type. Unless every effort is made to improve the
preparation of coffee in Haiti, the Haitian variety may lose its favored
position in France and other countries which now offer markets.
New outlets for Haitian coffee are badly needed. The emphasis now
placed on Europe as a market has obvious disadvantages, particularly in
view of the constant danger of additional import restrictions. Coffee
exported to Europe already is heavily taxed, both directly and indirectly,
by the countries which now provide markets.
The logical country in which to seek a new outlet is the United States,
which now purchases a disproportionately small share of the Haitian pro-
duction. Per capital consumption of coffee in the United States is higher
than in any other large country. Enormous quantities of coffee of all
varieties are imported by American coffee merchants. No customs duties
or other import restrictions are applied to coffee, nor has there been any
threat of such restrictions. Geographically, Haiti is situated closer to this
market than any of the larger coffee-producing regions.
The very size of this market has discouraged sales of Haitian coffee.
Quantities of coffee produced in Haiti are insufficient to meet the demand for
a particular grade to be used in the blends insisted upon by American
consumers. Advertising in the United States has created a preference for
these blends and coffee roasters have encouraged the sale of blended coffee
because it enables them to utilize large quantities of different varieties and






34 HAITI: REPORT OF FISCAL REPRESENTATIVE

sell them under a few brands and trade names as uniform blends. Actually,
however, the unblended mild coffees, such as the Haitian variety, are
unexcelled when served in their unblended state.
This peculiarity of the American market opens up the possibility of
selling Haitian coffee as a superior after-dinner coffee, roasted and packed
without blending and sold exclusively on its merits as a deluxe coffee.
Until supplies increase, :a campaign to advertise and sell the coffee in this
form would have to be restricted to a small section oi the country and
limited to a high-class clientele such as the better hotels and restaurants.
This plan has obvious possibilities. It is perhaps the best way in which
Haitian coffee can obtain a foothold in the American coffee market.
Haitian coffee retained its premium in price over inferior varieties during
most of the past fiscal year. In January, 1934, Santos coffee was quoted at
higher prices than Haitian "Contract 2", as can be seen from Chart No. 3,
but during the balance of the year deliveries were accepted at prices ruling
approximately 25 per cent above the quotations for Santos coffee. In this
respect, the reception accorded Haitian coffee was somewhat better than
during the previous year.
A threat to the ability of Haiti to retain its coffee markets developed in
March, 1934, when, upon the insistence of the French government, the need
arose for adjusting the commercial arrangements then in force with that
country. The details of the new arrangements entered into are discussed
elsewhere in this report. As far as coffee is concerned, it was agreed that
it could continue to enjoy the benefits of France's minimum tariff on that
product, and hence that there would be no discrimination against Haitian
coffee in favor of coffee originating from any other country. Although
the negotiations with France, and the new arrangements made, did not
affect the coffee trade directly in one way or another, they served to throw
into relief the transitory nature of established commercial relations and
to call the attention of the Haitian government to the immediate need for
strengthening the trade relations between Haiti and the principal countries
with which it does business.
The predominant position which' France holds in the coffee trade with
Haiti is shown in the table below, giving quantities of coffee exported in
1933-34 to the principal countries of destination:
Country Kilos Per cent
France .............................. 22,814,070 67.04
Italy ................................ 3,741,832 11.00
Belgium .......................... 3,235,314 9.51
Denmark .......................... 2,959,980 8.69
Spain .............................. 556,412 1.64
United States...................... 217,949 .64
All others.......................... 502,501 1.48
Total...................... 34,028,058 100.00
France in 1932-33 took 65.06 per cent of all Haitian coffee. Italy increas-
ed its share from 8.23 per cent in 1932-33 to 11.00 per cent in 1933-34.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Energetic efforts made by the Haitian government in 1934 to recover for
the coffee trade the former position of Italy as second in importance as a
market for Haitian coffee evidently have borne results. Importers in Italy
in 1931-32 purchased as much as 14.30 per cent of the total crop, and in
1930-31 the corresponding share amounted to 12.05 per cent.
Belgium took 9.19 per cent of the crop in 1932-33 and Denmark 10.59
per cent. Exports to Spain were cut almost in half in 1933-34, and its share
of the total dropped from 2.60 per cent in 1932-33 to 1.64 per cent in 1933-34.
An exceptionally large portion of the coffee crop was shipped from
Port-au-Prince in 1933-34. Of total exports, 8.223,574 kilos, or 24.2 per
cent, were shipped through that port. The other ports in the center of
the Republic, Saint Marc and Gonaives, also exported a large share of the
crop. These three ports in the central part of Haiti shipped 39.0 per cent
of the crop in 1933-34, compared with 31.6 per cent in 1932-33.
Cap Haitien and Port-de-Paix, on the north coast, experienced a poor
coffee year. Only 15.2 per cent of the 1933-34 crop was exported through
these ports, compared with 22.4 per cent during the previous year. Exports
from Cap Haitien were reduced almost by half. However, some falling off
in coffee production was to be expected in the North, since a record crop
had been harvested in the North the previous season, and a good crop
almost never is followed by another good harvest in the same region.
Ports in the southern peninsula accounted for 45.7 per cent of the crop
in 1933-34 and 46.02 per cent of the crop in 1932-33, or practically the same
share in both years. Cayes and Miragoane reported greater exports of
coffee in 1933-34, while shipments at the other southern ports declined.
The coffee trade in Haiti needs little in the way of assistance from the
Government from the angle of production. The immediate problem lies
in the direction of proper preparation for export, retention of existing
outlets and diversification of markets. It is to other products that the
Government must look for the needed increase in quantity and value of
commodities sold abroad.
Cotton
Cotton benefited more than any other Haitian export from the general
rise in commodity prices which took place during 1933-34. Although
quantities exported in the latter year declined by 9.32 per cent from the
1932-33 figure, the value of the crop exported increased by 47.69 per cent.
The quantity of cotton shipped from Haitian ports in 1933-34 totalled
5,301,796 kilos, compared with 5,846,483 kilos the previous year. The
decline was due entirely to climatic conditions affecting the yield of the
cotton plants, and not to plant diseases, insect pests, or difficulties in
marketing the crop. The plants probably were more thoroughly picked
than the previous year when the export crop was close to the record in size.
The remarkable increase in the value of the 1933-34 crop was due to the
fact that exports the previous year had taken place chiefly in the months





36 HAITI: REPORT OF FISCAL REPRESENTATIVE

prior to May, 1933, when the principal rise in cotton prices took place.
Cotton exports in 1933-34 received the full benefit of the price increase.
The heaviest shipments were made in the months when prices were highest,
or from February to April, 1934, when 66 per cent of the year's cotton
exports left the country. Considerable amounts also were exported in June
and July after prices had resumed their rise.
Average prices for Haitian cotton in 1933-34 were double the prices
received in 1931-32 (when they reached their lowest level), and considerably
higher than the 1930-31 figure. Comparative figures for the unit prices of
cotton,as shown by customs records, are given below:
Fiscal years: Gourdes per kilo:
1933-34................................................................. 1.29
1932-33................................................................. 0.79
1931-32................................................................ 0.64
1930-31................................................................. 1.02
Most of the cotton exported from Haiti corresponds closely in quality
and length of fibre with American middling cotton, and ordinarily the
prices received for the cotton closely follow quotations for American
middling. Haiti has benefited from the American efforts to restrict produc-
tion in the United States and force prices upward. A strong European
demand for Haitian cotton in 1934 for a time held prices for the Haitian
variety at a premium to American middling cotton. This was an exceptional
condition, and ordinarily it may be expected that exporters of Haitian
cotton will receive about the same prices in Europe as are paid for the
corresponding American variety.
Experiments conducted over many years have demonstrated that a
superior long-fibre cotton can be grown successfully in Haiti. Efforts to
increase production of long-fibre cotton have been intensified, and for the
past two years shipments of selected cotton have been made in commercial
quantities. Within the past year the area planted to selected cotton on
government experimental farms, and on privately owned farms where the
Government cooperates actively with planters, has been more than doubled.
Probably exports of selected long-fibre cotton in 1934-35 will exceed last
year's shipments of 30,000 kilos by several hundred per cent, and will
increase greatly in subsequent years.
In addition, seed for selected cotton has been distributed throughout the
country, and the general quality of the ordinary variety has been steadily
improving even though it is not yet being received in a higher price
classification. For the most part this cotton is still saw-ginned, which
results in cutting the fibres and reducing the quality. Government assistance
is now providing roller gins at Port-au-Prince, Cayes and Hinche, and it
will be possible to give proper preparation to long-fibre cotton.
Government operated farms for the production of long-fibre cotton have
been in operation for some time at Hatte Lathan and Hinche. On Ile A
Vache selected cotton is being grown on government land on a "share crop"


jA,





HAITI: REPORT OF FISCAL REPRESENTATIVE


basis. At Aquin, L'Asile, Saint Louis du Sud and in the Artibonite valley
selected cotton is being extended through a government bonus scheme by
which Gdes. 25.00 is paid to planters for each hectare planted exclusively
to selected cotton.
Long-fibre Haitian cotton is similar to Egyptian cotton, which ordinarily
commands a premium of about 50 per cent over American middling cotton.
Government restriction of cotton production in the United States has
operated to increase the price of American cotton, relative to Egyptian
cotton, but the latter variety still enjoys a premium of about 25 per cent.
As production of Haitian long-fibre cotton is extended, and planters become
acquainted with the greater value of the selected cotton, the annual crop
will increase greatly in value.
SThe United Kingdom generally purchases more than half of all cotton
exported from Haiti. The share taken by the United Kingdom in 1933-34
amounted to 51.54 per cent of the total quantity. France took most of the
balance, with 46.92 per cent of the total quantity. The comparative shares
taken by these countries in 1932-33 were: United Kingdom, 67.09 per cent;
and France, 27.49 per cent. France, therefore, resumed the place -which it
had formerly held as an important market for Haitian cotton. German
purchases, which had totalled over a million kilos in 1931-32, declined to
259,129 kilos in 1932-33, and to 44,155 kilos in 1933-34.
The cottonseed which accumulates as a by-product when the raw cotton
is ginned is sold to the local factories which manufacture lard substitutes
and soap. A by-product in turn of these factories is cottonseed cake which
is exported abroad for use as fertilizer and feed for cattle. Shipments of
cottonseed cake in 1933-34 totalled 5,907,131 kilos, valued at Gdes. 458,997,
or 1,055,064 kilos less than in 1932-33. In value, a decline of Gdes. 7,180
was recorded. No unprocessed cottonseed was exported in 1933-34, but in
the previous year 1,563,940 kilos, worth Gdes. 60,431, were shipped.
Sisal
The most noteworthy gain in production for export during 1933-34 was
made by sisal. Compared with the previous year, shipments increased 61.65
per cent in quantity and 121.33 per cent in value.
In quantity, exports increased from 3,737,057 kilos in 1932-33 to 6,041,051
kilos in 1933-34, and in value from Gdes. 1,140,752 to Gdes. 2,523,901.
Comparing the two years, average prices for sisal exports, according to
customs records, increased by 37 per cent. Shipments were made at an
average unit price of Gde. 0.418 per kilo in 1933-34, as against Gde. 0.305
in 1932-33, and Gde. 0.313 per kilo in 1931-32. This recovery in sisal prices,
which first became noticeable in 1933, has given the needed impetus to this
new industry, and growers are endeavoring to increase their acreage and
productive capacity.
The United States was the destination of 83.58 per cent of sisal exported
in 1933-34. The balance was taken almost entirely by Canada.





38 HAITI: REPORT OF FISCAL REPRESENTATIVE

More than eighty per cent of total exports of Haitian sisal in 1933-34 was
shipped from Fort Libert6, where the largest plantation is located. Exports
from this port in 1933-34 increased by 43 per cent when comparison is made
with the previous year. Even better results were recorded in the Saint Marc
area, where exports increased over eight times. Saint Marc has become
second in importance as a shipping center for sisal, and in 1933-34 handled
11.5 per cent of the total export production. Exports from Port-au-Prince
increased from 61,443 kilos in 1932-33 to 270,887 kilos in 1933-34, and at
Cap Haitien from 173,760 kilos to 179,357 kilos.
Sisal offers interesting possibilities for further expansion in production.
Parts of Haiti are ideal for growing the plant. Labor is abundant, and soil
and climatic conditions are excellent. The comparative proximity of Haiti
to the market offered in the United States and Canada is an especial
advantage. If prices can be maintained at, or above, present levels, this new
industry is assured of a bright future.

Sugar
Sugar shipments had reached a record total of 24,801,170 kilos in 1932-
33. From the latter figure they declined to 22,471,407 kilos in 1933-34, or
by 9.39 per cent. In value, on the other hand exports increased from
Gdes. 2,221,629 in 1932-33 to Gdes. 2,454,301 in 1933-34, or by 10.48
per cent.
As in the previous year, practically all of the 1933-34 output of raw sugar
was marketed in the United Kingdom, with a small share going to the
Virgin Islands (3.04 per cent of the total) and to Curacao (2.8 per cent).
Included in the figures for sugar exports are small quantities of refined
sugar, of which 152,597 kilos were shipped in 1932-33 and 207,010 kilos
in 1933-34. Most of the refined sugar in the latter period was marketed in
Curacao and the Virgin Islands.
In spite of a setback during the past year, the trend of sugar production
in Haiti is distinctly upward. A record crop of sugar cane is expected in the
1935 season. The grinding capacity of the single large mill in Haiti which
produces sugar for export has not yet been reached. Increased production
of raw sugar therefore is largely a matter of obtaining greater quantities
of sugar cane. The area planted to cane is growing, and as new fields of cane
come into bearing the output of the mill will increase. Ultimately, however,
any gains made by Haiti as a sugar-producing country will depend upon
further investment of capital for augmenting plant capacity and ability
to increase its export markets in the face of adverse tariffs, quotas, and
other barriers.
The molasses which is obtained as a by-product of sugar production is
generally exported, rather than being used, as in other sugar countries,
in the production of rum or industrial alcohol. The excise taxes at present
discriminate against molasses as a raw material for alcohol production, and






HAITI: REPORT OF FISCAL REPRESENTATIVE


exportation offers the only method of disposing of accumulated stocks,
even though the low commercial value of molasses and its bulky nature give
an almost negligible return to the seller when it has to be transported long
distances. This inability to dispose profitably of an important by-product
of sugar limits the degree of efficiency with which sugar can be produced
in Haiti, and may some day act as a deterrent to further capital investment,
and to the expansion of the sugar industry in Haiti. Potentially, Haiti
should be able to produce much larger quantities of sugar than it does at
present.
All molasses exported both in 1933-34 and the previous year was shipped
to the United States.
Logwood
Little chance for the recovery of logwood exports appears probable until
a greater demand for the product arises. Average prices have remained
practically stationary for two years, and buying has been much curtailed
since 1931.
To encourage exports, the duties on logwood exports in January,. 1934,
were suspended by executive order for an additional year, but there was
no response in the form of increased buying. Exports were almost negligible
from February to June. Shipments of some importance were made in July
and August, but more than 70 per cent of the year's exports were made in
the months prior to February, 1934.
Total quantities shipped were somewhat higher in 1933-34 than in the
previous year. Exports in 1933-34 totalled 17,885,600 kilos, valued at
Gdes. 837,356, compared with 14,129,175 kilos, valued at Gdes. 653,560
in 1932-33. The increase amounted to 26.58 per cent in quantity and Gdes.
183,796 in value.
Most of the logwood exported was marketed in the United States,
although the share taken by American buyers declined from 74 per cent
of the total in 1932-33 to 55 per cent in 1933-34. France in the latter year
took 34 per cent of total exports, and Belgium 9 per cent. Small shipments
were made to Germany and Italy.
Cap Haitien, as usual, was the leading port of shipment for logwood,
but exports through that port declined from 8,802,675 kilos in 1932-33 to
6,945,375 in 1933-34. Aquin and Gonaives shipped no logwood in 1933-34,
as against a total of 1,870,000 kilos in 1932-33. Exports through the ports
of Saint Marc, Miragoine and Fort Libert6 increased in 1933-34, and
1,050,000 kilos were shipped from Port-de-Paix in 1933-34 as against none
the previous year.
Bananas
It has long been felt that perhaps the greatest hope of achieving export
diversification and augmented production lay in the direction of building
up an important banana industry in Haiti. Hopes began to materialize in
June, 1934, when for the first time bananas were exported in quantity.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Shipments of bananas increased from 33,014 stems in 1932-33 to 272,820
stems in 1933-34. In value, exports increased from Gdes. 49,343 to Gdes.
320,561.
Exports in previous years had been negligible except in 1931-32 when
26,453 stems were shipped.
For the most part, the increase in banana exports in 1933-34 was due to
shipments made in the last four months of the fiscal period. Of the 272,820
stems shipped during the year, more than ninety per cent were exported in
the June-September period.
To show graphically the sudden rise in banana exports, there is given
below a table of banana exports, by months, during the past two fiscal years:
Months 1933-34 1932-33
stems stems
October .......................... 5,669 4,228
November.......................... 727 6,050
December .......................... 2,227 4,210
January.............................. 10 4,473
February ........................ 33 668
March .............................. 73 2,390
April .............................. 3,254 1,427
May ................................ 7,024 344
June ................................ 26,817 758
July ................................ 79,142 2,226
August ............................ 37,676 2,090
September....................... 110,168 4,150
Total.................. 272,820 33,014
Of the total shipments made in 1933-34, Port-de-Paix was the port of
exportation for 134,120 stems and Cap Haitien for 111,634 stems. The ba-
lance, amounting to 27,066 stems, was shipped from Port-au-Prince.
The north coast of Haiti for the time being has become the region where
banana cultivation shows the best prospects of success. Several groups
were engaged in the experimental buying of bananas in that section in the
latter part of 1932, and cultivators were encouraged to plant bananas of the
variety most suitable for export. Agents of the National Agricultural Ser-
vice also were helpful in encouraging new plantings and in giving ins-
truction regarding the cultivation of the fruit. Visits of foreign experts to
Haiti, and various surveys made to examine into the possibilities of banana
production in Haiti, increased the interest of planters in the North in the
cultivation of bananas for export. Finally, the Haitian government added
momentum to the movement by starting extensive irrigation and drainage
works in the Artibonite valley for the purpose of opening up new areas
to cultivation.
The main problem was to secure the interest of groups able to finance
and manage the buying of bananas and assure a steady market for the fruit.
The transportation and distribution of fresh fruit abroad involved a line
of endeavor with which exporters already established in Haiti were totally
unfamiliar. A combination of adequate capital and experience in managing
a highly specialized industry were essential to successful entrance into this
new field.






HAITI: REPORT OF FISCAL REPRESENTATIVE


'The first important effort of the Government to obtain the assistance
needed was unsuccessful, due to the opposition of the Legislative Body. A
contract signed by the Government with a group interested in developing
banana cultivation and marketing in the region between Saint Marc and
Port-au-Prince was rejected by the Legislative Body. In September, 1934,
however, both the Senate and the Chamber of Deputies passed resolutions
granting special powers to the President of the Republic and indicating
that the Legislative Body was in complete harmony with the efforts being
made by the Government to assure the establishment of a healthy banana
industry. Under the authority of these resolutions, exclusive privileges to
buy and export bananas in the northern section of the Republic were grant-
ed by the Government in October, 1934, to a new company formed for that
purpose.
Up to the time of the present writing, there is every indication that the
small beginning which has been made will develop into an important new
industry. But bananas now are being cultivated and marketed in a relati-
vely restricted area which is particularly difficult of access with respect to
transportation from the interior to the port of shipment. The full possi-
bilities of the industry will not be realized until the cultivation of bananas
for export has been extended to the many other producing areas of the
country, and needed coordination between the Government, the producers,
the steamship lines, and the marketing organizations has been established
on a satisfactory basis.
Other Exports
Rising prices brought a quick recovery of cacao exports. In value,
shipments during 1933-34 reached Gdes. 479,862, or more than double the
1932-33 figure. In quantity, exports increased by 74.76 per cent. The
1933-34 export crop of 1,607,167 kilos was about equal in size to average
crops of the past ten years. Practically all of the cacao shipped in 1933-34
was sold in the United States. Difficulty was experienced in having some
shipments of the Haitian product accepted abroad. It is essential for the
retention and development of cacao as an article of export that growers
and exporters should improve the preparation of the product shipped.
Exports of goatskins in 1933-34 increased 21.39 per cent in quantity, and
54.35 per cent in value when comparison is made with the previous year.
Total shipments weighing 162,025 kilos were valued at Gdes. 428,365.
Importers in the United States purchased most of the goatskins shipped
from Haiti. There is a steady and satisfactory demand for goatskins in
the United States, and it should be possible to increase exports considerably.
Honey exports totalled 520,308 kilos in 1933-34, or slightly less than the
previous year's figure. In value, however, exports increased to Gdes.
176,699, or by 30.18 per cent. Honey was shipped principally to France and
Germany.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Exports of Haitian rum showed the effect of prohibition repeal in the
United States and the opening of that market to imported liquor. From
negligible quantities in 1932-33, rum exports increased in 1933-34 to 21,797
liters, valued at Gdes. 168,092. Practically all of the rum exports were
consigned to American importers.
The problems which confront the Haitian rum industry, in its efforts to
expand into the foreign market, were discussed in the last report of the
Financial Adviser-General Receiver.* That some progress has been made
is shown by the figures for exports in 1933-34, but rum still constitutes a
very small share of Haitian exports. A market for a relatively high quality
product has been found in the United States, but the small quantities of
aged rum available in Haiti limit a rapid expansion in the market, even if
difficulties in merchandising and distribution can be overcome. Haitian rum
is being extensively advertised in the United States, and it has met with
success in entering a restricted and highly competitive market for the more
expensive qualities. Probably distillers will continue to find that the best
possibilities lie in the direction of a limited quality-market rather than in
volume secured through sales of low-priced liquor. The better grades of
Haitian rum have no superior, and they can be produced in gradually
increasing quantities to supply a limited market. On the other hand,
distillers in Haiti are not equipped to secure the volume of output which is
necessary to obtain a profit through the sale of the cheaper varieties,
although other West Indian countries have found that the low-grade market
offers the best possibilities. A mistaken policy in the past of obstructing
the growth of the large distilleries has left the rum industry unprepared to
take full advantage of the market opened to it in the United States.
Corn, cashew nuts, and turtle shells complete the list of exports from
Haiti. Of these, the first two in 1933-34 increased in value by Gdes. 70,195
and Gdes. 18,092 respectively. Shipments of turtle shells declined. Corn
is marketed chiefly in Curacao and Martinique, while the United States
provides the only important outlet for cashew nuts.
Pineapples practically disappeared from the export schedules in 1933-34.
Whereas canned and fresh pineapples valued at Gdes. 295,177 had been
shipped in 1932-33, shipments dropped in value to only Gdes. 1,820 in
1933-34.
The Haitian government quite properly had placed a great deal of faith
in the future of the pineapple industry, which had been looked upon as
offering the expansion in export production and diversification in foreign
outlets which was, and is, so badly needed. Because of its confidence in the
ability of a large American corporation to furnish the experience, organizing
ability, and capital needed to create this new industry, the Haitian govern-
ment permitted the foreign owners of the local company to develop large
areas near Cap Haitien with a view to setting up not only an industry which

*Page 77, Annual Report of the Financial Adviser-General Receiver, fiscal year 1932-33.






HAITI: REPORT OF FISCAL REPRESENTATIVE


in the course of time would prove profitable to the corporation, but which
would give to the northern section of the Republic the agricultural develop-
ment and commercial expansion so badly needed in that potentially rich
part of the country. Moreover, a concession was granted which gave
exclusive privileges, and which enabled the corporation to operate under
especially favorable conditions.
With these advantages, the corporation proceeded to invest capital, as
planned. Fields were cleared and planted to the finest varieties of fruit
Experiments conducted over many years brought improvements in cultiva-
tion, control of insect pests, plant diseases and the means of achieving
adequate production. When the ability of the company to produce pineapples
in commercial quantities was assured, a canning factory was erected. Later,
grapefruit orchards were planted. The exportation of canned pineapples
began in 1930. Production expanded rapidly in 1931 and then contracted
as excessive stocks accumulated in world markets and prices declined.
Nevertheless, exports continued to rise again in 1933, and the outlook for
the eventual success of the enterprise improved; in any event, it was felt
that it was only a matter of time before market conditions would be
corrected and production could be extended as originally contemplated.
Early in the fiscal year under review, the parent corporation suddenly
disposed of its ownership of the subsidiary at Cap Haitien. No reasons
for the move were made known. The fact that its interest in the company
had ceased did not even become a matter of common knowledge until some
months later. Since then, the canning of pineapples for export has.ceased,
and cannot possibly be resumed until, and unless, new financial and market-
ing connections have been made. Meanwhile, the failure of the enterprise
has been a blow to business at Cap Haitien; and to the Government it
means a loss in revenues which it had counted upon, and the need for seek-
ing elsewhere the increased production and diversification of exports which
it.must attain.
While, as already stated, no reasons have been assigned by the corporation
for its abandonment of the enterprise, its action was not due, evidently, to
its inability to continue financing the development, or to the fact that
pineapples could not be grown as cheaply in Haiti as elsewhere. To be sure,
tariff barriers abroad may have had something to do with the decision.
But more probably the primary cause was surplus world production of
pineapples, and the need for curtailment of excess output; and this meant
that the company felt obliged to abandon entirely one of its properties. The
development in Haiti was the enterprise which was chosen.
Whatever reasons motivated the sudden departure of the corporation,
or however well-founded those reasons were, the manner in which the
enterprise was relinquished probably has not lessened the misgivings with
which the Haitian government views the investment of foreign capital for
the exploitation of the country's natural resources.





HAITI: REPORT OF FISCAL REPRESENTATIVE


The granting of a concession to private enterprise by a government,
regardless of its detailed provisions, clearly implies an obligation of both
parties not only to carry out the specific requirements of the contract but
also to reach to the best of their respective abilities the objective which the
contract is intended to make possible of attainment. In the case of the
pineapple concession, the objective was to be the production of pineapples
for export. The Government had done its part by granting exclusive
privileges, and in every way indicating its willingness to take a proper share
of the risk involved in order to attain an objective which has not been
reached because the other party has suddenly decided that its own best
interests lay in abandoning the Haitian enterprise.
This attitude on the part of foreign capital has brought harm to a
country where capital has been well received; and it has unfortunately
placed needless obstacles in the way of further foreign participation in
the agricultural development of the country.

Commercial Conventions
New commercial arrangements with France came into effect in March,
1934, with the signing by representatives of the two governments of an
"avenant" to the Franco-Haitian commercial convention of April 12, 1930.
The avenant was signed on March 10, 1934, and ratified by the National
Assembly on May 25, 1934.
Dollar inflation had caused the prices of imported articles of French
origin to rise rapidly in relation to prices for similar articles imported from
countries with depreciated currencies. Although wines, cosmetics, and other
articles which are furnished chiefly by France already enjoyed the benefit
of a tariff reduction of one-third the established rates, the granting of
most-favored-nation treatment to other countries combined with the rising
scale of prices for French articles in terms of gourdes, tended to give a
temporary competitive advantage to the goods of other nations. It was
to correct this tendency, and to give to French merchandise the advantages
France insists upon in view of the. market for Haitian coffee furnished by
that country, that the two governments agreed upon the new extension and
modification of the commercial convention then in force.
Under the so-called "avenant" of the existing convention, the French
government agreed to continue to permit Haitian coffee to be imported
into France under the minimum tariff schedule. Furthermore it was agreed
that France would permit as much as 30,000,000 kilos of Haitian coffee to
enter France in a single year without quota restrictions, or reductions in
the number of licences granted to French importers of Haitian coffee. Haiti
was assured of no tariff discrimination, or other government restrictive
measures, in favor of other countries supplying France with coffee.
Haiti, on the other hand, agreed to apply certain specified rates of duty
to articles of French origin described by regions or by trade names in






HAITI: REPORT OF FISCAL REPRESENTATIVE 45

schedules attached to the avenant. Any internal revenue impost was to be
considered as being included in the customs duty collected. Articles benefit-
ing by the new rates had to be accompanied by certificates of origin.
The new rates were based mainly on the duties applicable prior to the
tariff of 1926. The old rates, so far as concerns the articles under discussion,
were lower than the current rates of duty. Furthermore, since no internal
revenue taxes could be added to the import duties merchants were assured
of fixed rates for a lengthy list of merchandise of French origin. Perfumes,
cosmetics, and pharmaceutical specialities, for example, were dutiable at
10 per cent ad valorem if they were imported under the trade names carried
in the list of French articles appended to the avenant. Sparkling wines,
vermouth, aperitifs, etc., were dutiable at Gde. 1.00 per liter; champagne at
Gde. 1.885 per liter; cognacs, armagnacs, etc., at Gdes. 2.171 per liter;
common bottled wines, at Gde. 0.432 per liter; and wine in barrels at Gde.
0.073 per liter. Medicinal mineral waters bearing certain trade names could
be entered free of all duty.
The new rates permitted the importation of a long list of French articles
at duties which in most cases were from 20 to 50 per cent under the rates
previously applicable. The internal taxes on wines and liquors no longer
were payable.
The new arrangement with France in effect meant the giving of certain
concessions in revenues in return for assurance of security for the coffee
trade. Articles such as wines, liquors and cosmetics now are taxed only
nominal amounts, although they are luxury products which in most coun-
tries, including France, are heavily taxed for revenue purposes. This
concession means a loss of direct revenue. On the other hand, importers
and merchants in Haiti dealing in articles of French origin have been given
assurance of continued business; France has received the advantage of a
steady market in Haiti for typically French products; and Haiti has received
the right to continue to sell its coffee in France on an equal basis with
competing coffee countries. Commercial relations with France have improv-
ed appreciably as a result of the new agreement. Chemical and pharma-
ceutical products imported from France increased in value by 9.11 per cent
in 1933-34 when comparison is made with the previous year. Perfumes and
cosmetics showed a slight drop in value, but imports of French wines and
liquors increased in value by 66.29 per cent.
No other changes affecting the tariff took place in 1933-34, nor were any
other formal agreements made with foreign countries respecting trade
relations. The United States, Great Britain, Germany, Italy and the
Netherlands remained parties to conventions or agreements granting reci-
procal most-favored-nation treatment and containing other general pro-
visions designed to promote commerce and friendship between nations.
SThe last annual report of the Financial Adviser-General Receiver empha-
sized the urgent need for protecting the trade channels which now exist by





HAITI: REPORT OF FISCAL REPRESENTATIVE


entering upon new agreements as soon as possible with the countries which
participate in Haitian commerce. Another year has passed, yet the agree-
ment with France is the only accomplishment of this kind which can be
recorded. The present agreements with other countries are inadequate to
counter the threats to Haitian trade which are the concomitants of today's
struggle between nations to gain and hold foreign markets. Unless present
outlets are firmly secured by reciprocal trade pacts with foreign market
countries, Haiti may find itself standing by helplessly while competing
countries enter into a network of commercial arrangements which leave no
place for the Haitian export trade.
An outlet in France for much of the coffee crop has been made safe for
the time being, but there is no assurance that the balance can be sold every
year in Italy, Belgium and Denmark. The cotton now shipped to England
and France may some day find those markets closed. Sisal, cacao, and
bananas are today the chief hope of attaining increased export production.
Trade recovery will depend upon ability to sell the output of these products
in the United States. No duties or quotas are applied to these commodities
at present upon their entrance into the United States.
The logical market for Haitian sugar, long-fibre cotton and rum is the
United States, but exports to that country are restricted by a quota on
sugar, by an almost prohibitive tariff on long-fibre cotton, and by a high
tariff on rum.
The Jones-Costigan Law in the United States prevents Haiti from obtain-
ing a fair-sized sugar quota and a reasonable share of the American sugar
market. This law directs the executive branch of the American government
to establish quotas based on average sugar imports, by countries of origin,
over a period of three years. The grand total of American sugar imports
is determined by a carefully calculated estimate of American sugar con-
sumption, taking into account also the quantity of sugar produced in the
United States. The amount of sugar needed from foreign sources is fixed
and limited in this way, and the proportionate share, or quota, is allocated
to each sugar-producing country in accordance with the percentage of sugar
imports into the United States which each country has supplied, in the past,
averaged over the three year period mentioned.
Unfortunately, Haiti has been accustomed to sell its sugar principally
in markets other than the United States. Hence, the quota at present
applied to Haitian sugar by American law amounts only to a little over
300 tons per year. Obviously, from the standpoint of augmenting production
through finding new markets, this quota is of no value whatsoever.
A law passed in 1934 which permitted and directed the President of the
United States to enter into bilateral commercial trade agreements in accor-
dance with the principles established at the Montevideo Conference, unfor-
tunately for Haiti, has been considered as not extending to the American
Executive the right to modify the sugar quotas, as determined under the






HAITI: REPORT OF FISCAL REPRESENTATIVE


Jones-Costigan Act. Consequently, Haiti cannot anticipate a better sugar
quota as part of any reciprocal commercial accord with the United States.
Neither can the quota be increased so long as the three year basic period
remains as the determinative factor.
Haiti has not yet become a leading producer of long-fibre cotton. This
variety of cotton is grown chiefly in Egypt. Nevertheless, there is reason
to believe that Haiti may expect a reduction in the American tariff on long-
fibre cotton which will permit the sale of the Haitian variety in the United
States as soon as Haitian production increases to the point where American
buyers feel that they may rely on a steady and satisfactory supply.
With reference to Haitian rum, there is every reason to anticipate a
reduction to the full extent allowed by the act empowering the American
President to make commercial treaties. It is hoped that the American
import duty on Haitian rum may be reduced by $2.50 per gallon, giving
the domestic industry good possibilities of augmenting sales to the United
States.
Coupled with the necessity of aiding in the lowering of world com-
mercial barriers and securing entry to markets under more favorable tariff
conditions is the equally important need for maintaining those markets
which are now open and to which Haitian products have the right of entry
without the payment of customs duties. In the search for revenues, espe-
cially during the past few years of world depression, some governments
have found a customs tariff the least budensome of all means of raising
needed revenues. Further, a small increase in tariff has found the'customs
machinery already set up and operating, and increased revenues can thus
be collected at practically no increase in cost of collection. This explains,
insofar as revenue tariffs are concerned, why so many countries have
increased their tariffs during the last few years; and it explains why, unless
the principle accepted at Montevideo is found acceptable to most of the
world, and is placed quickly and effectively as a barrier against higher
tariffs, exporting countries may find foreign markets increasingly obstructed
by tariffs, quotas, import licenses, and other trade restrictions. There is a
real danger that countries more and more will remove from their free lists
commodities which now may be entered free of duty.
Haiti must fight for export markets, and it must fight effectively. The
logical economic field for expansion must be chosen deliberately, and trade
must be directed to and from the countries which at the same time are
willing to buy and able to sell advantageously, and whose established trade
channels permit a continuity of commercial intercourse. Gourdes must be
spent in markets where they will flow back in the form of purchases from
Haiti. This is not a time to allow trade to drift out of hand and uncontrolled
in channels which apparently may offer immediate benefits, but which give
no chance for permanency; nor can Haiti rely entirely upon the perfectly
logical argument that trade can be three-cornered, until the larger trading






HAITI: REPORT OF FISCAL REPRESENTATIVE


nations of Europe change from a policy which insists that trade must be
direct and reciprocal between one country and another, and that nations.
can buy only from those which in return buy equal amounts.
All of the great trading nations of the world are united in the realization
that world recovery will come when foreign trade is permitted to move
freely; and that something must be done, and done soon, to break down the
existing barriers to the free movement of international commerce. Nations
are anything but united, however, as to the manner in which those barriers
are to be broken down, or what nation, or nations, will take the initiative
and risk a possible disruption of their internal economy in order to achieve
a less immediate and somewhat problematical increase in international
exchanges of merchandise.
From the commercial viewpoint, concessions in the way of lowered tariffs
and reduction of import restrictions in one country must have a counterpart
in similar concessions granted by the country, or countries, benefiting by
such reductions. According to this school of thought, anything in the way of
a reciprocal trade pact must be mutually and directly beneficial, as between
the countries concerned, and need not bear any relation necessarily to the
higher objective of a gradual and universal lowering of trade barriers.
Coexistent with these ideas is the feeling that the most-favored-nation
principle should be discarded, and that such special privileges as may be
accorded under bilateral treaties should be reserved to the signatory coun-
tries to the exclusion of the rest of the world.
These are the principles which largely influenced the new commercial
relations arrived at between Haiti and France in 1934. They also represent
substantially the viewpoint of many European nations, most of which
already are so inextricably involved in a network of artificially constructed
economic relations, one to the other and each to the rest of the world, that
mutual agreements which concede exclusive privileges appear as their only
solution to an immediate betterment of commercial relations; even though
the granting of such privileges disregards the main desideratum which
is a world-wide increase in international commerce and in effect only adds
to the maze of artificial barriers already erected. ':
A departure from this European viewpoint was voiced at the conference
of the Seventh International Conference of American States held at Mori-'
tevideo in the latter part of 1933. At that conference it was decided that
in the most-favored-nation clause rested the greatest hope of restoring world
trade, and that far from being a principle which is out-moded, that principle
should be made a part of every bilateral or multilateral trade agreement
between nations; that the main purpose was not to restrict exchanges
between nations to specific commodities which the signatory countries
alone could trade in, but that an actual and universally-applicable lowering
of the wall of trade barriers was the object to be accomplished. This
objective could only be reached by retaining the most-favored-nation
principle. :






HAITI: REPORT OF FISCAL REPRESENTATIVE


It was the consensus of opinion at the Conference that these principles
were economically sound and that they would contribute to the restoration
of world commerce. Haiti was represented at this Conference at which the
delegates of all of the Latin American countries decided upon the adoption
of this principle as being the directing policy in their future efforts to
broaden commercial relations by entering upon new commercial agreements.
In practice, the establishment of such agreements under the Montevideo
principle would proceed substantially as follows:
Two trading countries interested particularly in augmenting the exchange
of specific commodities would agree upon a mutual lowering of their
tariffs, or other restrictions, on those commodities. A reciprocal reduction
in these restrictions by both countries concerned would be a sine qua non
of the operation. At the same time, the most-favored-nation principle
would be adhered to by each country, but inasmuch as the commodities
specified in the agreement would be those especially adapted to trade
between the countries concerned, the advantages of the agreement would
accrue principally to the signatory countries. Thus, while the commercial
requirements of lower tariffs for particular commodities would be complied
with, there would be no actual increase in trade barriers against countries
outside of the agreement. In fact, other countries would receive equal
opportunities in every way to compete in the exchange of the commodities
specified. The net result obviously would be an improvement in trade
relations between the parties to the agreement, and at the same time there
would be no new barriers erected against international trade with the rest
of the world.
The gradual establishment of agreements of this kind between groups
of two or more nations would inevitably bring about a progressive reduction
in exchange and quota restrictions and in tariff barriers. Eventually,
international trade conditions as they existed before the depression would
be restored.
The twenty-one nations of the Pan-American Union which subscribed to
these principles have since then been endeavoring to arrive at agreements
drafted along these lines. The first real achievement was a new commercial
treaty signed by the United States and Cuba. Negotiations between other
groups of, countries are continuing at the present time, and the signing of
further treaties is to be expected soon.
In the case of the Republic of Haiti, the signing of agreements of this
nature is complicated by the fact that the tariff of the Republic is, with
very minor exceptions, entirely a revenue tariff. This fact apparently was
not stressed by the delegates of the Haitian government at Montevideo,
and Haiti is committed to follow in their broad lines the principles set
forth at that conference.
Whether the tariff immediately can be reduced, in order to obtain
important reciprocal concessions, without upsetting the balance of the






HAITI: REPORT OF FISCAL REPRESENTATIVE


national budget is doubtful. It is a difficult problem. Certainly, the fact
that the Haitian tariff is primarily a revenue tariff will restrict the value
of the reciprocal concessions which other countries, such as the United
States, may be disposed to grant.
This position in which Haiti is placed once more throws into relief the
undesirable emphasis placed on the tariff as a source of revenue. If internal
revenues had been built up gradually in accordance with principles establish-
ed in 1928, and since discarded, Haiti today would be in a far better position
to offer, and receive, reciprocal concessions which would put the country
in an enviable position vis-a-vis the countries to which it expects to sell its
coffee, bananas, sisal and other agricultural commodities on which it must
depend for eventual prosperity.
The Latin American countries which accepted the principles set forth at
Montevideo were with few exceptions (and Haiti was an outstanding
exception) countries whose internal economy already was so developed
that downward revisions in tariff rates made little difference in government
revenues. Revenues in most countries are more largely derived from
internal taxes. Tariffs generally are protective barriers to protect home
industries, to relieve dependence upon foreign countries for essential re-
quirements, to combat unequal foreign industrial competition, or to relieve
pressure in foreign exchange. Countries with tariffs of this nature better
can afford to bargain for rate reductions. Haiti, on the other hand, has
little to offer.
It is evident that, so far as Haiti is concerned, negotiations for trade
agreements must begin with the countries which hold the more important
places at Haiti's economic field. The agreement with France was a logical
beginning. Trade pacts with the United States, Great Britain, Italy and
Japan remain as next in importance. Negotiations between the Haitian and
American governments, following the principles established at the Monte-
video conference, began in September, 1934, and at the present writing the
signing of a definitive agreement is hoped to be in the immediate future.
The new treaty should secure to. Haiti the field for expansion andc
opportunity for trade which is needed, although the concessions which
might be expected to be obtained necessarily will be limited in value because
of the factors mentioned. Nevertheless, much should be accomplished
during the coming year in the direction of cementing trade relations with
the countries which offer, and can obtain, trade advantages.

Customs Administration
The Agreement of August 7, 1933, between Haiti and the United States
called for certain important changes in the organization of the Customs
Service. All of the custom houses of the Republic on January 1, 1934, were
given an exclusively Haitian personnel. The former title of "Collector of
Customs" was abolished, and the custom houses were placed in charge of






HAITI: REPORT OF FISCAL REPRESENTATIVE


"Directors" commissioned by the President of the Republic, upon the
recommendation of the Fiscal Representative. Other employees occupying
positions of authority and trust under the Fiscal Representative were
commissioned at the same time by the President of the Republic.
Under the authority of the same Agreement, the Customs Service, and
application of the customs laws, were placed under the direction of the
Fiscal Representative, as successor to the Financial Adviser-General
Receiver.
The Directors appointed in charge of the various custom houses in every
case were men who had served for many years in the customs organization
and who through long experience had demonstrated their ability to carry
out their new functions and assume positions of greater responsibility.
They were men in whom the Administration had confidence in their quali-
fications for the work entrusted to them, and it is gratifying to record that
since their appointment there has been no reason to regret the choices made.
Other officials chosen to fill important posts also have carried out their
work ably, and are deserving of a great deal of credit for making the
Customs Service a remarkably efficient organization.
Five American officials were retained as inspectors of the Customs Service
to oversee the operation and the strict application of the customs laws.
Customs inspection is carried out by inspectors residing at Cayes, Cap
Haitien, Saint Marc, and Port-au-Prince. Each resident-inspector is in
charge of inspection work in his district. The Cayes inspection district
includes J&r6mie. The Cap Haitien district includes Fort Libert6 and
Ouanaminthe. The Saint Marc district includes Gonaives and Port-de-Paix.
All other custom houses are in the Port-au-Prince inspection district. The
resident-inspector in that city is assisted by a deputy inspector. In addition
to customs inspection, these officials assist in inspection work under the
new Internal Revenue Inspection Service created under the Agreement of
August 7, 1933.

Internal Revenue Inspection Service
The Agreement of August 7, 1933, provided that inspection of the acti-
vities of the Internal Revenue Service was included among the duties of the
Fiscal Representative. Appropriate recommendations for the proper opera-
tion of the Internal Revenue Service were to be made by the Fiscal
Representative.
The Internal Revenue Inspection Service, which came into being on
January 1, 1934, was organized with a personnel composed entirely of
officials and employees who until that time had been serving in the Internal
Revenue Service. Men especially qualified for inspection work were chosen
for the new service. Their new work corresponded closely with the work
in which they already had been employed and with which they were well
acquainted.






HAITI: REPORT OF FISCAL REPRESENTATIVE


In effect, the new arrangement created two distinct administrative divi-
sions. Of these, the larger was placed under the direction of a Haitian
official, responsible directly to the Secretary of State for Finance. The
personnel was made exclusively Haitian. Duties were primarily the admi-
nistration of the internal revenue laws and collection of the internal revenue
taxes. The second division (the Internal Revenue Inspection Service) was
placed under the administration of the Fiscal Representative. Duties were
restricted to inspection work and making recommendations as provided in
the Agreement. No new function which had not existed before was
established by the Agreement, since regular and systematic inspection of
the collection of internal revenues had been a part of the work of the
organization built up under the Financial Adviser-General Receiver.
Since only the new Inspection Service is under the direction of the Fiscal
Representative, this report, so far as concerns internal revenues, has been
restricted to a discussion of the activities of the Inspection Service, the
formulating of appropriate recommendations for the proper operation of
the Internal Revenue Service and the adequate recording of receipts and
disbursements.* Inasmuch as the amount of internal revenue collected has
an important bearing on the maintenance of a balanced budget, a discussion
of internal revenue receipts in some detail is given in the appropriate section
hereafter. The Agreement of August 7, 1933, contains special provisions
affecting the responsibilities of this office in regard to cooperating in the
maintenance of a balanced budget, as well as changes in the tariff or
modifications of the taxes and internal revenues.
Until January 1, 1934, the Internal Revenue Service had been under the
direction of Mr. J. C. Craddock, with a staff of Haitian and American
officials and employees. On the date mentioned, Mr. Craddock became
Inspector General of the new service, with one assistant, four division
inspectors and five traveling inspectors. The office force consisted of a
stenographer, an office employee, and a messenger. The personnel of the
inspection service is exclusively Haitian with the exception of the Director
General and his assistant and three of the four division inspectors. Mr.
Thomas F. Murray was appointed as assistant to Mr. Craddock.
Each of the division inspectors is in charge of inspection work in a
district. The districts correspond to those referred to in connection with
customs inspection. Mr. Ll6io Cassagnol was made division inspector in
charge of the Port-au-Prince district. At the other three districts, Mr.
Maumus, Mr. Monk, and Mr. Perry, as division inspectors, carry out internal
revenue inspection in conjunction with their duties as customs inspectors,
and expenditures for their salaries are shared with the Customs Service.
The Inspection Service functioned during the last nine months of the
fiscal year under report. In this period, 843 inspections of internal revenue
offices were made. In each case, inspection included an audit of cash

*Tables showing internal revenue collections in detail are appended to this report.


'I






HAITI: REPORT OF FISCAL REPRESENTATIVE


accounts in addition to a general examination into methods of tax collecting,
qualification of employees for their work and other activities to assure the
proper operation of the tax collecting function. Inspections of distilleries
numbered 4226. Many miscellaneous inspections and investigations were
made.
The results of inspections and audits were reported to the Internal
Revenue Service. While no serious and outstanding irregularities were
found, there were reported a number of individual cases, as is to be expected
in an organization of the size and scope of the Internal Revenue Service,
where action needed to be taken to secure the proper collection of taxes
and an accounting for tax receipts. With the exception of a few incidents
involving minor officials, inspections indicated that internal revenue taxes
in general were being collected honestly and impartially.
Some of the Haitian and American officials, at present members of the
Office of the Fiscal Representative, in the past have been associated with
the Internal revenue Service, and have taken a part in the organization of
that service from the time when it provided less than nine per cent of the
annual revenues of the State to the period when it became the collecting
agency for more than seventeen per cent of total revenues. These officials
justifiably have taken a great deal of pride in seeing the organization grow
from year to year, and eventually become an essential and increasingly
important factor in the financial structure. Since 1931, defects in the new
excise legislation and changes in government policy have limited the
revenue-collecting effectiveness of the organization; but it is still an impor-
tant unit, and potentially well able to become, as it should, the principal
revenue-collecting agency of the Government. A well-balanced and efficient
organization, with an experienced and carefully drilled staff of officials and
employees was turned over on January 1, 1934, to the administration of
Haitian officials under the direct control of the Department of Finance.
In the period of nearly a year since that date the organization has continued
to administer the tax laws effectively, and those officials and employees
retained in the new service have continued to justify the confidence placed
in them by the Haitian government and by American officials under whom
they previously had served. Although the Internal Revenue Service is no
longer under the direction of these American officials, they take the same
pride and interest in the evolution and progress of the service as they did
in the past. It is to be regretted that this progress is needlessly handicapped
by the limitations of defective tax legislation, and it is hoped that the plan
of the Government to correct this situation will meet with the approval
of the legislative body.
Government Revenues
Total Revenues
Government revenues totalled Gdes. 36,752,165.28 in 1933-34, compared
with Gdes. 37,305,298.67 during the previous fiscal year. The decline
amounted to Gdes. 553,133.39, or 1.48 per cent.






HAITI: REPORT OF FISCAL REPRESENTATIVE


While revenues failed to reach the total of the previous year, nevertheless,
they were 31.17 per cent higher than revenues in 1931-32, and 15.77 per cent
higher than the 1930-31 total. A smaller coffee crop in 1933-34 produced
diminished returns from the duties on exports, but the loss in revenue
from this source was compensated for in part by greater receipts in the
form of duties collected on articles imported.
Chart No. 4, showing yearly government revenue collections since 1890,
indicates clearly that revenues in 1933-34 continued well above the mid-
depression level of 1930-31 and 1931-32. At the same time, a much further
gain in revenues will have to be recorded before the income of the Govern-
ment approaches the figures reached during the period of relative prosperity
which ended in 1929.
Revenues in Haiti naturally bear a very close relationship to activity in
foreign trade. The coffee crop brings in revenues in the form of the duties

CHART No. 4
TOTAL REVENUE RECEIPTS OF HAITI, FISCAL YEARS 1889-90 TO 1933-34
MILLONS Or
OOuneDE


"7^-----'r




gA -r
-V NJ


0oaa nass49596seMSocaco020oa040o007oroc o 10I, 1415 I17 8 I a202s 2 t232ams7282s3otI 3

on coffee exports, which ordinarily account directly for a third of total
government revenues. Rising prices or good crops bring money into the
country, and imports invariably respond almost immediately through
greater purchases of imported commodities. Many of the import duties
are collected on an ad valorem basis, and rising prices consequently produce
greater returns to the Government.
Compared with customs revenues, receipts from the internal taxes are
relatively stable. If allowance is made for the new taxes which have been
in effect since October, 1932, there has been little variation in internal
revenue receipts during the past three years, notwithstanding the wide
fluctuation in foreign trade and customs revenues. Unfortunately, from the
standpoint of stability in government receipts, the internal taxes still
produce only a small part of total government revenues.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Miscellaneous government receipts bear no direct relation to foreign
trade or business. They vary chiefly with the size of government deposits
and investments, together with the rates of interest paid.
The relative importance of the chief classifications of government, reve-
nues can be seen from the table below showing receipts in 1933-34:
Source Gourdes Per cent
Customs:
Imports .............................................. 19,394,235.80 52.75
Exports .............................................. 10,888,737.01 29.63
Miscellaneous...................................... 150,209.84 .41
Internal revenues ....................................... 5,048,902.18 13.75
Miscellaneous government receipts................ 999,232.78 2.72
Receipts from communes.............................. 270,847.67 .74

Total revenues, 1933-34................ 36,752,165.28 100.00,

Customs receipts still comprise far too large a share of the total. The
revenue from internal taxes should be increased at least to the point where
some stability in revenues can be assured, and the economically unsound
export duties can be removed.
In advocating the replacement of customs revenues by receipts from
internal taxes, this office is repeating what has been recommended many
times before. But little has been accomplished up to the present time,
except that it has been amply demonstrated that with proper legislation,
sources of revenue such as alcohol and tobacco can be made to provide
their fair share of support to the Haitian government, as they do to the
governments of other countries. The duty applied to coffee exports, and
the excessively high tariff which at present must be levied on imports in
order to provide the Government with sufficient revenues, will continue to
restrict the progress of the country, regardless of what may be accomplished
in the way of increasing production, improving commercial relations with
foreign countries, and other lines of endeavor to which especial interest is
now attached. The replacement of customs receipts by internal revenues is
still an outstanding need of the country.

Customs Receipts
The export and import tariffs in 1933-34 produced Gdes. 30,433,182.65
in revenues, compared with Gdes. 31,266,223.58 in 1932-33. The decline
amounted to Gdes. 833,040.93, or 2.67 per cent.
Customs receipts in 1933-34 accounted for 82.79 per cent of total
government revenues, compared with 83.82 per cent in 1932-33 and 82.39
per cent in 1931-32. They remained, therefore, the predominant source of
government income.
Of total customs receipts, 63,73 per cent were derived from the import
tariff, 35.78 per cent from the export duties, and 0.49 per cent from
miscellaneous sources such as storage charges, fines, and penalties.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Coffee alone in 1933-34 furnished no less than Gdes. 10,348,027 in direct
revenues, derived from the duty of Gde. 0.30675 per kilo applied to the
ordinary grades of coffee, together with the somewhat lower duties applied
to the types of coffee officially graded as Type 1, 2, or 3. Coffee, therefore,
provided the government directly with nearly a third of its total revenues.
Duties on sugar exports amounted to Gdes. 127,431 in 1933-34, and on cotton
to Gdes. 113,177. Duties on miscellaneous other exports added Gdes.
300,101 to the total.
A good coffee crop was harvested in 1933-34, and exports of coffee were
well above average. Since the export duties are specific, the income from
this source was greater than usual. In only seven of the past twenty years
have total receipts from the export duties exceeded the 1933-34 figure.
Nevertheless, a decline of Gdes. 2,338,156.14, or 17.62 per cent, from the
figure for the previous year was registered, due to the fact that a record
coffee crop was exported in that year.
This decline of more than two million gourdes in revenue strikingly
illustrates the extent to which the Government must depend for its income
upon the size of the annual coffee crop. An increase in the income from
internal taxes offers the only adequate means of bringing stability to
government revenues.
Whereas revenues from the export duties declined by Gdes. 2,338,156.14,
customs collections in the form of duties on imports increased in 1933-34,
compared with the previous year, by Gdes. 1,751,302.21, or by 9.93 per cent.
The increased purchasing power which came with rising prices for coffee
and cotton, in particular, produced continued activity in the import trade.
To this was added the heavy imports in the latter part of the year due to
speculation in cotton goods. In all probability, the import trade was more
active throughout 1934 than was warranted by consumer purchasing. Near
the close of the fiscal year, merchants were reported to be greatly overstock-
ed with merchandise for which there was no demand. As far as revenues
were concerned, however, the net result was to increase the collection of
revenues derived from the import tariff. Also, receipts tended to increase
because the prices of imported commodities, generally speaking, were rising
throughout the period, resulting in an increased yield from imports subject
to ad valorem duties. Receipts from import revenues increased from Gdes.
17,642,933.59 in 1932-33 to Gdes. 19,394,235.80 in 1933-34. The latter figure
was the highest comparable figure of any year since 1928-29.
The import tariff provides for the application of specific duties to most
of the commodities covered by the tariff. These commodities include
important groups such as lumber, gasoline, kerosene, common laundry
soap, rice, flour, and most of the group comprising manufactured iron and
steel, products. Ad valorem duties are applied exclusively to a few imports
such as machinery, automobiles, trucks, and miscellaneous kinds of appa-
ratus. On the other hand, either specific or ad valorem duties may be






HAITI: REPORT OF FISCAL REPRESENTATIVE


applied to many imports, depending upon which of the alternative rates
carried in the tariff produce the greater revenue yield. This is true of the
important textile group, a number of foodstuffs, particularly pickled fish,
and miscellaneous articles throughout the tariff.
The effect on revenue yields of generally increasing prices for commo-
dities imported, such as has occurred during the past year, may be seen from
the several ways in which the duties are applied. Rising prices obviously
have no direct effect on the revenue yield of articles on which specific duties
exclusively are applicable. Nevertheless, rising prices tend to reduce
quantities purchased, and as quantities diminish revenues decline. Imports
dutiable under ad valorem rates and those to which alternative duties are
applicable tend to counteract this effect and stabilize revenues. In this
period of rising prices many imports in the alternative group, previously
taxed on a specific basis, now are coming under the ad valorem classification
and are yielding increased revenues in proportion to the increase in prices.
The net result is that revenues from imports rise less rapidly than prices,
producing a progressive decrease in the burden of taxation until the-point
is reached where the burden of taxation, i. e., the relation between import
revenues and import values, becomes stabilized. Past experience shows
that when prices rise sufficiently the burden of taxation on imports is
reduced to about 29 per cent, at which point it remains constant regardless
of a further rise in prices. In the period from 1925 to 1930, for example,
the burden of taxation remained practically constant at between 29 and 30
per cent. Prices will have to rise much higher than they are at present,
however, before the tax burden is reduced to a figure approaching 30
per cent.
It often has been pointed out that the import duties place an excessively
high burden upon the movement of commodities into Haiti from abroad.
In 1933-34, for example, duties collected amounted to 42.45 per cent of the
value of all commodities imported. During the previous year, the burden of
the import tariff was even higher. Obviously, when imported articles are
being taxed an average of more than 40 per cent of their value, landed and
in the custom house, there is being added to their foreign value a surcharge
of such size that considerable resistance to their sale may be created. Many
articles, such as silk goods, can find only a very limited market. The
purchaser of any imported article is, in effect, paying a tax which averages
40 per cent of the value of the article abroad, plus the cost of transporting
the article to Haiti; and this average tax burden is computed not on the
comparatively small group of so-called "luxury" articles, which quite
properly are heavily taxed, but on all imports into the country, and most
of these consist of cotton goods, foodstuffs, kerosene, gasoline, household
utensils and other staple articles entering into domestic consumption.
The burden of the import tariff is very high. Of that there is no question.
But the import tariff also is the Government's principal source of revenue.




b


58 HAITI: REPORT OF FISCAL REPRESENTATIVE

Until other sources of revenue are found, such as increased income from
alcohol and tobacco, the import tariff must continue to levy a dispropor-
tionate and burdensome tax on consumers of the many articles which must
be purchased abroad. The attainment of the higher standard of living to
which the Haitian people aspire is retarded by the presence of this
unreasonable barrier to trade. The high import tax on staple imports has
been tolerated simply because it is indirect and unnoticed by the ultimate
consumer. A better understanding and appreciation on the part of the
people of the size of the tax they are paying on imports would go far to
overcome persistent objections to the transposition of revenue sources from
customs duties to the internal taxes which furnish most countries with
their chief sources of revenue.
,Miscellaneous customs receipts declined from Gdes. 396,396.84 in 1932-33
to Gdes. 150,209.84 in 1933-34. Receipts from this source consist chiefly
of storage fees, navigation taxes, fines and penalties, and vary considerably
from year to year. The decline of Gdes. 246,187.00 recorded above was due
to the payment in the prior year of the initial installments of a heavy fine
in settlement of pecuniary charges resulting from contraband operations
discovered during the year. Monthly installments on this fine are still being
paid.
The year-by-year changes in the amount of customs revenues by ports
offer an interesting example of the way in which commerce is steadily
converging toward the capital of the Republic. Export duties collected at
Port-au-Prince in 1933-34 reached a higher figure than that recorded for
any fiscal period for the past ten years. Similarly, import duties collected
at Port-au-Prince were higher in 1933-34 than in any previous year except
two. These were in 1927-28 and 1925-26, when the import trade reached
very high levels. Total customs receipts at Port-au-Prince during the past
ten years are given below:
Fiscal years Gourdes
1923-24................................................ 12,477,230.83
1924-25............................................. 15,986,578.64
1925-26................................................ 17,746,065.95
1926-27.................................................. 15,698,321.56
1927-28 ................................................ 21,687,904.75
1928-29................................................ 16,065,576.58
1929-30.................................. ..... 13,709,825.70
1930-31........................ .. ... 12,173,513.16
1931-32 ................. .......... ..... 11,928,675.58
1932-33 .......................... ....... 14,765,906.12

Internal Revenue Receipts
The internal revenue taxes during 1933-34 yielded Gdes. 5,048,902.18
compared with Gdes. 4,991,322.16 in 1932-33, indicating an increase of
Gdes. 57,580.02, or 1.15 per cent.
While the totals for both years show little variation, there were important
changes within the individual tax categories, and particularly in the excise
group. The various alcohol taxes, for example, in 1933-34 yielded Gdes.






HAITI: REPORT OF FISCAL REPRESENTATIVE


111,589.72 less than the previous year. Returns from the tobacco taxes, on
the other hand increased in 1933-34 by Gdes. 68,357.87, due principally to
augmented income from the tax on prepared tobacco.
The yield of the salt tax increased by Gdes. 28,243.99 in 1933-34. The
internal tax of Gde.0.25 per gallon on gasoline yielded Gdes. 574,516.23 in
1932-33 and Gdes. 549,608.68 in 1933-34, indicating a decline of Gdes.
24,907.55 in the latter period. While imports of gasoline increased in 1933-
34, tax receipts were lower due to the fact that large quantities of gasoline
which had been in storage became taxable when the new gasoline tax was
put into effect in October, 1932.
Taking all of the excise taxes as a group, the yield declined from Gdes.
1,844,434.20 in 1932-33 to Gdes. 1,804,538.79 in 1933-34, registering a drop
of Gdes. 39,895.41, or 2.16 per cent.
'The yield of all other internal revenue taxes, which totalled Gdes.
3,244,363.39 in 1933-34, increased by Gdes. 97,475.43, or by 3.10 per cent,
from the figure for the previous fiscal period. The returns from registration
fees increased in 1933-34 by Gdes. 69,000.65; revenue stamps by Gdes.
65,150.89; rentals on state lands by Gdes. 20,441.48; sales of postage
stamps by Gdes. 18,760.84; stamped paper by Gdes. 14,763.60; consular
visas by Gdes. 8,782.05; licenses by Gdes. 6,067.13; and telegraph and
telephone collections by Gdes. 5,210.11.
The yield of fees for the use of government irrigation systems increased
by Gdes. 3,229.49 to Gdes. 19,113.01 in 1933-34. Despite the increase, the
amount which the Government receives for the use of the extensive irriga-
tion systems which it has built, and now operates, represents a ridiculously
snall income considering the value of the systems to the persons who use
them and the amounts which the Government must expend each year for
their maintenance. Expenditures by the Public Works Administration for
maintenance of irrigation systems reached nearly Gdes. 100,000, whereas
receipts from the irrigation tax were only Gdes. 19,113.01. The need for a
nore equitable adjustment often has been pointed out, but thus far a new
irrigation law, which is badly needed, has not been provided.
The taxes enumerated above all produced greater yields in 1933-34. They
represent most of the individual tax categories other than the excise. A
few sources of revenue within the group, however, failed to show increased
returns. Of these the most important was the income tax, the revenue from
which dropped to Gdes. 527,377.87 in 1933-34, registering a decline of
Gdes. 81,585.28 from the figure for the previous year. Similarly, the income
from fines and penalties declined by Gdes. 28,683.07, and the yield of
subscriptions to government-owned water services declined by Gdes.
10,463.90.
.No especial significance is to be attached to the rise or fall of revenues
in the various tax categories, except in the case of the excise group. The
revenue decline in this group is a resumption of the decline which has







60' HAITI: REPORT OF FISCAL REPRESENTATIVE

occurred in every year since 1929-30, with the exception of 1932-33 when
the bumper coffee crop brought greater sales of alcohol, and a rise in the
yield of the taxes.
Internal revenue yields from alcohol have been as follows in each of the
years since the excise laws have been in force:
Gourdes
1927-28 ................................................ 55,883.07
1928-29.................................................. 1,438,513.75
1929-30................................................ 1,642,067.01
1930-31................................................. 1,048,921.42
1931-32................................................ 556,130.63
1932-33.................................................. 652,965.03
,1933-34 ................................................ 541,375.31
Alcohol today is yielding in revenues only a third of what it produced
five years ago. To be sure, economic conditions were better at that time.
Nevertheless, the taxes were new, and the collection of revenue from
alcohol was still in the experimental stage. With continued experience
under the same law, the yield today undoubtedly would be even greater
than it was in 1929-30; but the original law was abrogated in 1931, and
another law, drafted without sufficient consideration of its effect on reve-
nues, and ill-adapted to the needs of the alcohol industry, was substituted
in its place. The results are obvious from the above table. One of the most
urgent needs of the Republic at present is a properly drafted excise law,
giving an adequate revenue yield to the government treasury and assuring
protection to the alcohol industry. These two objectives are not incom-
patible. This office is convinced that legislation can be drafted, and can be
enforced, which will accomplish both purposes.
Much the same situation exists in the case of the Haitian tobacco industry.
Provisions in the existing law have reduced tobacco revenues and at the
same time have in no way rendered any solid support to the industry.
The absence of any consistently maintained government policy with respect
to the tobacco taxes, the continual threat of new experiments in tax rates,
have given rise to such apprehension and uncertainty within the industry
that the expected progress of the industry has been retarded. Annual
revenue collections from the tobacco taxes, given in the table below, show
graphically the industry's lack of progress, and the failure of the present
taxes to yield a fair share of revenue to the State:
Gourdes
1927-28................................................ 5,855.58
1928-29.................................................. 825,304.62
1929,30................................................ 1,090,411.74
1930-31.................................................. 841,020.92
1931-32 ................................................ 621,945.64
1932-33 ................................................ 484,063.96
1933-34 ................................................ 552,421.83
Tobacco and alcohol, even in difficult times, should easily provide the
Government with several million gourdes in revenues. Adherance to a
consistent tax policy and a definitive adjustment of the excise legislation,
should produce the needed results.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Miscellaneous Receipts
The income which the Government receives from miscellaneous sources
varies principally in accordance with the rates of interest paid on govern-
ment deposits, and the size of government investments in its own bonds.
Economic conditions have no direct effect on miscellaneous receipts.
In 1933-34 a new factor affecting miscellaneous revenues came into
evidence, in that interest received on the franc account of the Haitian
government for redemption of outstanding bonds of the 1910 franc loan
greatly increased in terms of gourdes because of the favorable rates at
which francs could be converted into dollars or gourdes. Conversion of
interest accumulations in the redemption account was largely responsible
for the increase in miscellaneous receipts recorded in that year.
Miscellaneous government receipts increased from Gdes. 902,079.84 in
1932-33 to Gdes. 999,232.78 in 1933-34. The gain of Gdes. 97,152.94 amount-
ed to 10.77 per cent.
Interest received on deposits and investments declined from. Gdes
658,732.50 in 1932-33 to Gdes. 635,689.02 in 1933-34. Treasury investments
in securities of the Republic declined slightly during the year, and income
from this source diminished accordingly. Also, average interest rates paid
on the time account of the Government in New York funds, which had
averaged 0.91 per cent in 1932-33, dropped in 1933-34 to 0.50 per cent. The
rate on the time account remained at 0.50 per cent throughout the latter
year. The sight accounts of the treasury produced no income in the form
of interest during 1933-34, although previously some interest had been
obtained on the sight account of the Government in New York funds.
Income from this source ceased in July, 1933, when banks in the United
States were forbidden by law to pay interest on demand deposits.
The conversion into dollars of monthly accumulations of interest in the
franc redemption account produced Gdes. 319,630.85 in 1933-34 as against
Gdes. 229,884.70 during the previous year. The rise of the French franc
accounted entirely for the gain in income, since the balance in the franc
redemption account declined by 6,141,044.42 francs during the year. On
September 30, 1934, the balance in the redemption account amounted to
32,433,546.25 francs. A total of 12,031 bonds of the 1910 loan were present-
ed for redemption during 1933-34, compared with 9,248 bonds in 1932-33 and
4,498 bonds in 1931-32. The loan is gradually being extinguished, although
many of the bondholders, apparently with the mistaken belief that some
adjustment eventually can be made to compensate for the decline of the
French franc between 1922 and 1928, have persisted in their demands that
redemption should be made at a rate of more than 500 francs per bond, or
even in the equivalent of the gold franc at its former parity, notwithstanding
the fact that the bonds bear a face value of 500 francs each. It is curious
to note that these same bondholders, who prior to the date when the loan
was called accepted interest on their bonds in current francs regardless of







62 HAITI: REPORT OF FISCAL REPRESENTATIVE

the low exchange rates, since then have endeavored to put every obstacle
in the-way of the complete retirement of the loan by insisting upon a
premium. Certainly, in view of the circumstances surrounding the issuance
of these bonds, the wording of the bonds themselves and of the bond in-
denture, there would be no possible justification for a change in the attitude
to, which the Haitian government always has adhered, namely, that it has
fulfilled all of its obligations in connection with the loan by calling.the
bonds and establishing a redemption account in current French francs of
sufficient size to redeem all of the bonds outstanding at the rate of 5.00
francs per bond.
Aside from income on cash deposits and investments in bonds, the
treasury from time to time receives funds from other sources which are
classified as miscellaneous receipts. These receipts consist principally of
payments 'of interest and amortization on loans made by the treasury, to
various communes of the Republic and funds reverting to the treasury
through prescription of unpaid treasury checks. Receipts from these
sources increased from Gdes. 13,462.64 in. 1932-33 to Gdes. 43,912.91. in
1933-34. The increase was due principally to the fact that considerable
sums of money have been loaned to communes during the past two years.
Interest payments on these loans are bringing in greater receipts under the
"miscellaneous" classification. Certain communal governments in past
years have received substantial advances from the government treasury and
have made no effort whatsoever to repay these loans. Improvement in the
finances of the communal governments due to collection of communal reve-
nues by the Internal Revenue Service, together with the general improve-
ment in business and foreign commerce, should make it possible for most of
these. communes to-make regular payments on the loans which they have
received from the Government.

Receipts from Communes
As described in detail in the last report of the Financial Adviser-General
Receiver*, the Internal Revenue Service since October, 1932, has been
charged with the collection of communal revenues in certain of the com-
munes of the Republic. This service was extended gradually, and by Oc-
tober, 1933, all communes, excepting Port-au-Prince, had entrusted the
collection of their revenues to the government tax collecting service. Com-
munal revenues at Port-au-Prince still are collected by the communal
government.
The Internal Revenue Service retains 15 per cent of communal revenues
collected in order to provide a fund to cover expenses in connection with
the collection of these taxes. Amounts thus set aside are accounted for,
under a separate classification, as government receipts. They should not
be confused with the actual revenue receipts of the Government itself.

*Page 47, Annual Report of the Financial Adviser-General Receiver, fiscal year 1932-33.






HAITI: REPORT OF FISCAL REPRESENTATIVE


S This service takes no part in the collection of communal revenues,
although officials now connected with the service until January 1, 1934,
were in charge of organizing this new function of the Internal Revenue
Service and in developing it to the point where all communes were covered
excepting Port-au-Prince. This report, therefore, is concerned with commu-
nal revenues only insofar as they have a bearing upon the economic condi-
tion of the country, and more directly through the fact that the 15 per cent
service charge to cover cost of collection is included in total receipts of the
Government and is accounted for in the records of this office.
SThe 15 per cent service charge referred to totalled Gdes. 270,847.67 in
1933-34, compared with Gdes. 145,673.09 the previous year. The increase
in 1933-34 amounted to Gdes. 125,174.58, or 85.93 per cent. Since the service
charge is a fixed percentage of communal taxes collected, the total of
communal revenues collected by the Internal Revenue Service increased in
1933-34 to a like extent. The comparison is significant, however, only in
that it shows the increased participation of the Government in the collection
of communal taxes, inasmuch as this new function had not reached its
present scope until the beginning of the year under review. In another
year, the government records of communal tax collections will furnish a
valuable measure of economic conditions in various parts of the country.
Uniformity and thoroughness in tax-collecting, which had been totally
lacking when the taxes were collected by the individual communal adminis-
trations, have been supplied by this new service rendered by the Govern-
ment.
Government Expenditures
Total disbursements of the Government from revenue in 1933-34 increas-
ed by Gdes. 3,543,467.65, or by 10.65 per cent, from the figure for the
previous year. The totals were Gdes. 36,802,275.73 in 1933-34 and Gdes.
33,258,808.08 in 1932-33. They include not only expenditures from ordinary
appropriations carried in the annual budget, but also those from supple-
mentary appropriations created by law during the course of the year, and
from extraordinary appropriations created by executive order, or, when the
legislative body is in session, by law.
Expenditures of the Government in 1933-34 reached a higher level than
in any year since 1929-30. For sake of comparison, the figures of total
expenditures from revenues for each of the past eight years are given below:
Fiscal years Gourdes
1926-27.................................................. 39,747,163.75
1927-28................................................ 40,977,914.49
1928-29................................................ 44,119,503.94
1929-30 ............................................... 40,643,229.52
1930-31................................................ 36,190,070.45
1931-32................................................ 32,888,112.00
1932-33................................................ 33,258,808.08
1933-34.................................................. 36,802,275.73
The rapid increase in expenditures during the past year largely has been
due to the Government's policy of spending all surplus current revenues






HAITI: REPORT OF FISCAL REPRESENTATIVE


for public works and other constructive projects. Many extraordinary
appropriations were established during the course of the year whenever
revenue forecasts indicated that receipts would be in excess of the original
budgetary estimate of Gdes. 32,000,000. These appropriations permitted
the orderly utilization of the indicated surplus.
At the end of the fiscal year 1933-34, total revenue receipts had reached
Gdes. 36,752,165.28 and expenditures from revenues during the year had
totalled Gdes. 36,802,275.73, leaving an excess of expenditures over receipts
during the year of Gdes. 50,110.45. In addition there remained treasury
obligations of Gdes. 786,126.86, representing total unused balances of
extraordinary appropriations. The latter amount was still available for
expenditure apart from the ordinary budgetary allocations, since extraor-
dinary appropriations remain available for use for a period of two years
from the date of their establishment.
If we eliminate from consideration those disbursements made during
1933-34 from extraordinary appropriations, and use the figure representing
the ordinary operating expenditures of the Government, we find that reve-
nues exceeded expenditures by Gdes. 4,164,018.20. As we have seen, however,
all of this surplus was expended during the year from new appropriations
established during the course of the year.
The total amounts expended from extraordinary appropriations by the
various departments and services of the Government during 1933-34 are
shown in the table below:
Gourdes
Public Works Administration........................................ 3,043,890.38
Department of the Interior............................................ 473,345.22
Public Health Service.................................................... 209,557.81
Department of Finance.................................................. 164,744.01
Department of Foreign Relations.................................. 123,699.97
Garde d'H aiti............................................................ 71,499.21
National Service of Agriculture.................................... 64,892.05
Department of Commerce................................................ 62,500.00
Total.................................................................... 4,214,128.65
In addition, several departments and services were the beneficiaries of
supplementary appropriations during the course of the year. Expenditures
from these appropriations, which represent additions to the ordinary budget
of expenditures, were as follows:
Gourdes
Garde d'Haiti............................................ 188,367.60
Public Works Administration.................... 60,000.00
Finance .................................................. 52,500.00
Foreign Relations............................. 42,800.00
Public Instruction..................................... 11,000.00
Justice........................................................ 8,500.00
Public Debt............................................. 2,000.00
Interior ................................................... 500.00
Total............................................ 365,667.60
The ordinary budget for 1933-34 authorized the expenditure of Gdes.
31.937,629.36. The latter figure was an increase of Gdes. 378,037.04 from







HAITI: REPORT OF FISCAL REPRESENTATIVE


the figure for net ordinary budgetary appropriations authorized in the
preceding year. This addition to the ordinary budget, together with the
large extraordinary and supplementary appropriations created during the
year, had the effect of increasing the disbursements of nearly all de-
partments and services of the Government in 1933-34, compared with the
previous year.
Total expenditures by departments and services in 1933-34, together with
the increase over the corresponding totals recorded in 1932-33, are shown
below:


Public Works Administration...................
Department of the Interior..... .............
Garde d'H aiti..........................................
Public Health Service.........................
Internal Revenue Service........................
Department of Foreign Relations............
Department of Commerce.......................
Department of Agriculture....................
Department of Justice.............................
Service of Series A, B & C Loans............
Department of Public Instruction............
Department of Religion...........................
Department of Public Works.................
Fiscal Representative.............................
Department of Finance...........................
Department of Labor............................
International- Institutions.......................


Total Expenditures
1933-34
Gourdes
7,050,830.51
2,087,454.22
5,862,494.81
2,910,859.78
1,016,338.75
657,788.92
385,760.17
1,682,674.83
1,262,343.30
8,631,552.60
1,831,894.21
402,256.02
28,840.75
1,417,528.08
991,072.03
517,586.75
65,000.00


Total.......................................... 36,802,275.73


Increase over
1932-33
Gourdes
1,998,060.46
516,064.16
284,627.97
205,016.01
156,443.41
126,083.61
89,395.22
81,417.41
72,706.00
39,442.30
34,810.60
3,326.15
3,078.70
1,996.96
2,614.56*
8,786.75*
57,600.00*

3,543,4 67.65


The accounting records of this office permit a detailed classification of
total government disbursements by functions and by objects of expenditure.
Payments for service of the public debt comprised 23.42 per cent of total
disbursements in 1933-34, compared with 25.60 per cent the previous year.
Expenses for military and police service were next in importance. They
comprised 14.88 per cent of the total in 1933-34, compared with 15.58 per
cent in 1932-33. Expenses for education were third in importance, with
9.39 per cent of the total in 1933-34, compared with 10.54 per cent the
previous year. Public health expenditures took a greater share of the total
in 1933-34, with 8.81 per cent in that year, compared with 7.96 per cent in
1932-33. The expense of revenue collection and financial administration
declined from 8.51 per cent of total expenditures in 1932-33 to 7.99 per cent
in 1933-34.
Expenditures connected with administration and operation of the Govern-
ment amounted to 60.85 per cent of total disbursements in 1933-34, compar-
ed with 61.08 per cent in 1932-33. Public works expenditures during the
past year accounted for an increased share of expenditures classified under
"acquisition of property". From 5.29 per cent of the total in 1932-33, the
percentage rose to 10.39 per cent in 1933-34.


*Decrease






HAITI: REPORT OF FISCAL REPRESENTATIVE


Expenditures for administration and operation are subdivided into several
classifications. Of these, "salaries and wages", "supplies and materials",
and "transportation" comprise the greater part. Disbursements for salaries
and wages increased from Gdes. 15,801,282.16 in 1932-33 to Gdes.
16,841,169.16 in 1933-34. Expressed as a percentage of total disbursements
under "administration and operation", however, the share taken by salaries
and wages declined from 77.10 per cent in 1932-33 to 75.06 per cent in 1933-
34. Purchases of supplies and materials and expenditures for transportation
both comprised a greater share of the total in 1933-34 than the previous
year.
Expenditures for Public Works
Two years ago, when revenues began to improve, the Government adopt-
ed the policy of expending surplus revenues so far as practicable for the
construction of public works. It was felt that not only would such expen-
ditures increase money circulation and give the needed impetus to recovery,
but that the use of surplus revenues for the construction of projects which
would open up new land to cultivation, particularly through irrigation and
drainage, would aid materially in the broader plan of increasing agricultural
production and lead the way to the solid establishment of important new
industries, such as the cultivation for export of bananas and long-fibre
cotton.
A total of Gdes. 2,334,270.82 was made available to the Public Works
Administration by extraordinary credit during the first year of the program.
Of that amount, well over half was appropriated for use in commencing
the extensive projects for irrigation and drainage planned at that time, and
many other projects, such as road construction (Gdes. 410,000) and bridge
repairs (Gdes. 237,500) were more or less related to the general plan.
An even greater amount was appropriated in 1933-34 for the use of the
Public Works Administration. Of total extraordinary appropriations,
amounting to Gdes. 3,708,999.00 in that year, the sum of Gdes. 2,584,519
was made available to the Public Works Administration for the purposes
described below:
Gourdes
N ew roads.................................................................................... 600.000
N ew public buildings.................................................................. 380,000
Repairs to buildings and churches.............................................. 176,000
Repairs and improvements to the public water supply............... 345,000
Irrigation and drainage.............................................................. 265,000
New bridges and repairs to bridges............................................ 245,000
Repairs and improvements in the telephone system.................. 202,500
M miscellaneous public improvements............................................ 131,019
Repairs and improvements to existing roads.............................. 100,000
W ork connected with public celebrations................................ 65,000
O their ........................................... ........................................ 75,000
2,584,519
In general, appropriations in 1933-34 covered a much greater variety of
projects. Moreover, the individual projects for the most part were for


4 -






HAITI: REPORT OF FISCAL REPRESENTATIVE


comparatively unimportant enterprises having no connection with the
more extensive projects commenced the previous year. Many of the projects
involving repairs were essentially necessary and urgent, as in the case of
the appropriations for repairs to the telephone system, waterworks and
bridges. On the whole, however, the original program of progressive
accomplishment of a few major projects has been lost sight of somewhat
in a mass of comparatively insignificant projects conferring local benefits
rather than benefits upon the country as a whole, and involving the treasury,
as in the case of new road construction, in the danger of increasing annual
recurring maintenance costs beyond the limitations of annual revenues.
Haiti today is insufficiently provided with roads. The need for new roads
to open up territory now inaccessible and undeveloped is acute. But
paradoxically it is fortunate that the existing road system is no more
extensive than it is, for the cost of maintenance would be greater than the
limited resources of the country could support. Already there is serious
doubt as to whether a year or two of diminished revenues will permit the
maintenance of some of the new roads, or even assure year-round traffic
on the main routes of communication. It is the belief of this office that the
road system of the country already has reached the point where recurring
charges for maintenance are barely within the limits imposed by current
revenues. Further extension of the road system should await a permanent
rise in the revenue-producing capacity of the country. That rise best can
be obtained by a more intensive development of the regions already provided
with communications by road.
Much the same difficulties exist with regard to public buildings. Schools
and courts are inadequately housed. Communal buildings and churches
everywhere are in a deplorable condition. Appropriations for direct expen-
ditures by the Government to be used for improving these conditions, or
indirect expenditures through advances to communes, have involved nearly
a million gourdes during the past two years. Splendid work has been done
by the Public Works Administration in utilizing these funds for building
many new structures and repairing existing buildings. The Public Works
Administration deserves a great deal of credit for accomplishing much
with slender resources. Communities in many sections undoubtedly have
benefited from the construction of handsome new schools and courthouses.
At the same time, such improvements as have been made constitute a very
small proportion of the total of similar needs which are no less essential
to the communities concerned. The expenditure of a million gourdes
represents only a very small beginning of the work of this type which
eventually should be carried out. Disbursement of this sum means much
to the relatively few communities which have been recipients of government
assistance, but to the country as a whole it means only that a million gourdes
have left the public treasury and that the executive government's plans to
benefit the people as a whole through irrigation, drainage, greater agri-






HAITI: REPORT OF FISCAL REPRESENTATIVE


cultural production, and a permanent increase in the country's resources,
have been delayed to that extent. It is unfortunate that both objectives
cannot be attained at the same time; but so long as resources are no greater
than at present, the Government can attempt to do no more than choose, and
so far as possible adhere to, a program of expenditure which best will bring
lasting benefits to the country as a whole.
New roads and new municipal buildings can be built when the nation has
achieved more stability in its income and greater financial resources. This
preeminent requirement already is in sight, and quickly will be at hand, if
every effort is concentrated on the means of attaining greater agricultural
production.
The construction of new bridges brings forward another problem in the
utilization of very limited resources to the best advantage. The Public
Works Administration for many years past has chosen to confine its work
in this direction to the building of a relatively few bridge structures, capable
of many years of service, but of high original cost. Undoubtedly, ultimate
economy lies in the avoidance in this way of heavy replacement costs, since
cheap and temporary structures have to be replaced from time to time. But
whether a country in -Haiti's present stage of economic development is best
served by this policy is at least questionable. In addition to the engineering
question involved, and the achievement of ultimate economy, is the question
of so utilizing present availabilities as to obtain immediately the utmost in
the way of material improvements in communication, transportation, drain-
age and irrigation which form vital parts of the program for increasing
agricultural production. Those who have faith in the ability of the country
to progress rapidly, once the solid establishment of one or more new
export industries is well under way, can await the construction of permanent
bridges, new communal buildings, and new roads until the time when a
definite raising of the level of national income permits the diversion of
funds in that direction.
Customs Service
Under the Agreement of August 7, 1933, the cost of operating the
Customs Service and other activities of the Fiscal Representative is paid
from a fund consisting of five per cent of customs revenues. In effect, the
Agreement provides for the continuation of the arrangement which has
been in force since 1915. Hence it is still possible to make the detailed
year-by-year comparisons of costs which for many years have been carried
in the annual reports of the Financial Adviser-General Receiver. The tables
in the reports which showed classified expenditures of that office have been
retained this year, and to them have been added the 1934 figures of expen-
ditures of the office of the Fiscal Representative.
The system of restricting expenditures for revenue collection to a fixed
percentage of revenue receipts is particularly well adapted to the financial
situation in Haiti. Although receipts fluctuate widely from year to year,






HAITI: REPORT OF FISCAL REPRESENTATIVE


the trend of revenues is distinctly upward, and expansion in the organization
of the revenue collecting services necessarily must accompany, and be a
part of, the development of the country economically. The "five per cent
fund" provides the flexibility which is needed, and at the same time
automatically eliminates the danger of creating a top-heavy and cumbersome
revenue-collecting agency with an excessively heavy fixed charge against
the national income.
To be sure, the severity and length of the depression had made it appear
that the percentage basis of allocating funds for revenue collection had
imposed restrictions which were prejudicial to the maintenance of an effi-
cient and well-organized structure. Enforced economy, and the fact that
the organization, instead of being kept intact or expanding, was being
curtailed in order to keep expenditures within the statutory limits, had its
inevitable effect upon the morale and efficiency of the personnel. But the
loss in that direction did not reach serious proportions, and now that reve-
nues have expanded, these difficulties have been overcome completely.
Fortunately, it had been foreseen during the years of relative prosperity
that the period of expansion would not continue indefinitely, and the devel-
opment of the revenue-collecting organization was at all times kept within
reasonable bounds. Moreover, a surplus was accumulated in the five per
cent fund which was drawn upon when current availabilities for expenditure
fell off, and retrenchment was nowhere near so great as it necessarily
would have been if no surplus had been accumulated.
This surplus had almost disappeared in 1932, but during the past two
years, with improving revenues, it has been possible to build it up, and at
the end of September, 1934, there remained in the five per cent fund a
surplus of Gdes. 251,911.11. Accruals to the five per cent fund during
1933-34 amounted to Gdes. 1,521,659.13. and expenses totalled Gdes.
1,417,528.08, producing a surplus of Gdes. 104,131.05 which was added to
the surplus of Gdes. 147,780.06 recorded at the end of the previous year.
Experience gained during the years of depression makes it doubly advis-
able to enlarge this surplus whenever revenues and accruals to the five
per cent fund offer an opportunity.
The variable nature of sums available for the operation of this office
has made it particularly necessary to have available for reference a detailed
accounting of amounts expended. The cost-accounting system put into
effect in 1924 and further elaborated in 1928 has filled this need admirably,
making it possible at all times to examine in detail the relation between
expenditures and availabilities. Tables 22 to 28, annexed to this report, and
similar tables in previous reports, give a complete record of sums expended
by the customs administration since 1919, classified by objects of expendi-
ture and by customs districts, as well as by months and by years. The
accounting system itself, as applied to the customs administration, as well
as to all of the administrative divisions of the Haitian government, is






HAITI: REPORT OF FISCAL REPRESENTATIVE


believed to compare favorably in completeness with the cost-accounting
system of any foreign government. So far as concerns the operation of the
customs service, it shows a record for economy of which it would be
difficult to find a counterpart in the cost of revenue collection elsewhere.
This office takes especial pride in the achievements recorded in these
accounts.
Expenditures of the Customs Service in 1933-34 showed little change,
both with respect to totals and classified objects of expenditure, from the
figure recorded the previous year. Since revenues remained at about the
same level in both years, accruals to the five per cent fund remained stable.
Expenditures likewise remained at nearly the same figure as in 1932-33.
In the latter year a total of Gdes. 1,415,531.12 was disbursed. In 1933-34,
total expenditures increased by only Gdes. 1,996.96, bringing the 1933-34
figure for total expenditures to Gdes. 1,417,528.08.
In 1933-34, as in the preceding year, the Customs Service paid the entire
amount of the annual commission due the Banque Nationale de la R6pu-
blique d'Haiti for treasury service in connection with customs collections.
This commission in 1933-34 amounted to Gdes. 304,331.82. The Government
is under the obligation of paying the bank a commission of one per cent of
total customs and internal revenue receipts, or a minimum of Gdes. 300,000
in any one year. This commission represents the bank's fee for performing
its various functions in connection with its service as treasury agent of
the Government. The Customs Service, whenever possible, has paid from
its five per cent fund that share of the commission represented by one per
cent of customs receipts. Payments of this commission were regularly
made by the Customs Service until 1931-32 when the drop in availabilities
made it necessary to pay part of the commission from the general funds
of the Treasury.
An analysis of expenditures in 1933-34 shows that relatively small in-
creases in disbursements for salaries and supplies were balanced by savings
effected principally in the accounts covering transportation, repairs and
maintenance, and the acquisition of property. Fixed charges, which account
includes only payment of the annual commission to the Banque Nationale
de la R6publique d'Haiti, also registered a decline, due to the decline in
revenues. A complete summary of the increases and decreases in the various
classifications of expenditures (1933-34 compared with 1932-33) is given
below: Increases Decreases
Gourdes Gourdes
Salaries and wages....... .. ..................... ........ 26,777.96 ................
Supplies and materials.................................. 21,365.02 ................
Transportation ........................ .. ......... ....... ........... 35,899.45
Communication ........................ .................. 350.65
Rents ................................. .......................... 1,430.07................
Special and miscellaneous.............................. 7,355.63 ................
Repairs and maintenance............................. ................ 9,030.86
Acquisition of property................................ ................ 1,320.34
Fixed charges..... ....... ............. .. .............. 8,330.42
56,928.68 54,931.72






HAITI: REPORT OF FISCAL REPRESENTATIVE


The changes indicated are so small relative to the total expense statement
of the Customs Service of over one million gourdes that they are of little
significance except that they show almost no change in the cost of operating
the service during the year under report. Small salary increases were grant-
ed to deserving members of the personnel, bringing about an increase in the
salary account. The increased cost of supplies reflects simply the general
rise in the prices of stationery, office supplies and similar items. Transporta-
tion costs declined because it was not found necessary during the year to
purchase new automotive equipment. This account probably will show an
increase in 1934-35 since replacements will be necessary. "Special and
miscellaneous" expenses show an increase due to the cost of the annual
audit of accounts. This audit, as explained elsewhere in this report, had
been deferred during the years of declining receipts because of the need for
economy.
Disbursements for repairs and maintenance, as well as for acquisition of
property, show a small decline. It was felt desirable during the year to
continue the deferment of needed repairs as long as possible in order to
help build up a surplus in the five per cent fund. Many needed improve-
ments to customs property and replacement of equipment no longer can be
delayed, and it is probable that these accounts also will show an increase
in 1934-35.
The total cost of customs operation in 1933-34 was Gdes. 523,893.01,
compared with Gdes. 637,588.57 in 1929-30 before sweeping economies had
to be put into effect. Similarly, administrative costs were Gdes. 557,564.73
in 1933-34 compared with Gdes. 640,263.91 in 1929-30. Disbursements for
the acquisition of property, which usually exceeded Gdes. 100,000 in each
of the years prior to 1930-31, in 1933-34 amounted only to Gdes. 16,450.36.
Since customs revenues declined somewhat in 1933-34, it is to be expected
that the cost of customs operations, per gourde collected, would rise. For
each gourde collected in 1932-33, the cost of operating the custom houses
consumed Gde. 0.0166. In 1933-34 this figure rose to Gde. 0.0172. If admin-
istrative costs are added to the above, the corresponding figures are Gde.
0.0339 and Gde. 0.0355 respectively.
Expenditures at seven custom houses advanced slightly in 1933-34 com-
pared with 1932-33. These were Cayes, Jacmel, Saint Marc, Port-de-Paix,
Petit Goave, Jer6mie, and Fort Liberte. The remaining custom houses
reported decreased expenditures, the most notable drop being at Port-au-
Prince where costs declined from Gdes. 267,216.48 in 1932-33 to Gdes.
262,014.07 in 1933-34, notwithstanding the marked rise in collections in
that port during the latter year. At Port-au-Prince the cost per gourde
collected declined from Gde. 0.0181 in 1932-33 to Gde. 0.0150 in 1933-34,
putting that custom house in third place, after Gonaives and Jacmel, in the
order of economy in the collection of customs revenues.





HAITI: REPORT OF FISCAL REPRESENTATIVE-


In previous annual reports reference has been made to the belief that
customs revenues are collected with greater economy in Haiti than in other
countries. An adequate comparison is difficult, because other countries
in most cases do not publish data as to customs costs with the completeness
with which these costs are recorded in Haiti. But no instance ever has been
brought to the attention of this office where the customs revenues of a
foreign country have been collected with so little cost to the government.

Internal Revenue Service

In examining expenditures of the Internal Revenue Service, it should
be remembered that since January 1, 1934, that organization has been
separated into two divisions, of which only the Inspection Service comes
under the direct administration of the Fiscal Representative.
Formerly, the Internal Revenue Service had operated from a fund con-
sisting of 15 per cent of revenues collected by it. Under the new arrange-
ment, 15 per cent of collections continued to be set aside, but 5 per cent of
collections were to constitute the operating fund of the Inspection Service,
and the balance was to be used to cover the expenses of the Internal Revenue
Service. The Agreement of August 7, 1933, provided that sums not required
by the Internal Revenue Inspection Service within its allowance were to be
made available to the Internal Revenue Service.
Accruals to the operating fund of the new Inspection Service amounted
to Gdes. 178,440.97 in the nine months from January 1, 1934, to September
30, 1934. Expenditures during the same period totalled Gdes. 174,797.24.
This amount was expended for the following purposes:
Gourdes
Salaries .................................................. 73,005.55
Supplies .................................................. 2,412.78
Transportation ........................................ 55,660.06
M miscellaneous ......................................... 274.00
Repairs ................................................... 17.50
Equipment .............................................. 43,427.35
Total............................................ 174,797.24

Transportation costs comprised nearly a third of total expenditures during
the nine months period. This proportionately large item is to be expected
in view of the nature of the work performed by the Inspection Service,
involving frequent visits to internal revenue offices, distilleries, and tobacco
factories in all parts of the country. Moreover, new automotive equipment
had to be purchased at the time the new service was organized.
As already explained, the Inspection Service did not add a new function
to the work of collecting the internal taxes. A function which already had
existed was simply placed under separate administration. For this reason,
expenditures still can be accounted for adequately by combining those of
the Inspection Service with those of the Internal Revenue Service. Tables
with classifications of expenditures carried in the reports of the Financial






HAITI: REPORT OF FISCAL REPRESENTATIVE


Adviser-General Receiver are again carried in this report, and disbursements
of the Inspection Service since January 1, 1934, have been combined in the
tables with the disbursements of the Internal Revenue Service. In this way,
a detailed comparison and analysis of expenditures still can be made.
The combined operating allowance of the two services totalled Gdes.
1,016,338.75 in 1933-34, compared with Gdes. 859,896.16 in 1932-33. The
increase was due first to the extension in the past year of communal tax
collecting to all communes of the Republic excepting Port-au-Prince, and
secondly to the gain in internal revenue collections. The service charge of
15 per cent of communal collections amounted to Gdes. 270,847.67 in 1933-
34, as against Gdes. 145,637.09 in the previous year. Thus, Gdes. 125,174.58
were added to the amounts made available to the Internal Revenue Service
for expenditure.
Of course, the extension of communal tax collecting at the same time
added to the cost of operating the Internal Revenue Service. Total expenses,
including, since January 1, 1934, those of the Inspection Service, rose to
Gdes. 1,016,338.75 in 1933-34 from Gdes. 859,895.34 in 1932-33. All accruals
to the combined operating funds were expended in 1933-34, and all but a
fractional amount was expended the previous year.
The Internal Revenue Service in 1933-34 did not pay all of the com-
mission of one per cent due the Banque Nationale de la R6publique d'Haiti
for its services as.depository for tax collections. Of the amount of Gdes.
50,489.02 due, the Internal Revenue Service paid Gdes. 40,709.08. The
balance was paid from the general funds of the treasury. The previous
year, the Internal Revenue Service paid all of the amount due, or Gdes.
47,241.03.
Expenses for administration and operation increased from 83.67 per cent
of total expenses in 1932-33 to 90.09 per cent in 1933-34. Corresponding
declines were registered under disbursements for the acquisition of property,
repairs and maintenance, and payment of fixed charges. The latter item
consists only of the commission due the Banque Nationale de la Republique
d'Haiti.
Subdividing disbursements for administration and operation, we find that
salaries and wages comprised 73.10 per cent of those expenditures in 1933-
34, compared with 72.05 per cent the previous year. Comparing the same
periods, transportation costs increased from 16.26 per cent to 17.03 per cent.
The cost of supplies, and miscellaneous items remained about the same in
both years.

Treasury Position

Since government receipts during 1933-34 very nearly equalled expen-
ditures, there was comparatively little change in the cash position of the
treasury. However, such changes as occurred, as can be readily seen from







74 HAITI: REPORT OF FISCAL REPRESENTATIVE

the simplified balance sheet given below, were in the direction of greater
liquidity:
Sept. 30, 1934 Sept. 30, 1933
ASSETS Gourdes Gourdes
Current Assets.................. 9,434,391.04 8,704,183.30
Investments .................... 9,041,512.45 9,278,728.55
Other Assets.................... 4,284,540.31 4,182,327.49
22,760,443.80 22,165,239.34
LIABILITIES Gourdes Gourdes
Current Liabilities............. 2,779,889.20 2,802,973.94
Reserves ........................... 4,445,363.80 4,182,327.49
Surplus ............................ 15,535,190.80 15,179,937.91
22,760,443.80 22,165,239.34

The sale of treasury investments in Series B bonds to the fiscal agent
for amortization purposes has had the effect of adding to cash resources
and reducing investments. Otherwise, the balance sheet for the most part
was affected only by such items as changes in extraordinary appropriations
outstanding and government checks issued but not yet paid, when com-
parison is made of the condition of the treasury on September 30, 1934,
and on the same date the previous year.
Current assets as of September 30, 1934, consisted of the following:
New York funds: Gourdes
Current accounts.................................... 4,540,680.80
Time account ....................................... 3,281,977.15
7,822,657.95
Current accounts in gourdes................................................. 1,502,188.81
Receipts in suspense................................................................ 428.85
Cash in hands of disbursing officers.................................... 109,115.43
Total.......................... ..................... .............. ... 9,434,391.04

On September 30, 1933, total cash deposits in the Banque Nationale de
la R6publique d'Haiti amounted to Gdes. 8,606,876.38, of which Gdes.
4,542,798.80 were in New York funds.
Investments are carried on the balance sheet at cost. The total of Gdes.
9,041,512.45 indicated on the balance sheet as being the cost of treasury
holdings of securities of the Republic as of September 30, 1934, represents
the following nominal value of these securities:
Dollars
Series A.......................... ..................... 700,000.00
Series B................................................ 972,009.80
Series C................................................ 289,299.74

1,961,309.54

The remaining figure on the asset side of the simplified balance sheet,
labeled "other assets", consists of: (1) the balance in the account maintain-
ed at the Banque Nationale de la Republique d'Haiti to cover fiduciary
currency out of circulation; and (2) outstanding loans to communes. The
first of these two items declined to Gdes. 3,461,676.51 on September 30,
1934, from Gdes. 3,622,500 on the same date of the previous year. The







HAITI: REPORT OF FISCAL REPRESENTATIVE


account is adjusted monthly so that the balance at no time exceeds the
average of fiduciary currency in the vaults of the bank for the previous
month. As fiduciary currency in circulation is lost or destroyed, and as the
demands of commerce for subsidiary coinage increase, this account will
tend to decrease, and cash on deposit will increase to a corresponding extent.
A number of new loans were made to communes during 1933-34, and the
figure representing the participation of the treasury in these advances
consequently increased. Outstanding loans to communes amounted to
Gdes. 822,863.80 on September 30, 1934, as against Gdes. 559,827.49 on
September 30, 1933. Twelve communes and a Catholic school were bene-
ficiaries of treasury loans which aggregated Gdes. 283,000.00 during 1933-
34. In the same period, repayments on the principal amounts of advances
to communes amounted to Gdes. 19,963.69. A number of advances made
to communes in past years have never been repaid. With the recent
improvement in the finances of the communal governments, there is now
no reason why repayment should be delayed. The amount owed the Govern-
ment by communes, which now approaches one million gourdes, if repaid
could be employed for much-needed public works projects.
The asset side of the balance sheet does not include many intangible or
contingent assets, and assets represented by the private domain of the State.
For example, the Government owns and operates valuable public utility
properties and it has a reversionary interest in the property represented
by concessions now operated under private ownership. No values have been
set upon such items, although obviously they represent valuable assets of
the State. The extent of the private domain has never been even approxi-
mately determined. Such properties as appear upon the cadastre represent
only a small part of the total.
An important contingent asset consists of the balance in the 1910 loan
redemption account in excess of requirements for redeeming outstanding
bonds. The exact amount which eventually will revert to the treasury cannot
be determined at this time, since prescription of coupons on certain bonds
has been interrupted or suspended, but it appears that at least 800,000
French francs will return to the treasury from the balance of 32,433,546.25
francs on deposit as of September 30,1934, to cover redemption of the 1910
bonds still outstanding. The restoration of this sum to the treasury is under
discussion at present.
Current liabilities showed little net change on September 30, 1934, com-
pared with the same figure for the previous year. However, there were
substantial changes between the individual items.
Current liabilities as of September 30, 1934, are listed as follows:
Gourdes
Extraordinary appropriations outstanding.............. 786,126.86
"Non-revenue" credits........................................... 516,642.39
Balance in operating fund of Fiscal Representative 251,911.11
Treasury checks oustanding................................. 1,225,208.84
Total......................... ...... ............. ... 2,779,889.20






HAITI: REPORT OF FISCAL REPRESENTATIVE


Since extraordinary appropriations may be drawn against during a period
of two years from the date of their establishment, there exists at the end of
each fiscal year an obligation representing unused balances of extraordinary
appropriations. This obligation amounted to Gdes. 786,126.86 as of Sep-
tember 30, 1934, and to Gdes. 1,291,542.02 on the same date of the previous
year, registering a decline of Gdes. 505,415.16. On the other hand, the
figure for checks issued and not yet paid increased from Gdes. 778,576.10
on September 30, 1933, to Gdes. 1,225,208.84 on September 30, 1934,.an
increase of 446,632.74.
Balances standing in "non-revenue" credits declined by Gdes. 67,382.68
between the same dates. These items represent balances in accounts compos-
ed of funds received from sources other than revenue, such as savings
accounts of the Garde d'Haiti, deposits of bonds and guarantees, various
revolving funds, and other credits where deposits and withdrawals cannot
properly be considered as revenues and expenditures of the Government.
The amount of Gdes. 516,642.39 representing the combined balance of such
accounts as of September 30, 1934, indicates the total amount which the
treasury might be called upon to pay.
The remaining item in the table above represents unused accruals to
the five per cent operating fund of the Fiscal Representative. The corres-
ponding figure at the end of the previous year was Gdes. 147,780.06,
indicating an increase since then of Gdes. 104,131.05. The operating fund
varies within wide limits in accordance with fluctuations in customs reve-
nues, and it is desirable that the balance in the fund should be somewhat
higher than it is at present.
The figure on the liability side of the balance sheet under "Reserves"
showed no change between the two dates except in the item covering loans
to communes which was increased by the net amount of advances made
during the year, or by Gdes. 263,036.31. In the interest of conservative
accounting, it has been the practice to set aside from surplus an amount
corresponding to the balance of outstanding treasury advances of this
nature. The loans represent assets of the treasury only to the extent that
the beneficiaries are able to repay them. Experience in recent years has
shown that beneficiaries of government loans in many cases fail to appre-
ciate the nature of their obligations to the State and make little effort to
maintain or improve their credit standing by liquidating these obligations
promptly. Neglect of contractual obligations in individual instances reflects
not only on the credit of the communal administration concerned, but upon
the security of advances of this kind as a group. When resources permit,
the treasury can be of much assistance to the communal governments; but
such assistance certainly cannot be readily forthcoming if beneficiaries
continue to neglect meeting their obligations to the State promptly and
in full.


*






HAITI: REPORT OF FISCAL REPRESENTATIVE


Public Debt

Since the flotation of the three issues of the loan of 1922, the Republic
of Haiti has an unbroken record of full payment of all interest and amorti-
zation requirements of the funded debt. Not only have contractual obliga-
tions been met in full, but payments to the fiscal agent of the external
issues regularly have been made in advance of the dates on which they
were due.
The high credit standing of the Republic is reflected in quotations for
the Series A bonds on the New York Stock Exchange. Prices climbed
during 1933-34 from a low of 68%j early in the year to a high of 82 reached
in July, 1934. Market quotations show that the Haitian bonds are included
among the highest grade Latin American issues floated in the United States.
That prices for Haitian bonds declined for a while to low levels was due
to apprehension felt by investors as to the security of Latin American bonds
as a class, and not to doubts concerning the intrinsic merit of the Haitian
issues.
The gross public debt of the Republic had been reduced to Gdes.
50,830,435.79 on September 30, 1934, from Gdes. 66,901,412.84 on Sep-
tember 30, 1933. At the end of the preceding fiscal year the gross debt
amounted to Gdes. 72,625,870.96. Figures include the government's liability
of Gdes. 3,622,500 to protect fiduciary currency, and deduction has been
made of sums remaining unexpended in the sinking fund accounts on the
dates mentioned.
Expressed in terms of face values of bonds outstanding the public debt
of the Republic on September 30, 1934, was as follows:
Gourdes
Series A.............................................. 45,757,500.00
Series B............................................... 5,454,538.70
Series C.............................................. 7,447,806.80
Total...................................... 58,659,845.50
Of the above amounts, the treasury on the same date held bonds having
the following face values:
Gourde,
Series A............................................... 3,500,000.00
Series B............................................... 4,860,049.00
Series C................................................ 1,446,498.70
Total......................................... 9,806,547.70
From the figures given, it can be seen that bonds remaining in the hands
of the public on September 30, 1934, had a nominal face value of Gdes.
48,853,297.80. Of this amount, Gdes. 42,257,500 represented Series A bonds;
Gdes. 594,489.70, Series B bonds; and Gdes. 6,001,308.10, Series C bonds.
The figures which have been given show that the Series B issue, or
internal loan, nearly has been extinguished, except for the relatively large
number of these bonds still held by the treasury as an investment. Pond-
holders responded quickly to the offer made by the President of the






HAITI: REPORT OF FISCAL REPRESENTATIVE


Republic on May 9, 1933. to exchange A bonds for those of the Series B
issue in the hands of the public.* Bonds not yet exchanged at the end of
the fiscal year 1933-34, having a face value of slightly more than $100,000,
were in the hands of 85 bondholders, most of whom individually held bonds
of less than $500.00 nominal value. Efforts are being made to reach the
remaining bondholders and make known to them the advantages of
exchanging their bonds against those of the Series A issue.
Arrangements for exchanging Series B bonds against those of the A
issue may be made at any office of the Banque Nationale de la R6publique
d'Haiti.
Payments in 1933-34 to the fiscal agent of interest and amortization
requirements of the external issues were made on the dates, and in the
amounts, indicated below:
Series A Series C
Gourdes Gourdes
October 1, 1933...................... 2912,499.90 482,124.90
March 28, 1934...................... 2,912,499.90 482,124.90
Total.............................. 5,824,999.80 964,249.80
The bond contracts call for payment in equal monthly installments of
the amounts due for interest and amortization. It has been found advan-
tageous, however, to make payments considerably in advance of the due
dates, since funds on deposit with the fiscal agent draw interest at the
rate of 24 per cent per annum, whereas funds deposited in the time account
of the Government at present draw only 2 per cent interest. Moreover,
payments in large installments permit the fiscal agent to set aside sufficient
sums to cover coupons on the next interest date and then begin at once to
apply the balance to the gradual acquisition of bonds in the open market
for amortization. Support is therefore given the market for the bonds by
continual sinking fund purchases throughout the year. The steady flow of
funds for the retirement of the outstanding bonds gives stability to the
market prices of the bonds and enhances their desirability as an investment.
It is stipulated in the bond contracts that the amounts paid to the fiscal
agent shall be applied first to interest requirements, and the balance to
amortization. The relatively low prices at which it has been possible to
acquire bonds for amortization during the past few years has accelerated
retirement of outstanding bonds and has reduced the amount which must
be paid out for interest. Thus, the total interest requirements of the
external and internal issues declined from Gdes. 3,954,304.11 in 1932-33 to
Gdes. 3,595,138.15 in 1933-34, making the difference available for further
amortization. In addition, the schedules of payments in the bond contracts
provide for slight increases each year in the amounts which the Govern-
ment pays to the fiscal agents. Consequently, retirement of the outstanding
bonds is being progressively accelerated. After payment of interest, the

*Details of the operation are given in the Annual Report of the Financial Adviser-General Receiver,
fiscal year 1932-33, page 62.


I .*







HAITI: REPORT OF FISCAL REPRESENTATIVE


sum of Gdes. 5,000,111.45 was left available for amortization in 1933-34,
compared with Gdes. 4,604,789.69 during the previous year.
The American government in recent months has put into effect new and
drastic regulations governing the stock exchanges of the United States and
restricting the type of securities which may be traded on the exchanges.
The Series A bonds are listed on the New York Stock Exchange. Recently,
information has been received that the bonds are assured of continued
listing on the stock exchange under the new regulations governing exchange
transactions. This approval of Haitian securities means that they have won
the privilege of being included in a restricted group of bonds. Listing may
be closed to the bonds of countries which have failed to keep their finances
in good condition.
SSo long as revenues are maintained near their present level, the public
debt of Haiti will continue to place a relatively light burden on the financial
resources of the country. The burden of annual interest charges has been
reduced from 19.08 per cent of revenue receipts in 1923-24 to 9.78 per cent
in 1933-34. Including amortization charges, the burden of the debt has
-been reduced from nearly 30 per cent of revenues in 1923-24 to 23.48 per
cent in 1933-34. In ten years the gross debt has been more than cut in half.
The Republic has passed through a period of extreme business depression
and has met promptly all of the contractual obligations connected with its
public debt. No contingency can be foreseen which would throw doubt on
the ability of the country to continue service of the debt. The problem
before the Government today is not that of finding the wherewithal to pay
the charges on the sums which it has borrowed but to utilize the margin
between debt charges and revenues to the best advantage.

Service of Payments
The Service of Payments, which until January 1, 1934, operated under
the "five per cent fund" of the Financial Adviser-General Receiver, continu-
ed after that date, under special provisions of the Agreement of August 7,
1933, as an important division of the Office of the Fiscal Representative.
The cost of operation is paid from the operating allowance of the Fiscal
Representative.
Under the Agreement, all government checks since January 1, 1934,
have been signed by a delegate of the Secretary of State for Finance,
rather than by the disbursing officer of the Office of the Financial Adviser-
General Receiver as previously. The only exceptions are checks drawn
against funds deposited at the Banque Nationale de la R6publique d'Haiti
to the credit of the Fiscal Representative, which are signed by the Fiscal
Representative or his delegate.
The Service of Payments performs a great many functions in connection
with the finances of the Republic. Primarily, it is the central government
accounting office. All receipts and expenditures of the Government are







HAITI: REPORT OF FISCAL REPRESENTATIVE


passed over its books, and regularly audited. Accounting control is main-
tained over all government deposits, investments, "non-revenue" accounts,
and disbursements in connection with the public debt. Budgetary and other
appropriations are carried in accounts under a system which gives assurance
that appropriations cannot be overdrawn or misapplied. Accounts are kept
to permit detailed analyses of costs. Statistics are compiled monthly and
annually to furnish the Government with detailed records of all financial
transactions. The tables respecting finances annexed to this report were
compiled by the Service of Payments. Finally, vouchers covering expen-
ditures and issued by all departments and services of the Government. are
routed to the Service to Payments where the necessary entries are passed
over the accounts and checks drawn and sent to the proper official, for
signature. Following signature, checks are distributed by the Service of
Payments to the offices where the expense originated; or in the case of
salary payments due employees of the Government checks are distributed
directly from the office in Port-au-Prince or are paid through agents in
other districts of the country. Officers of the Garde d'Haiti on their regular
inspection trips handle civil payments in the remote parts of the country
and in sections not within easy distance of the cities. In the cities, payments
are effected through agents of the Service of Payments attached to the
various custom houses.
No particular difficulties were experienced during 1933-34 in carrying out
the various activities of the Service of Payments. Civil payments were made
regularly and without interruption except in September, 1934, when in a
few instances payments had to be delayed somewhat while awaiting
supplementary appropriations. The fact that the 1933-34 budget was well
adjusted to the operating requirements of the Government greatly expedited
the work of the Service of Payments, and lessened the auditing and account-
ing problems resulting from the unsatisfactory budgetary situation of
prior years.
The existing Service of Payments is an organization which has been
developed and improved year after year until now it meets every require-
ment of the Government with respect to auditing and accounting.

Auditing
It had been the practice in the past to have a yearly independent audit
made of the accounts kept by the Service of Payments. These audits had
been interrupted since 1930, because of the need for economizing in every
possible way; but increasing availabilities in the "five per cent fund" made
it possible to resume these audits at the end of the fiscal year under report.
A staff of four auditors lent by the office of the Comptroller General;of
the United States began an examination of the accounts in September, 1934.
The audit was not completed until November following the close of the
fiscal year because of the work involved in checking back the records .of







HAITI: REPORT OF FISCAL REPRESENTATIVE


the preceding four years. Their report has since been received, and it has
given assurance that the accounts had been properly kept during the
period. The report contained some valuable recommendations and sugges-
tions concerning bookkeeping methods which will be put into effect. In
general, however, the report indicates that the accounting system which
has been improved gradually over a period of many years now serves the
purpose admirably and requires no changes of a fundamental nature. On
the contrary, the new Budget and Public Accounting Law, together with
the accounting system which operates under its authority, are believed to
give to Haiti a control over government receipts and expenditures which
has no superior elsewhere in government accounting.
:The auditor's examination of the accounts revealed no irregularities of a
serious nature. One point, however, is worthy of special mention. Criticism
in the report was directed against the tardiness which sometimes occurs in
connection with the justification of cash advances. The Public Accounting
Law authorizes the payment of such advances to government paymasters
for use in defraying certain classes of expenditures such as travelling on
official business, representation, the cost of celebrating national holidays
and similar expenses. Such advances, by law, later must be justified by
submission of documents evidencing the disposition made of the sums
advanced. In the great majority of cases, these advances are promptly
justified, but in a number of instances the accounts have been left unjustified
for a longer time than was reasonable. This office is doing all in its power
to secure in as short a time as each case permits proper justification for
advances of this nature, and it has secured the cooperation of government
officials in the matter of closing the outstanding accounts.

Supplies
The centralization of government purchases of stationery, office supplies
arid similar equipment, under the Bureau of Supplies, continued during
1933-34 to give the highly satisfactory results recorded in the past. Not
only does the Bureau provide a competently managed and centrally located
supply house, well stocked with the thousands of individual items entering
into the everyday use of the government offices, but it has made possible
considerable economies through the purchase of supplies in quantity and
at favorable discounts.
The Bureau of Supplies is not a profit-making enterprise. Merchandise
is sold at a margin which will just cover operating expenses. During 1933-
34, merchandise costing Gdes. 248,249.82 was sold for Gdes. 270,819.20,
leaving a gross profit of Gdes. 22,570.08 to cover expenses. Operating
expenses of the Bureau amounted to Gdes. 19,391.27 (compared with
Gdes. 19,650.89 in 1932-33), leaving a net profit at the year end of Gdes.
3,178.81.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Gross sales during 1933-34 amounted to Gdes. 270,819.20, or practically
the same as the figure of Gdes. 271,231.10 recorded the previous year.
Inventories were valued at Gdes. 148,529.25 on September 30, 1934 compared
with Gdes. 122,483.31 on September 30, 1933. Total assets on the same
dates were Gdes. 186,037.16 and Gdes. 183,574.70 respectively. No liabilities
were recorded at the end of either year.

The Budget and Financial Legislation

For the first time in several years the Government in 1933-34 operated
under an ordinary budget of expenditures which had not been prorogued
from the prior year, or which did not need extensive administrative reduc-
tions in order to keep expenditures within the limit of receipts. Also, the
1933-34 budget contained full provisions and adjustments needed to provide
funds for new positions or functions created by law in prior years, and for
which funds previously had to be provided by means of special appropria-
tions.
To simplify and strengthen administrative control over expenditures,
it is highly desirable that an annual budget should be enacted which will
require little or no adjustment during the course of the fiscal year which it
is intended to cover. The 1933-34 budget was ideal in this respect. It was
balanced, with a safe margin to spare. Payments for salaries and other
expenses could be made promptly. Accounting was simplified. It was
possible to determine accurately at all times the relation between receipts
and probable expenditures, thus adding to the statistical value of data
accumulated during the course of the year. All government departments
and services were aided in that they knew at all times just how they stood
with regard to availabilities.
Unfortunately, the good record of the year under report will not be
repeated in 1934-35. The 1933-34 budget had to be prorogued at the end of
the year due to the failure of the legislative body to vote a satisfactory
budget. Failure to enact a satisfactory budget necessarily will bring a
return of the budgetary confusion which had existed in prior years, since
funds in most cases will have to be provided to meet new obligations which
meanwhile have been created. However well-adapted the 1933-34 budget
may have been to the requirements of that year, it is not adequate for use
in the subsequent year. The legislative body up to the close of its last
session had not re-enacted the law establishing a general reduction in
salaries of government employees. Consequently, salaries at the beginning
of the new year became payable at the old figures. No allowance had been
made for restoration of pay cuts in the published budget of 1933-34, and
when it was prorogued many adjustments were necessary. Also, the latter
budget did not reflect the changes in ordinary government expenditures
following withdrawal of American military support in August, 1934, which
necessitated a considerable revision of the amounts allocated annually to


I
- f \ "







HAITI: REPORT OF FISCAL REPRESENTATIVE


the Garde d'Haiti. A new lyc6e and a number of new salaried government
positions were created by law in the latter part of the fiscal year 1933-34.
Funds must be provided by special appropriations if the positions created
are to be filled. These new obligations have come into effect without legis-
lative consideration having been given to their relation to the total operat-
ing expenditures of the Government and to the interconnection which must
exist between receipts and expenditures. The accomplishments in 1933-34
in the way of improving the budgetary situation, therefore, were not so
great as had been hoped.
The ordinary operating budget for 1933-34 totalled Gdes. 31,937,629.36.
The prorogued budget for 1934-35, if funds are provided to meet the new
obligations recently created, and after making a number of administrative
reductions, will provide appropriations permitting the disbursement in
1934-35 of an amount totalling Gdes. 33,407,720.33. The relation between
these two figures, subdivided by budget chapters, is shown in the table
below:
Budget Chapters Budget for 1933-34 Budget for 1934 35 Increase
Gourdes Gourdes Gourdes
Public Dept............... 8,696,249.60 8,747,906.00 51,656.40
Foreign Relations...... 500,692.50 542,680.50 41,988.00
Finance .................. 2,820,651.00 2,858,941.00 38,290.00
Commerce .............. 325,327.00 342,835.00 17,508.00
Interior .................. 9,928,322.46 10,723,592.30 795,269.84
Public works.......:....... 3,991,885.00 .4,109,779.76 117,894.76
Justice .................... 1,264,641.00 1,414,206.00 149,565.00
Agriculture .............. 1,618,727.20 1,682,534.77 63,807.57
Labor .................... 522,211.00 564,183.00 41,972.00
Public Instruction...... 1,849,760.50 1,978,910.50 129,150.00
Religion .................... 419,162.10 442,151.50 22,989.40
31,937,629.36 33,407,720.33 1,470,090.97

With the exceptions already noted, almost no new legislation having any
effect upon revenues or expenditures was enacted in 1933-34. A contract
which many believe might have given the new banana industry an early
start, and a solid foundation, failed to receive legislative sanction. A
contract with the electric light company serving Port-au-Prince and Cap-
Haitien, which the executive government believed would provide the State
as well as private consumers with better service at cheaper cost, also failed
to receive legislative approval. No final action was taken during the year
by the legislative body on the contract for the sale of the Banque Nationale
de la R6publique d'Haiti to the Government. If ratification had been com-
pleted, the Government already would have become sole owner of the
bank, marking a long step forward toward attaining a desirable national
objective. Excepting new legislation liberalizing the Homestead Law,
thereby making really effective a law which had been rendered useless
because of the excessive restrictions which it imposed upon prospective
beneficiaries, there was no other financial legislation of an important nature
which was enacted during the year. At the same time, many desirable






HAITI: REPORT OF FISCAL REPRESENTATIVE


projects were brought up for consideration before the legislative body, and
it appears possible that in the course of time approval of this needed legis-
lation eventually may be obtained.

Currency
Rising values for both imports and exports produced a general increase
in the circulation of notes issued by the Banque Nationale de la R6publique
d'Haiti during 1933-34. Circulation of subsidiary coinage also increased.
Money in circulation on September 30, 1934, and on the same date of the
previous year, is shown in the table below: Sept. 30 1934 Sept. 30, 1933
Gourdes Gourdes
Notes of the Banque Nationale de la R6pu-
blique d'Haiti........................................ 7,687,129 6,907,764
United States currency (estimated)........... 2,500,000 3,000,000
Subsidiary currency.................................. 3,989,202 3,509,684
14,176,331 13,417,448
Note circulation increased by 11.3 per cent between the two dates.
American money entering into circulation, on the other hand, declined by
an amount estimated at $100,000, due to withdrawal in August, 1934, of
American military and naval forces in Haiti. Considerable sums had been
expended in Haiti each year by the American Government, and these
expenditures had maintained the quantity of American currency in general
circulation at a high level. In all probability, the use of United States
currency in Haiti will continue to decline, regardless of any future improve-
ment in business and foreign trade.
Banking and Credit
Banks in Haiti continued to maintain an extremely liquid position during
1933-34. Average loans and discounts in Haiti for the year, figured at
Gdes. 4,780,472.05. show practically no change from the 1932-33 average,
which in turn was not quite a third of the average amounts advanced by
banks in the years prior to the depression. Credit has contracted to a much
greater extent than business activity. Nevertheless, there have been no
indications that lack of credit is restricting to any extent the movement of
the export crops, or that the banks in any way have failed to make justi-
fiable loans to commerce. Credit eventually will expand with business
improvement; but in Haiti, as elsewhere, bank loans will not begin to
reflect gains in business until improvement in foreign commerce and busi-
ness generally is well under way.
As might be expected, bank deposits in Haiti have responded more
quickly to improving conditions. Excluding government deposits, the
average of monthly balances on deposit at the two banking institutions
doing business in Haiti increased from Gdes. 12,317,027.63 in 1932-33 to
Gdes. 13,129,264.23 in 1933-34. The latter figure is higher than the corres-
ponding figure for any year since 1930-31, and it is not far from the figures
recorded in the years prior to the depression.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Government deposits in the Banque Nationale de la R6publique d'Haiti
increased from an average of Gdes. 12,057,331.56 in 1932-33 to Gdes.
13,725,612.71 in 1933-34. While government deposits have increased, they
still are far from the figures recorded in the years prior to 1930 when
usually they exceeded Gdes. 20,000,000.
No business failures of any importance were recorded in 1933-34, dupli-
cating the record of the previous year. The ability of all of the larger
business houses in Haiti to weather several years of severe depression has
been a remarkable phenomenon of the period. Poor management and
inadequate capital have eliminated many small establishments, but such
failures occur even in times of prosperity. On the other hand, all of the
more important exporters have kept in business, as well as the leading
wholesale and retail dealers.
Haiti also has fared well industrially during the past few years, contrary
to what might be expected. The smaller sisal decorticating plants suspend-
ed operations for a while, it is true, but they have since resumed production.
Several factories for manufacturing lard substitute, soap and other by-
products are flourishing. Matches are now being produced in Haiti. All of
the larger alcohol distillers have kept in operation. Only the tobacco in-
dustry has shown signs of weakness, and in that instance the weakness has
been due more directly to defective excise legislation rather than to eco-
nomic conditions. Also, the pineapple industry has suspended operations,
for reasons described elsewhere in this report. On the whole, however,
industry in Haiti appears to have progressed despite world conditions which
in other countries have forced curtailment of industrial production and have
brought serious increases in the number of business failures.
The general subject of banking and credit assumed a position of unusual
importance in 1934, when plans were made for the acquisition of the
Banque Nationale de la R6publique d'Haiti by the Government.
The Banque Nationale de la R6publique d'Haiti for many years has
operated as a privately owned institution, serving under contract as depo-
sitory of the Haitian government, acting as the sole bank of issue, as fiscal
igent for the internal government loan, and performing numerous functions
connected with treasury service. As a unit in the organization of one of the
largest banks in the United States, it has been provided with excellent
management and with foreign technical assistance capable of performing
the highly specialized and intricate operations peculiar to banking. As
part of the same world-wide organization, the local unit and its branches
have received the benefit of close control by the central management,
together with regular and competent inspection of its activities and audit
of its accounts. The bank is backed financially by the immense resources
of the parent institution. Undoubtedly, the bank under its present owner-
ship has performed, and has performed well, countless services to Haitian
business and to the Haitian government.






86 HAITI: REPORT OF FISCAL REPRESENTATIVE

On the other hand, ownership by a foreign bank of what is, in fact, an
institution which performs largely a treasury function brings with it certain
disadvantages which should be overcome. The bank as it is today cannot
respond quickly to the needs of the community. Its policies necessarily
must be directed by its foreign owners, and the owners in turn naturally
are inclined to adopt broad policies applicable to the entire organization,
rather than policies especially suited to the subsidiary in Haiti. The local
bank holds a relatively unimportant place among the branches and subsi-
diaries of the parent institution, and the attention given to the needs of the
local bank is perhaps influenced by the minor position which it holds among
the vast activities of the larger organization. Also, matters of importance,
requiring perhaps a quick decision, must nevertheless be referred to officials
abroad before action can be taken. Expansion of the bank in any direction
is limited to the extent that the governing officials are willing to make
greater commitments in Haiti; and such expansion even may be limited by
foreign laws or regulations governing the nature of the activities in which
the parent organization may accept responsibility for affiliates in other
countries. Moreover, payment by the Government of charges for treasury
service rendered by the bank involves an expenditure each year which
usually exceeds Gdes. 300,000.
It is natural that the Haitian government should desire to avoid the. res-
trictions, inconveniences and expense resulting from foreign ownership
and acquire the bank as a national institution under its own control.
Conditions in 1934 were ideal for the contemplated transfer of owner-
ship. The present owners were willing to dispose of their interest in the
local bank, and the Government had cash reserves sufficient to enable the
operation to take place immediately through payment of slightly more than
half of the purchase price in cash, the balance to be paid in installments
extending over a three year period.
The plan quite naturally provided for a transitory period during which
policies could be shaped and technical experience gained by the Government,
and by government officials, in conducting a banking business efficiently
and with full understanding of the technical details of a modern banking
organization. The confidence of private customers of the bank had to.be
retained; commercial houses, both in Haiti and abroad, at present doing
business through the bank had to be given every assurance of the continued
soundness of the institution; and holders of government bonds were natu-
rally interested in view of the nature of the security behind their bonds.
Hence the contract of sale provided, in effect, for representative control
during a period of transition extending to the life of the present external
bond issues, but with the Government represented directly on the board of
directors of the new bank by two directors out of the total of six.
A contract of sale incorporating essentially the provisions briefly describ-
ed above was drafted, and signed on May 12, 1934, subject to ratification







HAITI: REPORT OF FISCAL REPRESENTATIVE


by the legislative body. The last session of the legislative body closed,
however, before final action was taken on the contract, and the matter is
still pending.
Acquisition of the Banque Nationale de la R6publique d'Haiti by the
Government is a natural objective of the Haitian government. Working
toward this desirable end over a necessary period of transition will serve
to prepare the social economy of the country to. handle effectively this
essential government-operated service.

Claims
Settlement of court judgments and claims against the State, adjustments
of pensions, correction of over-payments, and other charges of the same
nature involved the disbursement during 1933-34 of Gdes. 114,605.56.
Similar payments in 1932-33 amounted to Gdes. 82,035.89, and in 1931-32
to Gdes. 69,388.46.
The budget for 1933-34 contained an appropriation of Gdes. 91,200 for
the settlement of claims and for the restitution of amounts paid in error.
It was found necessary to increase this amount in June, 1934, and a supple-
mentary appropriation of Gdes. 40,000 was established. The total of Gdes.
114,605.56 expended from these appropriations for the most part represent-
ed many small payments involving adjustments of various kinds. The
principal single item was in the amount of Gdes. 35,078.36. This sum was
expended to adjust salaries of the personnel of the offices attached to the
Senate and to the Chamber of Deputies.
The Republic is fortunate in that the floating debt arising from the ex-
istence of justifiable claims is negligible in size. The work of the Claims
Commission and the issuance of the Series B bonds had relieved the State
of the burden of claims which had accumulated during more troublofus
times. Since then, good governmental administration largely has eliminated
the the accumulation of new claims, and such charges as have appeared
from time to time result simply from the ordinary operation of the go-
vernment and the inevitable differences which arise between the State and
its citizens. Recourse to the courts is seldon resorted to by claimants. For
the most part disputes involving pecuniary awards are settled administra-
tively. The payments made during 1933-34 chiefly were settlements of this
character. Of the total number of claims settled, not more than twenty
individual items involved payment of more than Gdes. 1,000, and of these,
only four resulted from legal decisions against the State.
Personnel
The Agreement of August 7, 1933, contained provisions which required
a number of changes in personnel. For the most part these changes involved
the promotion to positions of greater responsibility of many Haitian officials
and employees who had served under the Receivership and who had
demonstrated their ability and fitness.







HAITI: REPORT OF FISCAL REPRESENTATIVE


On January 1, 1934, when the provisions affecting the organization of
this office came into effect, 37 Haitian officials received appointments in
the Customs Service and were duly commissioned by the President of the
Republic. Of those commissioned, a group of fourteen were made officials
of the first class, eight were made officials of the second class, and fourteen
were made officials of the third class.
Of those officials selected under the first group, the following were chosen
to serve as "Directors" at the more important custom houses:
R. Scutt Director of Customs at Port-au-Prince
E. Etienne Cap Haitien
P. Hall Cayes
B. Oriol Jacmel
L. Renaud "" Gonaives
E. S. Goutier "" Port-de-Paix
Em. Thalks "" Saint Marc
R. Gerdes Jeremie
F. Lemaine Petit Goave
P. Anglade Miragoane
The above officials at the time they received their new appointments had
been serving as collectors of customs, or as senior officials, at the ports
indicated.
The new title of "Director of Customs" corresponds to the former desi-
gnation of "Collector of Customs". The directors on January 1, 1934, were
put in full charge of their respective offices, subject only to the supervision
of the central administrative office. Customs auditing was continued, as
in the past, by the auditing staff in Port-au-Prince. For the purpose of '
assuring adequate inspection of customs activities, five officials were
appointed to serve as Inspectors of Customs. Mr. Melville Monk was
charged with customs inspection in the northern district, with residence at
Cap Haitien. Fort Libert6 and Ouanaminthe are included in this district.
In the western section, which includes Saint Marc, Gonaives, and Port-de-
Paix, inspection was entrusted to Mr. M. J. Perry, with residence at Saint
Marc. Mr. Robert Maumus, residing at Cayes, was charged with inspection
in that city and J6r6mie. In the Port-au-Prince district, which includes
also Petit Goave, Miragoine. Jacmel, and Belladere, customs inspection
was put in charge of Mr. R. A. Farmer, assisted by Mr. D. A. Witcomb
as his deputy, and by Mr. E. H. Mahy.
As described elsewhere in this report, the Internal Revenue Service on
January 1, 1934, was placed under a Haitian Director General and became a
separate office operating directly under the Department of Finance. Most
of the officials and employees who had served in the former organization
were transferred to the new office. A few, however, were released to
provide the staff of the new Internal Revenue Inspection Service created by
the Agreement of August 7, 1933. Mr. J. C. Craddock, who had been
Director General of Internal Revenue, on January 1, 1934, became Inspector
General of the new Inspection Service. Mr. Thomas F. Murray, who had







HAITI: REPORT OF FISCAL REPRESENTATIVE


oeen an Inspector in the Internal Revenue Service, became assistant to
Mr. Craddock with the title of Inspector. Mr. LUlio Cassagnol was appoint-
ed as Division Inspector in the new service. In addition, a force of
employees serving with the Internal Revenue Service was detached from
that service on January 1, 1934, to form the balance of the personnel of the
new Inspection Service.
In addition to their duties as Inspectors of Customs, Mr. Monk, Mr.
Maumus, and Mr. Perry were assigned to internal revenue inspection work
in their respective districts. Also, the Directors of Customs under the new
set-up became available to the Inspection Service for special work. Further-
more, in a number of cases Directors of Customs who, in addition to their
customs work, had been serving as collectors of internal revenue, after
January 1, 1934, temporarily were put at the disposal of the Director
General of Internal Revenue in order that tax-collecting might continue
without interruption and to permit the new Director General to adjust his
staff gradually to the new arrangement.
The reorganization under the Agreement of August 7, 1933, was effected
without difficulty. No serious problems of administration or management
arose. The five months which intervened between the signing of the
Agreement and the date when the changes affecting personnel arrived made
it possible to carry out the reorganization sysmatically and without
interruption or loss in the efficiency with which revenues are collected.
' It was the aim of this office to carry out the changes required by the
Agreement of August 7, 1933, with as little disruption as possible of the
working force built up during the years when the revenue-collecting offices
were being organized and developed. This office takes just pride in the
composition of the personnel, and the ability and honesty with which
duties are performed. But the best results cannot be expected if factors
other than ability and honesty are permitted to influence the selection of
employees and to create the feeling among members of the personnel that
their own loyalty, perseverance and special training carries little weight
in obtaining promotion or even in retaining their positions in the organiza-
tion. Fortunately, the changes made necessary by the Agreement could be,
and were, effected without giving cause for a feeling of insecurity on the
part of Haitian members of the personnel. The total number of Haitian
employees was not reduced. No employees of the Customs Service under
the new arrangement were demoted. In a number of instances, as has been
pointed out, officials were appointed to positions of greater trust and
responsibility.
As to American officials serving under the Fiscal Representative, a special
provision carried in the Agreement of August 7, 1933, made it necessary
to reduce the staff of Americans. Mr. R. A. Gravel, who had served under
the Financial Adviser-General Receiver since July 2, 1924, left the employ






HAITI: REPORT OF FISCAL REPRESENTATIVE


of this organization on December 31, 1933. On the same date, and for the
same reason, Mr. N. George Haag left this service where he had been
employed since October 1, 1929.
The Agreement of August 7, 1933, contained one provision respecting
personnel which is of particular significance in that it indicates a new
policy of the Haitian government which may be considered as the beginning
of what should develop into a comprehensive and uniform civil service
system. Article VIII of the Agreement provided that positions which may
become vacant among the commissioned employees of this service are to
be filled by the appointment of persons chosen by competitive examination.
This provision sanctions a policy which has been the established practice
in modern customs administration, viz., the gradual advancement of em-
ployees to positions of greater trust with emphasis placed on demonstrated
ability and training. In Haiti, the new plan of holding competitive
examinations will furnish a more definite basis for making selections in the
Haitian Customs Service to fill vacancies.
The creation by means of a civil service system of a body of government
employees appointed as a result of their demonstrated ability will continue
to have the support of everyone interested in having efficient and adequately
trained government employees. The policy marks only a small beginning
of what should be extended until it includes each non-political branch of
governmental administration where a permanent organization staffed by
men equipped with administrative ability or technical knowledge is essential.
In particular, the civil service system should be followed, for obvious
reasons, in the revenue-collecting services of the Government where there
is every reason to employ only trained specialists who will give proper
service and satisfaction to the public and assure the proper operation of
the revenue-collecting function.
Two officials who had been employed for many years in the customs
service were lost by death during .1933-34. Mr. Fernand Lemaine died at
Petit Goave in February, 1934. At the time of his death he was Director of
Customs in that city. He had been engaged in customs work for more than
thirty years and was one of the oldest employees of the customs service.
The vacancy caused by Mr. Lemaine's death was filled by advancing
Mr. Prosper Anglade, Director at Miragoane, to the more important post
at Petit Goave. Mr. Anglade was replaced provisionally at Miragoine by
Mr. Christian Claude.
One of the best known customs employees at Port-au-Prince was Mr.
Gustave Woel, who died suddenly in December, 1933. Mr. Woel at the time
of his death was attached to the Port Office in that city. He was a compe-
tent, courteous employee who had given over seventeen years of meritorious
service to this organization.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Conclusion
The year covered by this report marked the end of a distinct phase in
the economic evolution of the Republic of Haiti. During that period the
country has been preoccupied with problems which have tended to obscure
what has been, and still is, its most fundamental need, viz., an increase in
production for export.
To be sure, no person interested in the welfare of the country has lost
sight of the fact that in the development of agricultural production and in
the extension of the export trade were to be found the forces which
eventually would bring to Haiti economic progress and a higher standard
of living. But even more pressing needs which were essential as a founda-
tion for progress had to be supplied during the period which has ended.
Public security had to be established, health and sanitary conditions im-
proved, and the machinery of government put in working order. Roads
had to be built. The claims of the Government's creditors had to be satisfi-
ed. Bonds were refunded and the floating debt retired. Finances had to be
put in order. A monetary reform was instituted. Reforms in legislation
were needed. New laws were enacted and a new import tariff was devised.
Internal revenue laws were put into effect in an effort, not yet completed,
to give to Haiti a sound and well-balanced revenue system. Essential
government functions, such as the Garde d'Haiti, the Public Works Admin-
istration, the Public Health Service and the Agricultural Service had to
be organized and developed into efficient operating services of the Govern-
ment.
Before all that had been planned was accomplished the country found
itself in the midst of a world-wide economic depression which reduced the
value of its foreign trade to a third of what it had been. Revenues were
nearly cut in half. A period of steady improvement was interrupted by
forces which were not within the power of the Government to control.
Today, Haiti has recovered from the worst effects of the world depression.
The serious problems with which it was absorbed in former years for the
most part have been solved; and as the country enters a new phase of its
evolution, it is able progressively to direct its efforts to fulfillment of the
underlying requirements for economic and social progress.
Agricultural production undoubtedly has increased, and increased steadily,
during the past ten years. The figures given in this report give ample
evidence that the leading export commodities have followed an upward
trend throughout the period. Coffee, cotton, and sugar, except in poor crop
years, are increasing so far as concerns quantities exported. Efforts to
grow sisal have been notably successful. Nevertheless, the increase in
quantities exported has been insufficient to overcome the decline which has
taken place in the prices paid in world markets for the commodities which
Haiti produces for export.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Prosperity and a higher standard of living can come only with an
increase in the quantity of goods which Haiti sells abroad. On the export
trade depends the volume of imports which can be purchased; and on both
the export and import trade depend the revenues which the Government
must have if it is to bring to its citizens better schools, hospitals, roads,
public buildings and other material improvements which must form a part
of any program of social and economic advancement. Hence, in the last
analysis, prosperity can come only if, and when, export production is
increased. And that increase must be a substantial increase if it is to have
the needed effect. Little can be hoped in the way of further gains in the
prices of exportable commodities. Only a permanent increase in the agri-
cultural productivity of the country will enable Haiti to advance.
Potentially, the fertile plains and valleys of the Republic are capable of
producing far more in the way of exportable commodities than they do at
present*. Even the areas already planted can be cultivated more intensively
and made to produce greater quantities of coffee and cotton and other
commodities which now bring money into the country. But in the thickly
populated regions which now contribute little wealth to the country there
could be grown, in addition to the present output, enormous quantities of
new products, such as bananas, without affecting the export of coffee or
cotton already grown and exported from those areas. In Haiti a combina-
tion of fertile soil, a favorable climate, mountains protecting the lowlands
from hurricanes, and an abundant supply of labor to cultivate the land
offer all that is needed potentially. Foreign markets to absorb the new
products, particularly that in the United States for bananas and sisal,
already are open to exporters.
The all important question, then, is how the needed increase in produc-
tion for export best can be achieved.
Certainly, it will not be achieved if agricultural production is allowed to
drift without guidance or direct government assistance. The commodities
which Haiti exports for the most part are grown on small farms. Farmers
grow coffee and cotton and cacao simply because they are accustomed to
growing them and because the mechanism for marketing and distributing
other products does not exist. Private initiative from the direction of
marketing and distribution is handicapped by lack of capital and by the
difficulty of organizing widely-scattered groups of producers to the extent
necessary. Only the Government can act as intermediary between capital and
marketing organizations on the one hand, and the producers on the other.
Already there is every indication that the efforts of the Government to
increase production for export will be successful. Success will be assured

-*The potential export capacity of Haiti is illustrated by comparing per capital exports in Haiti with per capital
exports of cotton in the cotton-producing regions of the United States. Haiti in 1933-34, with a population of
2,500,000, exported commodities of all kinds valued at Gdes. 51,546,000, indicating per capital exports of Gdes.
20.62. The ten cotton-producing states of the United States, with a population of 26,206,000, exported cotton
worth Gdes. 1,975,840,000 in 1933. Hence the per capital production of cotton alone amounted to Gdes. 75.40,
or almost four times as much as Haiti now exports per capital, including not only cotton, but coffee, sisal,
sugar and all other products on which Haiti depends for its income.







HAITI: REPORT OF FISCAL REPRESENTATIVE


if a definite program is followed, and carried out to its ultimate conclusion,
of concentrating every effort on activities which will tend to increase
production. The program must involve: first, efforts to interest adequately-
capitalized marketing and distributing organizations in new enterprises,
such as banana production; secondly, negotiations to obtain trade advan-
tages in the foreign markets where the new products are to be sold, and to
retain markets already established; and thirdly, the, expenditure of such
surplus revenues as may be available on irrigation, drainage, government
experimental farms, trade promotion and other activities which will tend
to increase and diversify the export trade.
It is exceedingly difficult to interest foreign capital and enterprise in
development of the country's resources. World conditions are unfavorable.
Uncertainty surrounds the matter of money values. Foreign countries are
reluctant to permit the export of capital. International commercial relations
have not yet improved sufficiently to give assurance that export markets
are protected. Political instability, and economic difficulties in some coun-
tries have led to debt repudiation and confiscation of property and capital.
A wave of nationalism, impelled by dissatisfaction arising from an unparal-
leled world depression, has swept over the greater part of the world.
Under these conditions, capital must be assured both of protection and
profit before it can be induced to enter Haiti, or indeed any other country.
But even if contacts can be made, and capitalists can be found who are
interested in developing the country's resources, there remains the problem
of making connections which on one hand will safeguard the Government
from burdensome obligations in the future, and on the other hand will give
assurance that the projected enterprises will be successful and will
accomplish their purposes.
Willingness on the part of private initiative to promote new enterprises,
or even to risk the investment of capital in those enterprises, is not enough
to warrant the making of important commitments by the Government.
It is of the utmost importance that a group interested in a development
such as the banana industry should be backed by adequate capital, by
technical knowledge, and by enough experience in its field of endeavor
to be able to carry the enterprise to a successful conclusion.
The importance which must be attached to these qualifications is nowhere
more apparent than in the banana industry. Here is an industry which is
new to Haiti -one on which the government places its chief hope of
obtaining new wealth for its people and increased income for the national
treasury. Yet the difficulties in the way of success are many. Production
is only a part of the problem. It is a relatively simple matter to plant and
cultivate bananas of the proper variety, and raise fruit which is acceptable
for export. But when a stem of bananas reaches maturity, it must be cut at
exactly the right stage in its growth: neither too green nor too ripe. It
then must be transported to market at the port of shipment, and carefully