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
Publisher:
Port-au-Prince, Imprimerie de l’Etat, 1935-.

Notes

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

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University of Florida
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ILLMC
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All applicable rights reserved by the source institution and holding location.
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LLMC31883
System ID:
AA00001157:00002

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This volume was donated to LLMC
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HAITI


ANNUAL REPORT

OF THE


FISCAL REPRESENTATIVE


FOR THE FISCAL YEAR

OCTOBER, 1934 SEPTEMBER, 1935




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............................. ............................... .......................... 6
Origin of Imports............................................... ......... ............................... 6
Destination of Exports.................................................. ............................... 9
Balance of Trade.................................. ... ................................... 11
Ports of Entry for Imports............................................ ................ ........... 15
Ports of Shipment for Exports................................................................. ... 15
Shipping ....................................... .... .... ........... ............................. 17
Tourist Trade ........................................ .............................................. 19
Foreign Commerce by M onths............................................ ...................... 20
Commodities Imported................................................... ................................ 21
Commodities Exported.................................................... ............................ 25
Coffee ......................................................... ......... .................................. 26
Cotton ..................................................... ....... .................................. 32
Sugar ....................................................................................................... 34
Sisal ......................................... .................. .................. ........................ 36
Bananas ........................................... ... .. ...................................... 37
Other Exports.................................. ............... ........ .... ....................... 39
Commercial Conventions............................ ............... ..................................... 41
Tariff M odifications............................................................................................. 46
Customs Administration............................................... .................................. 48
Internal Revenue Inspection Service........................................ ..................... 48
Government Revenues.................................................... ................................ 49
Total Revenues.................................................... .................................. 49
Customs Receipts................................................... ................................ 50
Internal Revenue Receipts........................................... ......................... 54
M miscellaneous Receipts................................................................................ 57
Receipts from Communes............................................. ........................ 58
Government Expenditures.............................................. ............................... 59
Customs Service.................................................. ................................... 65
Internal Revenue Service.......................................................................... 67
Treasury Position................................................................. ............................ 69
Public Debt........................................................ ............................................ 72
Service of Payments........................................... ............................................ 75
Supplies ............................................. ...................... ................................. 76
The Budget and Financial Legislation.................................. ....................... 77
Currency .............................................................. ......................................... 81
Banking and Credit..................................................... ................................. 83
Acquisition of the Banque Nationale de la Republique d'Haiti.................... 86
Claims ............................................................ .............................................. 88
Personnel ........................................................................................................ 89
Conclusion ............................................................. .................................... 90
Tables ................................................................ ........................................... 97
Annex: Report of the Inspector General, Internal Revenue Inspection Service.... 140
Expenditures .................................................. .................................. 141
Personnel .................................................................................................... 142
Internal Revenue Receipts............................................................................ 142
Conclusion ................................................................................................... 144
Tables ...................................................................................................... 145
Appendix: Schedules.............................................. ...................................... 151

III






STATISTICAL EXHIBITS
TABLES
Pages
1. Value of Imports and Exports, and excess of Imports or Exports, fiscal
years 1916-17 to 1934-35........................................ ......................... 99
2. Value of Imports showing countries of Origin in percentages, fiscal years
1916-17 to 1934-35............................................... .......................... 99
3. Value of Exports showing countries of Destination in percentages, fiscal
years 1916-17 to 1934-35........................................................................ 100
4. Value of Total Foreign Commerce by countries in percentages, fiscal years
1916-17 to 1934-35.................................................................................. 100
5. Value and Percentage of Value of Imports, Exports and Total Foreign
Commerce by countries -fiscal year 1934-35....................................... 101
6. Value of Imports by Ports of Entry-fiscal years 1916-17 to 1934-35.... 102
7. Value of Exports by Ports of Shipment-fiscal years 1916-17 to 1934-35 102
8. Value and Percentage of Value of Imports, Exports and Total Foreign
Commerce by Ports-fiscal year 1934-35............................................... 102
9. Net Tonnage of Steam and Motor Vessels in foreign commerce entered by
Registry and Months-fiscal year 1934-35........................................... 103
10. Net Tonnage of Sailing Vessels in foreign commerce entered by Registry
and Months-fiscal year 1934-35........................................................ 104
11. Value of Imports by Registry of carrying vessels -fiscal year 1934-35.... 105
12. Value of Exports by Registry of carrying vessels-fiscal year 1934-35.... 106
13. Value of Imports by Months and Ports of Entry-fiscal year 1934-35 f
compared with 1933-34............................................................................ 107
14. Value of Exports by Months and Ports of Shipment- fiscal year 1934-35 !
com pared w ith 1933-34............................................................................ 108
15. Value of Imports by Commodities-fiscal years 1916-17 to 1934-35.... 109
16. Quantity of Imports by Commodities-fiscal years 1916-17 to 1934-35 110
17. Value of Exports by Commodities-fiscal years 1916-17 to 1934-35........ 111
18. Quantity of Exports by Commodities- fiscal years 19116-17 to 1934-35.... 112
19. Quantity and Value of Five Principal Exports by Ports fiscal year
1934-35 compared with 1933-34............................................................ 113
20. Percentage of Value of Exports by Commodities -fiscal years 1916-17
to 1934-35................................................................................................ 114
21. Quantity and Value of Exports by Commodities and Months-fiscal year
1934-35 .......................................... ...................................................... 115
22. Fiscal Representative Funds-fiscal years 1916-17 to 1934-35............... 116
23. Expenses of Fiscal Representative by Objects of Expenditures -fiscal
years 1916-17 to 1934-35.................................................................... 116
24. Classification of total Expenditures of the Fiscal Representative -fiscal
year 1934-35............................................................................................. 117
25. Classification of Administration and Operation Expenditures of the Fiscal
Representative fiscal year 1934-35.................................................. 117
26. Distribution of Expenditures from the Operating Fund of the Fiscal
Representative- fiscal year 1934-35.............................................. 118
27. Cost of Customs Operations by Ports and Cost of Administration, Repairs
and Maintenance, Acquisition of Property, and Fixed Charges fiscal
years 1919-20 to 1934-35................................... ................... 119





STATISTICAL EXHIBITS


Pages
28. Total Cost of Collecting Each Gourde of Customs Receipts -fiscal years
1919-20 to 1934-35................................................................................. 120
29. Operating Allowance of Internal Revenue Service -fiscal years 1923-24
to 1934-35 ................................................................................................... 120
30. Revenue of Haiti by Sources -fiscal years 1889-90 to 1934-35............... 121
31. Relation between Import and Export Values and Customs Receipts fiscal
years 1916-17 to 1934-35........................................................................ 122
32. Customs Receipts by Months -fiscal years 1916-17 to 1934-35................ 123
33. Customs Receipts by Ports-fiscal years 1916-17 to 1934-35................... 124
34. Customs Receipts by Sources and Ports-fiscal year 1934-35................... 124
35. Customs Receipts by Sources and by Months-fiscal year 1934-35........... 125
36. Distribution of Customs Receipts-fiscal years 1916-17 to 1934-35........ 126
37. Miscellaneous Receipts by Sources and by Months- fiscal year 1934-35.... 126
38. Total Receipts of Haitian Government by Sources, Months, and Ports -
fiscal year 1934-35................................................................................... 127
39. Ordinary, Supplementary and Extraordinary Appropriations from Revenue
--fiscal years 1931-32 to 1934-35........................................................ 128
40. Revenues and Expenditures-fiscal years 1932-33 to 1934-35............... 129
41. Functional Classification of Expenditures- fiscal year 1934-35............... 130
42. Classification of Total Expenditures by Departments and Services-fiscal
year 1934-35............................................................................................... 131
43. Classification of Administration and Operation Expenditures by Depart-
ments and Services fiscal year 1934-35............................................. 132
44. Reimbursements to Appropriations -fiscal years 1931-32 to 1934-35.... 133
45. Receipts and Expenditures--fiscal year 1934-35................................... 134
S 46. Revenues and Expenditures and Excess of Revenues or Expenditures-
fiscal years 1916-17 to 1934-35............................................................ 135
47. Treasury Assets and Liabilities............................................................... 136
48. Public D ebt.................................................................................................... 136
49. Expenditures from Revenue for the Public Debt and Relation of such
Expenditures to Revenue Receipts-fiscal years 1933-34 and 1934-35 136
50. Profit and Loss Statement--Bureau of Supplies -fiscal year 1933-34
and 1934-35................................................................................................. 137
51. Balance Sheet--Bureau of Supplies............................................................ 137
52. Notes of the Banque Nationale in Circulation by Months-fiscal years
1919-20 to 1934-35..................................................................................... 138
53. Loans and Deposits of Banks in Haiti by Months-fiscal year 1934-35.... 138


CHARTS

1. Value of Total Imports and Total Exports, by Months, Fiscal Years 1931-32
to 1934-35..................................................... ..................................... 21
2. Quantities of Leading Commodities Exported and Imported, fiscal years
1916-17 to 1934-35............................................. ............................ 23
3. Coffee Prices, fiscal years 1933-34 and 1934-35....................................... 28
4. Total Revenue Receipts of Haiti and Expenditures from Revenues fiscal
years 1916-17 to 1934-35.......................................... ..................... 50





STATISTICAL EXHIBITS


ANNEX: INTERNAL REVENUE INSPECTION SERVICE
TABLES
Pages
1. Internal Revenue Receipts by Sources, fiscal years 1919-20 to 1934-35.... 147
2. Internal Revenue Receipts by Collection Districts, fiscal years 1919-20
to 1934-35 .................................................................................................. 148
3. Internal Revenue Receipts by Sources and Districts, fiscal year 1934-35.... 149
4. Internal Revenue Receipts by Sources and Months, fiscal year 1934-35.... 150



APPENDIX: SCHEDULES

1. Quantity and Value of Imports into Haiti by Countries of Origin, October
1934- September 1935........................................................................... 153
2. Quantity and Value of Exports from Haiti by Countries of Destination,
October 1934--September 1935.................................... 182
3. Customs Receipts by Sources, by Ports and by Months, fiscal year 1934-35 189






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HAITI
ANNUAL REPORT OF THE FISCAL REPRESENTATIVE
FOR THE FISCAL YEAR
*, OCTOBER, 1934 SEPTEMBER, 1935










HAITI

ANNUAL REPORT OF THE FISCAL REPRESENTATIVE
FOR THE FISCAL YEAR
OCTOBER, 1934- SEPTEMBER, 1935


OFFICE OF THE FISCAL REPRESENTATIVE

Port-au-Prince, Haiti, December 27, 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 nineteenth annual report on the
commerce and finances of the Republic of Haiti. The report covers the fiscal
year ending on September 30, 1935, 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
S, governments.
Two years of good crops and rising foreign commerce values were
followed, in the year just ended, by a distinct recession in the foreign trade
of the Republic.
Exports in 1934-35 declined in value by 31 per cent from the corre-
sponding total for 1933-34. Similarly, imports declined in value by 10
per cent.
Government revenues, dependent so largely on the value of the foreign
commerce of the Republic, were adversely affected by the drop in export
and import values. Customs revenues declined by 20.1 per cent and internal
revenues by 10.5 per cent. Receipts in all of the principal revenue cate-
gories declined.
The explanation for this unfavorable turn in foreign trade and revenues
lies almost entirely in the exceptionally small size of the 1934-35 coffee
crop. The harvest was the poorest in two decades. Exports were less than
half the quantity exported in 1932-33, when shipments reached a record
high level. A decline of 44.1 per cent from the 1933-34 total was registered.
S Lower coffee prices further accentuated the drop in value of the export
trade. Quotations for Haitian coffees showed signs of strength in the





HAITI: REPORT OF FISCAL REPRESENTATIVE


early months of the fiscal year; but in January prices fell off sharply, and
with the exception of a brief period of recovery in April and May, remained
at a low level throughout the balance of the year. The average price of
coffee in 1934-35 was slightly under the average for the preceding year.
Other crops showed better results. Cotton exports were close to the
record high, and prices were favorable. Sugar exports, in quantity, were
greater than in any previous year. Sisal exports declined in quantity and
value, but banana exports in 1934-35 in value were more than double the
1933-34 total.
The decline in imports concerned chiefly the group of staple commodities
which make up the bulk of the import trade. In particular, imports of
cotton goods, flour, fish, soap and miscellaneous foodstuffs were affected.
Increased values, among the more important groups, were recorded only
in the case of chemical and pharmaceutical products, kitchen utensils, and
kerosene.
The sharp decline in exports resulted in an unfavorable balance of trade,
amounting to Gdes. 5,532,416. In each of the two previous years exports
had exceeded imports by a wide margin. In 1933-34, for example, exports
valued at Gdes. 51,546,191 exceeded imports by Gdes. 5,860,983. The favor-
able balance of trade in 1932-33 had amounted to Gdes. 8,316,423.
Similarly, the. decline in revenues which accompanied the slump in
foreign trade produced an excess of expenditures over revenues. The
operating deficit amounted to Gdes. 7,263,369.70. In 1933-34, government
revenues and expenditures from revenues had been practically equal.
Despite lowered revenues, the Government was able to continue much
of its public works program, meet various other extraordinary expenditures
incurred during the year, and service the public debt promptly. Government
operating costs, paid from appropriations in the ordinary budget of ex-
penditures, increased considerably. All expenditures were met from reve-
nues and from cash reserves accumulated in more prosperous years.
However, the drain on treasury reserves has been severe and cannot
continue. Government operations in the future will have to be met largely
from current revenues, and every effort must be made to build up cash
reserves.
It appears, therefore, that results in 1934-35 from the point of view of
commerce and revenues on the whole were unfavorable. However, the
declines which were recorded reflect largely a temporary condition due
almost exclusively to the short coffee crop. The trade recession was not
by any means unexpected. Forecasts had indicated a poor coffee crop.
Moreover, with excellent crops having been harvested in the two prior
years, it was not unreasonable to suppose that the 1934-35 crop would be "
sub-normal. What was not foreseen was that coffee production would
descend to the almost unprecedented low level of nineteen million kilos.





HAITI: REPORT OF FISCAL REPRESENTATIVE


S The country normally produces from thirty to thirty-two million kilos
of coffee.
The decline in production was not due to reduced acreage, to the price
factor, or to inability to market the crop abroad. The drop was entirely
due to climatic conditions which reduced the yield of the coffee trees and
brought about an unusually sharp downward swing of the curve of coffee
production. Coffee in Haiti is notoriously subject to wide fluctuations in
year-by-year production; and over a long period of years these fluctuations
assume a marked cyclical character which brings production, at long
intervals, to exceptionally low depths. In 1934-35, coffee production
dropped to what now appears to be the bottom of the cyclical swing. This
low point presumably has now been passed, and it can be expected that it
will be many years before we shall see another coffee harvest as small as
last season's total.
The disappointing coffee crop was not without its brighter side. It served
to throw vividly into relief the dangers of almost complete dependence
upon this one export commodity, and brought a renewal of efforts to
circumvent this outstanding defect in the country's economy. Accomplish-
ments during the past year in the establishment of the banana industry on
a solid basis point to the ultimate overcoming of the present dependence
on coffee.
Negotiations undertaken early in the year resulted in the signing of a
contract, on February 25, 1935, between the government and the Standard
Fruit and Steamship Company, Inc., of New Orleans. Under this contract,
* all bananas grown in Haiti and of a quality commercially acceptable for
export are to be bought by the company. It is hoped that the banana
industry by this contract has been established on a permanent basis, and
S that the production and export of the fruit can now proceed through a
period of orderly development until bananas become, as we now have;
good reason to believe, as important in the economy of the country as
coffee.
The fruit company, under its contract, also has undertaken to provide
the capital necessary for making advances to planters, constructing
wharves, railroads, purchasing depots, and warehouses, with the object of
bringing banana exports to an average figure of not less than 4,000,000
stems per year after the firsf six years; and in addition it is pledged to
instruct planters regarding the cultivation and transportation of bananas,
as well as in the precautions necessary to avoid plant diseases. The.
contract foresees the signing of contracts between the company and
individual planters, following certain approved contract types.
Already, bananas have become fifth in importance among the country's
exports, and production is increasing steadily.
Another outstanding accomplishment during the year was the purchase
of the capital stock of the Banque Nationale de la R6publique d'Haiti.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Negotiations which began early in 1934 reached a successful conclusion on
July 8, 1935, when the government made a cash payment of Gdes. 5,000,000
to The National City Bank of New York and acquired full ownership of
the Banque Nationale de la R6publique d'Haiti. With the acquisition of
that institution, the government now owns and operates its own central
bank of issue and depositary of government funds.
The signing, on March 28, 1935, of the new commercial treaty with the
United States, which became effective on June 3, 1935, was a leading event
of the year. By this treaty Haiti has been given assurance that no tariff
duties in the United States will be levied on the principal exports which
Haiti sells in that market. The treaty in this respect affects particularly
coffee, bananas, sisal, cacao and logwood. In addition, the new treaty
permits Haiti to export rum to the United States under a more favorable
tariff rate which, it is expected, may enable the local rum industry to enter
this new market. Haiti, in return, has granted reductions in tariff on a
number of manufactured products commonly sold by American exporters
in Haiti. Both countries, by the new treaty, have agreed to the continuance
of unconditional most-favored-nation treatment in commerce between the
two countries. In this respect Haiti and the United States are simply
continuing the commercial policy which had been in effect under the
Modus Vivendi of July 8, 1926.
The treaty gives new hope of bringing about a more equitable distri-
bution of trade between Haiti and the United States. It has long been
obvious that a greater portion of the export trade will have to be disposed
of in the American market (or conversely, that imports from other foreign
market countries will have to be increased) if Haiti is to avoid the blocking
of vital outlets for the export trade. Incidents similar to that which
occurred in June, 1935, when for several weeks exporters found the im-
portant French market completely closed to shipments of Haitian coffee,
indicate the imperative need of a vigorous and well-considered Haitian
commercial policy. Nor was the closure of the French market the only
indication of this need. Quotas and blocked exchange interfered seriously
with exports of Haitian commodities to other countries, particularly to
Spain, Italy and Germany.
The rising tide of sentiment abroad in favor of national isolation, and
the desire for economic self-sufficiency, are gradually undermining in
Europe the conception of triangular commerce between countries. The
Montevideo conference reasserted the adherance of Pan-America to the
concept of trade agreements aiming toward the general reduction of trade
barriers and the re-establishment of commerce between nations. The
Republic of Haiti, one of the Pan-American states, is caught between the
two theories of trade. The potential danger of these new forces to Haiti's ,
economic life is fully realized. Prompt measures were taken by the govern-
ment during the year under review to overcome or lessen their effects.




HAITI: REPORT OF FISCAL REPRESENTATIVE


The American commercial treaty and the agreement with Canada are
among these measures. Another was the enactment in April 15, 1935, of
a law imposing a 100 per cent increase in tariff duties on imports from
those countries which have no commercial agreements with Haiti, and
which dispose of their products in the Haitian market without, in return,
buying a reasonable share of Haitian exports. Still another measure was
an arrangement with France by which that country agreed, subject to a
thirty day cancellation clause, to renewal of its commercial agreement
with Haiti in return for an undertaking on the part of Haitian commerce
to buy more French products. A substantial portion of imported material
used by the public services will now be bought in France. Coffee sold in
France will be shipped largely in sacks purchased in France; and a sub-
stantial part of the coffee sold in France is to be transported in French
vessels.
The government at present is actively engaged in endeavoring to
establish Haitian coffee in new markets. The assurance given by the
Haitian-American commercial treaty that no restrictions will be imposed
on imports of Haitian coffee give renewed confidence that before long this
immense market will be available to coffee exporters. There is every
prospect of success if the cooperation of exporters can be obtained. Only
through diversification of outlets can the coffee trade be assured that the
coffee harvest can be marketed without interruptions which may prove
disastrous. The temporary interruption of coffee exports to the French
market, as related above, has served to give a warning of the seriousness-
I of the threat to the coffee trade. Exporters must not delude themselves
into believing that the settlement which reopened this desirable market
has given a permanent solution of the problem. The once important free
markets in Spain, Italy, and Germany, already have been virtually blocked
to Haitian exports. New and more energetic measures must still be tried.
In a further effort to meet the dangers which threaten the coffee trade,
an endeavor was made to obtain the adherance of coffee exporters to the
establishment of a cooperative coffee syndicate. The purpose was to
organize the trade in such a way as to encourage the formulation and exe-
cution of marketing policies advantageous to producers and exporters as
a whole, and to permit the orderly marketing of the crop. Unfortunately,
exporters to date have been unable, or unwilling, to agree to any adequate
cooperative organization. Unless the coffee trade forms a combination to
protect its interests, exporters may find that through lack of an adequate
organization established markets have been closed to them and that
meanwhile no cooperative plan exists for their protection. Coffee ex-
porters in other coffee-producing countries have long ago combined in
syndicates permitting concerted action to protect the trade. No such organ-
ized marketing exists in Haiti. Exporters sooner or later must realize that
they cannot rely entirely on their own individual measures for protection.





6 HAITI: REPORT OF FISCAL REPRESENTATIVE

Foreign Commerce
After two years of rapid recovery, Haiti's foreign trade in 1934-35
declined sharply in value to a total of Gdes. 76,790,826, from Gdes.
97,231,399 in 1933-34 and Gdes. 84,984,309 in 1932-33. Expressed as a
percentage, the decline from the 1933-34 figure amounted to 21.02 per cent.
Exports, in value, declined from Gdes. 51,546,191, in 1933-34, to Gdes.
35,629,205 in 1934-35, or by 30.88 per cent.
Similarly, imports in value declined from Gdes. 45,685,208 in 1933-34,
to Gdes. 41,161,621, in 1934-35, or by 9.90 per cent.
Total foreign commerce, valued at Gdes. 76,790,826, was less in value
than in any year of the past nineteen, with the exception of 1931-32, when
exports and imports amounted to a total of Gdes. 73,411,945. The extent
to which the world depression, together with a poor coffee year, has
affected the commerce of Haiti is strikingly shown by the fact that at
the height of the period of high prices, foreign commerce in a single year
(1927-28) had a total value of Gdes. 214,577,513. The latter figure is
nearly three times the 1934-35 total.
Of course, during the past two years world commodity prices in general
have been improving. This is true of the majority of commodities which
Haiti commonly imports, as well as exports of raw cotton and a few of
the less important export commodities. Unfortunately, however, the
principal articles of export, particularly coffee and sugar, have not yet
shown signs of any appreciable price increase. Indeed, due to over-pro-
duction throughout the world little hope of betterment is possible in the
near future. Low prices, combined with a phenomenally small coffee
harvest in 1934-35, carried export values to the lowest figure since 1920-21.
Imports likewise, since they depend in total value upon purchasing power
created through the sale of export commodities, reached a very low figure,
although the decline was not so great as in the case of exports. In the
two years prior to 1934-35, exports had exceeded imports in value by more
than Gdes. 14,000,000. This fact undoubtedly- helped maintain imports in
1934-35 at a relatively high level.

Origin of Imports
An abrupt change in the direction of the import trade was a feature of
the fiscal year 1934-35. This change was caused by the enactment on
April 15, 1935, of a law establishing a maximum tariff consisting of the
then existing import duties increased by 100 per cent. The law, as ex-
plained in detail in a later chapter, affected imports of merchandise from
countries which had sold large quantities of merchandise to Haiti and had
bought from Haiti in return only negligible quantities of Haitian export
products.
Japan in 1934 had secured what amounted practically to a monopoly in
the important Haitian cotton goods trade. Success in selling the lower-





HAITI: REPORT OF FISCAL REPRESENTATIVE


priced varieties of cotton textiles increased Japan's share of the total
Haitian import trade to 19.33 per cent (Gdes. 8,829,263) in 1933-34,
compared with 3.02 per cent (Gdes. 1,156,152) in the previous year.
Japanese purchases of Haitian exports meanwhile had in value not
exceeded Gdes. 36,107 (the 1933-34 figure). Sales to Haiti continued at
an even greater pace during the first half of 1934-35. Imports from Japan
in the October-April period of the that year amounted to Gdes. 5,999,707,
or 23.09 per cent of total import values. In April 1935, imports valued at
Gdes. 970,562, or 27.66 per cent of total imports in that month, were of
Japanese origin.
From one point of view this trade was desirable. Consumers received
the advantage of being able to purchase textiles and many other Japanese
manufactured articles at prices lower than could have been obtained
otherwise. On the other hand, Haiti's export trade, on which purchasing
power depends, was endangered by the diverting of Haitian purchases
from the countries in which Haiti disposes of its exports. The export trade
already had been seriously threatened. Protests were made which were
based on the disparity of merchandise exchanges with the countries which
were Haiti's best customers. Sales to Haiti by countries which failed to
buy a proportionate share of Haitian exports placed one more obstacle -
and a serious one--in the way of arriving at commercial agreements
S which would permit Haiti to sell in its usual markets.
The application of the maximum tariff to imports from countries which
do not buy from Haiti quickly corrected the situation. For example,
C Japan's share of the import trade dropped to 8.37 per cent during the last
five months of the fiscal year. Taking the year as a whole, however, Japan
remained second in importance among those countries supplying merchan-
dise to Haiti, with a share of 17.66 per cent in that year, compared with
19.33 per cent in 1933-34. In value, imports from Japan dropped from
Gdes. 8,829,263 in 1933-34 to Gdes. 7,270,260 in 1934-35, or by 17.6 per cent.
American sales to Haiti declined in value from Gdes. 22,107,138 in
1933-34 to Gdes. 19,914,238 in 1934-35, or by 9.9 per cent. The American
share of total imports remained the same in both years, at 48.39 per cent.
This compares with 62.22 per cent in 1932-33 and an average of 82.58 in
the ten years ending in 1925-26. The trend of the American share of the
import trade has been steadily downward, although that country is still
the most important source of imported merchandise.
The decline in imports from the United States affected principally the
cotton textile groups, pickled and salted fish, flour, automobile accessories,
tires, glassware, leather goods, butter substitutes, patent medicines, pipes
and fittings, nails, tools, lumber, railroad equipment, sugar machinery,
soap, paper and miscellaneous machinery and apparatus. Increases were
recorded in the case of kerosene, paints, structural steels, steel sheets, silk
goods, cigarettes, furniture, electrical apparatus (particularly radios),





HAITI: REPORT OF FISCAL REPRESENTATIVE


hats, crude chemicals, pharmaceutical and chemical products, fertilizers,
fresh meats, biscuits and fresh butter. Imports of trucks from the United
States declined, while automobile imports increased. Gasoline imports from
the United States (including Puerto-Rico) increased slightly in value.
The decline in Haitian purchases of Japanese merchandise affected most
groups of cotton goods, as well as hats and shoes. Purchases increased in
the case of glassware, pottery, hosiery and miscellaneous cotton goods.
Japan sells little in Haiti with the exception of cotton textiles and manufac-
tured cotton goods.
The British textile trade in Haiti was affected more severely during the
period under review than was the American trade. Imports of cotton
prints in particular were affected. Declines also were recorded in the
case of distilled liquors, steel sheets, copper goods, and hats. Imports
increased in the case of British-made soap, woolen goods, non-edible oils,
and butter.
The United Kingdom remained third in importance among countries
supplying goods to Haiti. The British share in 1934-35 amounted to 9.16
per cent of total imports, as against 10.46 per cent in 1933-34. In terms of
values, imports of British goods declined from Gdes. 4,780,024 in 1933-34
to Gdes. 3,770,925 in 1934-35. However, imports from other parts of the
British Empire increased, particularly in the case of purchases from
Canada.
Germany increased its share of the import trade from 4.43 per cent in
1933-34 to 6.04 per cent in 1934-35. In a year of declining imports,
Germany increased its total sales, in value, from Gdes. 2,025,638 in 1933-34
to Gdes. 2,493,545 in 1934-35. Imports of German enamelled ware, agri-
cultural implements and cement were more than doubled. Increases were
registered in the case of pharmaceutical products, cotton hosiery, jute
bags, earthenware and clay pottery, steel cutlery, and paints. Declines
occurred in imports of German glassware, malt liquors and cosmetics.
Purchases from France declined fractionally in value (from Gdes.
2,299,383 in 1933-34 to Gdes. 2,259,257 in 1934-35), but the French share
of the total import trade increased from 5.03 per cent in 1933-34 to 5.49
per cent in 1934-35. Trade with France benefited from the rider to the
commercial treaty with France, and imports of French pharmaceutical
products, patent medicines, cosmetics and wines increased appreciably in
1934-35. Printed matter received from France also increased. Declines,
however, were recorded in the case of imports from France of jute bags,
kitchen utensils, miscellaneous machinery and apparatus, shoes, edible
oils, and copper goods.
The Netherlands (and Curacao) furnished 4.06 per cent of total imports
in 1934-35, compared with 4.29 per cent in 1933-34. Gasoline imports from
Curacao increased substantially in quantity and value in 1934-35, but





HAITI: REPORT OF FISCAL REPRESENTATIVE


imports from the Netherlands, comparing the same years, declined in value
from Gdes. 1,176,578 to Gdes. 870,280. For the most part the decline was
due to smaller purchases of jute bags, enamelled ware, steel sheets and
matches.
Next in importance among suppliers of merchandise to Haiti were
Belgium, Canada, and Italy. Each of these countries increased its share
of the total import trade, as well as the value of its sales to Haiti, which
in the aggregate amounted to 5.15 per cent of total imports in 1934-35.
No country other than those mentioned furnished more than a fraction
of one per cent of total imports in 1934-35.

Destination of Exports

Striking changes in the direction of Haiti's export trade took place in
1934-35. France, the United Kingdom, and the United States, in the order
named, remained the principal countries of destination. The proportion
of the total export trade taken by each country, however, changed
radically.
The exceptionally small size of the coffee crop in 1934-35 gave to the
other export products relatively greater importance; and since cotton,
sugar, sisal and bananas are sold mostly in the United Kingdom and the
S United States, we find that the share of total exports taken by those
countries increased considerably.
The United Kingdom, which had taken 11.48 per cent of total exports
S in 1932-33, and 11.71 per cent in 1933-34 increased its purchases to
22.33 per cent in 1934-35.
The French share of the export trade, on the other hand, declined sharply
from 54.18 per cent of the total in 1932-33, and 53.70 in 1933-34, to 39.55
per cent in 1934-35. This abrupt change in the relative importance of the
French market to Haitian trade was not due solely to the small coffee
crop. French purchases of Haitian cotton were more than cut in half,
despite the large increase in 1934-35 deliveries of cotton for export.
Logwood exports to France also declined in value.
Values of commodities shipped to France in 1934-35, and in the preceding
year, are shown below:
1934-35 1933-34
Gourdes Gourdes
Coffee ........................................... 12,361,086 24,003,217
Cotton ......................................... 1,489,581 3,269,575
Logwood ...................................... 182,247 292,302
Honey ........................................... 24,460 72,994
All other ....................................... 32,848 42,729
Total.............................. 14,090,222 27,680,817

Raw cotton, sugar, and cottonseed cake are practically the only exports
to the United Kingdom. That market is very important to the Haitian






HAITI: REPORT OF FISCAL REPRESENTATIVE


export trade, however, since it absorbs by far the greater part of the
annual production of these commodities. Shipments during the past two
years were as follows:
1934-35 1933-34
Gourdes Gourdes
Raw cotton ................................... 4,260,080 3,462,042
Raw sugar ................................... 3,230,552 2,201,671
Cottonseed cake............................. 414,043 258,900
All others ...................................... 52,235 115,693
Total.................................. 7,956,910 6,038,306
Particularly noteworthy is the fact that despite a year when total export
values declined sharply, shipments to the United Kingdom actually
increased in value by nearly two million gourdes. The percentage increase
amounted to 31.77 per cent. The reason was, of course, the increased
production during the last year of cotton and sugar. Both of these
products regularly are disposed of in the British market, which each year
is becoming increasingly important to the Haitian export trade.
The United States in 1934-35 continued to be the largest market for the
various leading export products, other than coffee, sugar and cotton, which
make up the remainder, of the export trade. Shipments to the United
States, by commodities, during the past two years were as follows:
1934-35 1933-34
Gourdes Gourdes r
Sisal .............................................. 1,859,520 2,191,061
Bananas ........................................ 763,085 319,960
Goatskins ...................................... 425,346 427,850
Cacao ........................................... 384,143 462,643
M olasses ....................................... 321,610 185,644
Rum .............................................. 174,438 162,564
Logwood ....................................... 139,204 471,063
Sugar ............................................ 112,296
Coffee ............................................ 61,580 248,453
All others ...................................... 58,457 58,405
Total................................... 4,299,679 4,527,643
It can be seen that important changes took place in the relative im-
portance of commodities shipped to the United States. Bananas in 1934-35
became second in importance among commodities sold in that market.
Production for export of sisal and cacao declined sharply in 1934-35,
resulting in a decline in the export values of these products sold in the
American market. Molasses and sugar exports increased. Sugar shipped
to the United States for the most part was entered there under customs
drawback privileges. High duties and a small quota prevent the entrance
of Haitian sugar upon the American market for consumption in that
country. The 1934-35 exports are explained by the fact that raw sugar
received from Haiti was refined in the United States and later re-exported
(excepting the 300 tons representing Haiti's sugar quota).
Total exports to the United States in 1934-35 declined in value by Gdes.
227,964, or by 5.03 per cent, from the total for 1933-34.




HAITI:: REPORT OF FISCAL REPRESENTATIVE


Exports to France, the United Kingdom, and the United States aggre-
gated 73.95 per cent of total exports in 1934-35, indicating relatively little
change from the percentage (74.19 per cent) recorded the previous year.
In 1934-35 the remainder of the export trade, amounting to 26.05 per cent
of the total, was absorbed almost entirely by Belgium, Denmark, Germany,
Japan and Italy. Spain, which in previous years had purchased important
quantities of coffee, was practically eliminated in 1934-35 as a country of
destination for Haitian exports. Italy likewise dropped from first place in
1934-35 among the five countries mentioned to fifth place. Italy's share
of the total declined from 7.99 per cent of total exports in 1933-34 to 2.33
per cent in 1934-35. Coffee is the only commodity of importance exported
to Italy. In value, shipments of coffee to Italy declined from Gdes.
4,110,653 in 1933-34 to Gdes. 831,690 in 1934-35.
Belgium increased its share of the total from 7.22 per cent in 1933-34
to 8.74 per cent in 1934-35. Shipments to Belgium were composed chiefly
of coffee.
Denmark likewise is an important coffee buyer. Total exports to that
country in 1934-35, mostly coffee, were valued at Gdes. 2,243,838, compared
with Gdes. 3,308,365 in 1933-34. The percentage share of the total trade
declined from 6.42 per cent in 1933-34 to 6.30 per cent in 1934-35.
Germany, although still a relatively unimportant buyer of Haitian
exports, in 1934-35 substantially improved its position. This was due
largely to important purchases of cotton, which increased in value from
Gdes. 61,879 in 1933-34 to Gdes. 1,049,108 in 1934-35. Total exports to
Germany in the latter year were valued at Gdes. 1,322,980. Besides cotton,
small quantities of coffee and honey were shipped to Germany.
Japan likewise became a buyer of Haitian cotton in 1934-35. Exports
to that country, consisting entirely of cotton, increased in value from Gdes.
36,107 in 1933-34 to Gdes. 867,870 in 1934-35, putting that country in
seventh place as a market for Haitian exports.

Balance of Trade
Imports exceeded exports in 1934-35 by Gdes. 5,532,416. In 1933-34 a
favorable balance of trade amounting to Gdes. 5,860,983 had been recorded,
and in 1932-33 the favorable balance of trade had reached Gdes. 8,316,423.
As already has been remarked, the volume of the import commerce in
1934-35 was relatively well sustained. Residual purchasing power carried
over from the previous two years had enabled consumers to continue
buying imported merchandise on a scale which otherwise would not have
been possible.
During the past ten years exports have exceeded imports in value by
Gdes. 25,143,377. Thus Haiti has been able to receive its normal re-
quirements of imported merchandise and at the same time obtain from
abroad the funds which it needs to pay back borrowed capital. The fact




HAITI: REPORT OF FISCAL REPRESENTATIVE


that an unfavorable balance of trade was recorded in 1934-35 correctly may
be looked upon as a purely temporary feature. Fundamentally, as an
examination, of trade figures over a period of years will demonstrate,
Haiti's position with respect to.exchanges of merchandise, and the values
represented by those exchanges, is sound in every way.
To be sure, with respect to invisible exports, Haiti has lost a substantial
item through the cessation of large expenditures by the United States
government. The net income from this source prior to 1934-35 had been
approximately Gdes. 3,000,000 per year. Nevertheless, this loss in income
is rapidly being replaced by the development of the new banana industry,
which in 1935-36 may be expected to produce more than Gdes. 3,000,000 in
new income, with steadily increasing amounts in subsequent years. In
addition, the invisible income derived from the tourist traffic at present is
increasing. Estimates place the inflow of funds from this source as high
as Gdes. 750,000 in 1934-35.
During these years when trade balances are jealously watched by the
big commercial nations, it is of especial interest to compare the value of
imports and exports by individual countries. But before doing so, and be-
fore drawing any conclusions, certain important reservations must be made.
Foreign commerce figures necessarily are taken from customs records.
They give, therefore, only the conventional F. O. B. values of merchandise
shipped from Haiti. No allowance is made for re-exports from the country p
of destination.
Similarly, the import figures, in accordance with accepted statistical
practice, give the C.I.F. value of merchandise received in Haiti. The
country of origin is the country from which the merchandise was shipped,
as shown by the shipping or commercial documents. Often the merchandise
has simply been re-exported from the indicated country of origin, having
lost its identity in the latter country as merchandise actually produced in a
third country; or the imported merchandise may have been composed of
raw materials imported from some third country which were processed to
a minor extent in the statistical "country of origin".
Parenthetically, it should be remarked that the re-export trade in Haiti
is negligible. No city in Haiti serves to an important extent as an entrep6t
for imported merchandise which is later distributed to other countries.
Neither are there drawback privileges which permit the processing of
imported goods and their later exportation to other countries.
Bearing in mind this statistical inadequacy in our foreign commerce data,
it is important, so far as practicable, to make proper allowance in our
examination of trade balances. And we find that in the case of Haitian
commerce the factors mentioned make a considerable difference in the
results obtained -perhaps more so than in the case of data covering
trade between most other countries, where such discrepancies may offset
one another.





HAITI: REPORT OF FISCAL REPRESENTATIVE


In the case of Haitian exports, the two leading commodities happen to
be coffee and sugar. Both commodities are shipped largely to foreign
ports where often they are re-disfributed, or are processed and re-
distributed, to other countries. For example, much of the coffee landed at
Havre or Antwerp is re-exported to other countries, or mixed with other
coffees and re-exported. Sugar from Haiti is refined in England and much
of it undoubtedly is re-exported to Continental and other countries.
As an example, we learn from a reliable source that Switzerland in
1933-34 received more than 300,000 kilos of Haitian coffee, mostly via the
ports of Antwerp and Hamburg. This coffee in our customs statistics
necessarily was included among exports to Belgium and Germany, and no
indication given that its real destination was Switzerland.
Cotton, on the other hand is largely consumed in the country of desti-
nation. The same is true of sisal, bananas, logwood and cacao.
Turning now to imports, we find that the bulk of goods received are
comprised in the groups under textiles and foodstuffs. Textiles manufac-
tured in industrial countries such as England and Japan are made from
raw materials obtained from third countries. However, the greater part of
the value of the finished product is represented by processing and merchan-
dising costs. In the case of foodstuffs, however, the situation is somewhat
different. Nearly twelve per cent of total imports are composed of flour and
fish, indicated in our statistical tables as imported mostly from the United
States. A further examination, however, shows that much, if not all, of
the flour carried in the customs statistics as of American origin is milled
* in the United States from Canadian wheat. Similarly, much of the pickled
or salted fish shipped to Haiti from American ports comes from Canadian
sources.
Of course, a complete and accurate adjustment of trade data to allow
for these factors can hardly be achieved. For practical purposes it is
sufficient simply to observe the direction of such influences, making due
allowance for their relative importance. Correct interpretation of customs
statistics is not possible without giving proper recognition to these obscure
but important factors. The frequently heard assertion that Haiti has failed
to buy in the markets where it sells loses much of its weight if customs
data are correctly interpreted.
Examining again the customs figures for exports and imports, we find
that the most important discrepancy in 1934-35 between Haiti's buying
and selling was in the case of trade with Japan. Imports from that country
totalled Gdes. 7,270,260, while exports to Japan amounted only to Gdes.
867,870, or 11.92 per cent of imports. Manifestly, so wide a margin
between exports and imports is inimical to Haiti's trade relations with its
foreign market countries. As related elsewhere in this report, corrective
measures were initiated by Haiti early in 1935. A better balance should
be obtained in the future.





14 HAITI: REPORT OF FISCAL REPRESENTATIVE

Imports from France in 1934-35 were 16.03 per cent of exports to that
country. While the margin between imports and exports remains quite
large, it is considerably less than in previous years, and still further
adjustments may be expected. Moreover, as already explained, a large
part of the coffee shipped to France is redistributed to other countries. The
figure for exports to France is therefore considerably exaggerated, and
does not represent actual consumption.
Then too, the "invisible" items in the account are heavily in favor of
France. Haiti's payments to France for services such as debt service,
freight, insurance, remittances to Haitian residents in France, funds ex-
pended by Haitian travellers and students in France, and so on, reach a
substantial total. In addition, Haiti contributes important sums to French
members of the clergy in Haiti. Scholarships add to the total in favor of
France.
British purchases of Haitian exports were more than double British
sales to Haiti. However, the export figures undoubtedly include sub-
stantial amounts representing Haitian sugar refined in Great Britain and
re-exported to other countries. Also, the import figures fail to reflect the
quantities of Canadian wheat and fish entering into Haitian consumption.
Then too, Haitian purchases from British dominions and possessions
exceeded sales by nearly Gdes. 700,000. On the whole, therefore, the trade
balance with Great Britain is far more satisfactory than customs figures
appear to indicate.
American purchases of Haitian merchandise in 1934-35 were 21.59 per
cent of sales. However, the import figures, totalling Gdes. 19,914,238,
include flour and fish imports valued at Gdes. 4,879,254. Much of this
amount, as already pointed out, represents re-exports from the United
States of Canadian wheat processed in the United States.
Even after making allowance on the latter score, it is apparent that
purchases from the United States still exceed Haiti's sales to that country.,
Trade between the two countries, in the present period of instability in
foreign commerce, cannot be entirely satisfactory until merchandise
exchanges approach more closely a balance. Preferably, since the United
States from the standpoint of international payments is a creditor nation,
the balance of trade with that country should be strongly in favor of Haiti.
Although merchandise exchanges with the United States may have been
unsatisfactory last year, they represent a distinct improvement over
previous years, and much more rapid gains may be looked for in the near
future. Development of the banana and sisal industries should quickly
increase sales to the American market. The new reciprocal trade agreement
with the United States will further promote trade between the two
countries.
The manner in which Haiti pays for its purchases of foreign merchan-
dise and at the same time is able to service fully its foreign indebtedness





HAITI: REPORT OF FISCAl. REPRESENTATIVE


has been set forth in previous reports of this office.* While "invisible"
S items entering in the international balance of payments are important, it
is the movement of merchandise which in the last analysis builds up the
credit balances which make possible the payment of interest and amorti-
zation of the public debt.

Ports of Entry for Imports
Port-au-Prince in 1934-35 again increased its commanding lead as the
principal port of entry of the Republic. Imports received in that city
were valued at Gdes. 30,994,065, or 75.30 per cent of total imports received
at all ports of entry.
In 1928-29, commodities imported through Port-au-Prince comprised in
value only 58.76 per cent of all goods received in that year. Since then,
the portion of the import trade handled through that port has increased
steadily each year until now more than 75 per cent of the import trade
passes through Port-au-Prince.
As was pointed out in the last report of this office, the rise in importance
of the capital city as the principal center of distribution .is one more
indication of Haiti's commercial progress. Good roads and improving
coastwise service are tending more and more to concentrate the import
trade in the leading commercial city, where distribution can be handled
more cheaply and efficiently than through consignments direct to the
smaller ports.
Other ports of entry for the most part handled a smaller share of the
S total import trade in 1934-35 than in the previous year. An exception was
Cap Haitien, where imports increased from 7.18 per cent of the total in
1933-34 to 7.24 per cent in 1934-35. Cap Haitien remained second in
importance as a port of entry in 1934-35, followed by Cayes, Gonaives,
Saint Marc, Jacmel, Jer6mie, Port-de-Paix, Fort Libert6 and Petit Goave.
In relative importance in the import trade these cities remained in the
same order as the previous year, with the exception of Fort Libert6, which
advanced ahead of Petit Goive and Miragoine. The sisal development in
the Fort Libert6 district is adding to the commercial importance of that
town. Imports recorded there increased in value from Gdes. 198,088 in
1933-34 to Gdes. 306,381 in 1934-35. With this single exception, the value
of imports received at each of the ports of entry declined in 1934-35 when
comparison is made with the corresponding figures for 1933-34.

Ports of Shipment for Exports
The thirty per cent decline in export values in 1934-35 affected export
activity at all of the principal ports. Jacmel and Jeremie suffered the
greatest losses in export values; while Saint Marc, Port-au-Prince and
Fort Libert6 were affected relatively little.

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





HAITI: REPORT OF FISCAL REPRESENTATIVE


The Saint Marc region produces chiefly cotton, coffee and sisal. The
cotton harvest in that section was exceptionally abundant in 1934-35, and
shipments of that commodity from the port of Saint Marc increased in
value from Gdes. 2,394,969 in 1933-34 to Gdes. 3,130,935 in 1934-35. The
coffee crop was small in that district, as elsewhere in the Republic, and
exports declined by nearly Gdes. 900,000. Sisal exports registered a drop
in value of Gdes. 218,462. However, the increase in cotton exports, together
with small shipments of bananas, nearly made up for the decline in coffee
and sisal production. Exports at Saint Marc in 1934-35 showed a net
decline from the 1933-34 figure of only Gdes. 476,499, or 10.75 per cent,
whereas at Jacmel a decline of Gdes. 3,603,401, or 57.89 per cent, was
recorded.
At Port-au-Prince export activity was aided by the record quantity of
sugar produced in 1934-35. Sugar is exported only from Port-au-Prince.
In value, shipments in 1934-35 increased by more than Gdes. 1,000,000
when comparison is made with the corresponding total for 1933-34. A
substantial increase in cotton shipments during 1934-35 also aided the
export trade handled by that port. Coffee exports, however, declined in
value by Gdes. 3,836,493, resulting in a net decline in exports from Port-
au-Prince of Gdes. 2,188,356, or 15.46 per cent.
At Fort Libert6, where sisal is practically the only commodity exported,
shipments declined in value by Gdes. 402,359, or by 18.06 per cent.
Cap Haitien in 1934-35 exported principally coffee (Gdes. 2,555,566) and
bananas (Gdes. 353,400). Other exports, valued in the aggregate at Gdes.
583,033, consisted chiefly of logwood, cacao, sisal, and cotton. With coffee
the predominant article of export, total exports in 1933-34 declined by
Gdes. 1,194,904, or by 25.49 per cent. It should be noted that bananas
already have become an important factor in the export trade from Cap
Haitien, and that 'it was largely because of increased banana shipments
that the export trade of that city was somewhat less severely hit in 1934-35
than exports of the country taken as a whole."
Export production in the Jacmel region suffered a greater decline than
was recorded in any other part of the country. Coffee and cotton are the only
important articles produced for export at Jacmel. Coffee shipments
declined in value by 59.84 per cent from the previous year's figure, and
cotton by 52.07 per cent. The boll weevil caused more damage to cotton
in the Jacmel district than in the other cotton producing sections. A small
quantity of bananas was shipped from Jacmel in 1934-35, but these exports
made no appreciable difference in export values, which declined from the
1933-34 figure by Gdes. 3,603,401, or by 57.89 per cent.
At J6remie, coffee exports dropped in value from Gdes. 2,084,175 in
1933-34 to Gdes. 825,500 in 1934-35. Other exports (principally cacao)
declined in value by Gdes. 102,612. Total exports from J6r6mie registered
a decline of 55.92 per cent from the 1933-34 figure.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Similarly, the export trade at Petit Goive declined by 45.85 per cent;
r at Cayes, by 37.88 per cent; at Gonaives, by 32.93 per cent; and at Pbort-
de-Paix, by 33.04 per cent.
Port-au-Prince in 1933-34 remained the leading port of shipment, with
33.58 per cent of the total export trade, as against 27.46 per cent in 1933-34.
Gonaives in 1934-35, with 11.41 per cent of total exports, replaced Jacmel
as second city in value of shipments. Saint Marc was third, with 11.10
per cent, and Cap Haitien fourth, with 9.80 per cent.

Shipping
During the past five years the number of vessels calling at Haitian ports
has increased steadily. In 1930-31 only 551 ships, having an aggregate
registered tonnage of 1,313,725 net tons, entered Haitian ports. During
1934-35, with foreign trade considerably under the 1930-31 figure, the
number of callings increased to 765 vessels, registered at 1,822,179 net tons.
Compared with the previous year, the number of callings increased by 47,
and the aggregate tonnage by 78,787 net tons.
In part, the increase was due to the fact that a larger number of tourist
vessels, on special cruises, visited Port-au-Prince in 1934-35 than during
the previous year. There were twenty such visits in 1934-35, compared with
ten in 1933-34. Figures for the net tonnage of these vessels 1 included in
the totals given above. The twenty tourist ships which visited Haiti in
1934-35 had a combined net tonnage exceeding the 1933-34 figure by
* 119,391 tons. After making proper allowance for this increase, it appears
that the tonnage of vessels engaged in carrying cargos in the Haitian trade
declined slightly in 1934-35. The number of callings of cargo vessels,
however, increased by a small percentage.
This increase in number of callings was due to the visits at Haitian ports
of ships engaged in the banana trade. Bananas usually are shipped on
comparatively small vessels which make frequent stops at the various
open and closed ports which are centers of banana production. The
development of this new industry will tend to augment the number of ships
serving Haiti.
As pointed out in the last annual report of this office,* the amount of
cargo space available for carrying Haiti's foreign commerce is greater
than is actually needed at present. While exporters and importers may
find this improvement in shipping facilities of some advantage to them,
the fact remains that the lack of sufficient cargoes, and the inability of the
shipping companies for the present to realize more profitable returns from
their Haitian trade, tend to delay much needed adjustments in the freight
rates at present applied to Haitian imports and exports. The ship operators
compelled by their own financial difficulties, appear to be more desirous of

S*Annual Report of the Fiscal Representative, fiscal year 1933-34, page 14.





HAITI: REPORT OF FISCAL REPRESENTATIVE


obtaining as much revenue as possible from the limited cargoes available,
rather than of assisting Haiti, by reducing freight charges, in a long-term
program for increasing the production of export commodities.
The government continued during 1934-35 to endeavor to obtain freight
rate reductions. However, there were no important changes in rates during
the year. That threatened increases were avoided was in itself an ac-
complishment. In all probability, any substantial favorable adjustment
in freight rates will have to await an increase in the volume of freight
offered.
There were no outstanding changes during 1934-35 in the distribution
of the carrying trade with Haiti among ships of different foreign registries.
American vessels continued to lead in Haitian commerce. Of total import
values in 1934-35, American ships carried 57.30 per cent; Netherlands
ships 19.93 per cent; German ships, 5.97 per cent; French ships, 4.30 per
cent; Norwegian ships, 3.91 per cent, and Japanese ships 3.01 per cent.
The corresponding percentages for the previous year had been substantially
the same, with the exception of the share of the import trade carried in
Japanese bottoms.
Japan for the first time became an important factor in carrying Haiti's
water-borne commerce during the past year, when merchandise valued at
Gdes. 1,688,427 was transported to and from Haiti in Japanese ships.
Japan's share of the total shipping trade, when comparison is made with
the previous year's figures, increased from 0.06 per cent to 1.26 per cent
in the case of exports, and from 1.77 per cent to 3.01 per cent in the case
of imports.
Netherlands and American ships carried the greater part of the export
trade in 1934-35, as in the previous year, although British and French
ships increased their share of the trade, Vessels flying the Netherlands flag
carried 25.61 per cent of the export commerce in 1934-35, as compared with
30.11 per cent in 1933-34. Similarly, the American share declined from
22.43 per cent to 21.34 per cent. British ships, however, increased their
share from 15.65 per cent in 1933-34 to 18.90 per cent in 1934-35, and
French ships from 12.45 per cent to 13.24 per cent. The portion of the
export trade shipped in vessels of German registry declined from 17.32
per cent in 1933-34 to 15.92 per cent in 1934-35.
Haiti's exports to France in 1934-35, valued at Gdes. 14,090,222, were
carried chiefly in Netherlands ships (Gdes. 3,703,872), followed by French
ships (Gdes. 2,841,807), British ships (Gdes. 2,384,527) and.American ships
(Gdes. 2,273,739). About half of the export trade with Great Britain was
carried in British bottoms, with the remainder distributed chiefly between
ships of Netherlands, French and American registries. Exports to the
United States were transported for the most part in American vessels,
although Norwegian and Netherlands ships obtained a small share of the
total.






HAITI: REPORT OF FISCAL. REPRESENTATIVE


,In the import trade, American vessels in 1934-35 transported 64.8 per
cent of merchandise coming from the United States, and 70.36 per cent
of imports from Japan. Goods of British origin were carried chiefly (71.71
per cent) in American ships, and French goods in French ships (71 per
cent). German ships carried 68 per cent of total imports from that country.

Tourist Trade
As indicated by the increased number of tourist ships calling at Port-
au-Prince, the tourist trade assumed considerably more importance during
1934-35. Not only were there more visits of the larger tourist ships, but the
passenger lists of these vessels were well-filled.
For the first time, according to available records, Port-au-Prince in
1934-35 was a port of call for special cruise ships during the summer
months. Several such visits were made in mid-summer. Tourists are
learning that Haiti has a delightful year-round climate, and that a visit
to Haiti can be enjoyed in the summer as well as in the winter.
The regular passenger ships calling at Haitian ports, and catering to
tourists, enjoyed an active year, especially during the last half of the fiscal
period. Merchants are responding to the demands of the tourist trade by
improving the attractiveness and increasing the variety of articles offered
for sale to tourists. Port-au-Prince has become quite as interesting to
tourists as a place to shop as any of the ports of call for tourist vessels
in West Indian waters. Certain imported articles, such as wines, liquors,
S perfumes and cosmetics can be purchased more cheaply in Haiti. In ad-
dition, Haitian rum deservedly has become a favorite with tourist shoppers.
Other articles of domestic manufacture, such as hardwood furniture, sisal
bags, and silver jewelry, are being improved in quality and variety, and
find a ready market.
This feature of the tourist trade is having an important effect on Haiti's
"invisible" income from this source. More money is being expended in
Haiti by each tourist visitor, because more attractive articles are being
offered for sale. In addition the number of tourists visiting Haiti has
increased during the past year, adding still more to "invisible" income.
On the other hand, there has been no increase in the number of travellers
visiting Haiti for longer periods than the few hours during which the
cruise ships usually remain in port. Port-au-Prince can accommodate limited
numbers of visitors in its attractive and comfortable hotels. However,
that city, and Cap Haitien, are still in need of the more elaborate amenities
demanded by tourists. It is unfortunate that the capital invested in a
relatively large number of small hotels has not been combined to permit the
establishment of a larger single enterprise, modeled along the lines of a
modern resort hotel, with a golf course, dancing pavilion, and the sports
of various kinds which bring tourists and visitors by the thousands to
other West Indian cities. Considerable capital would be required, it is





HAITI: REPORT OF FISCAL REPRESENTATIVE


true, but not so much as to make impossible its accumulation entirely from
local sources, with the help of proper promotion and organization, and "
by combining the many scattered enterprises at present operating with
indifferent success in the capital city.
Equally essential to further progress of the tourist trade is the establish-
ment of a small, modern, hotel at Cap Haitien, and an improved road
connecting that city with the capital.
A splendid opportunity to bring more visitors to Haiti has been offered
recently through a change in the schedule of one of the steamship compa-
nies serving Haiti. In order to permit the loading of bananas at Cap
Haitien, weekly stops are now made at that city as well as at Port-au-Prince
on the northbound trip to New York. If better hotel accommodations were
available at Cap Haitien, that city might easily become a leading attraction
to tourists.
It must be admitted that there is at present little prospect of an immedi-
ate development of tourist attractions to the full extent described. In
particular, government resources are hardly sufficient as yet to permit the
improvement in roads which is needed. Nevertheless, some such long-term
plan should be formulated and adhered to, and government encouragement
should be given to the private capital and initiative needed to carry out
the program.

Foreign Commerce by Months
The import trade was subject to considerable month-by-month variation
in 1934-35. In October of that year imports, in terms of value, reached
the highest level since 1930. However, it soon became apparent that the
coffee crop would be even smaller than had been expected, and that buying
power would be limited. Imports declined progressively in value through-
out November, December, January and February. In March and April
1935, imports gained slightly because of heavy cotton and sugar exports
at that time of the year. However, the recovery was only temporary, and
in June, 1935, imports receded to a low level. The expectation of a good
coffee crop during the approaching harvest season brought a gradual rise
in imports throughout July, August, and September, 1935. Even then,
imports in September, valued at Gdes. 3,314,275, were less than ordinarily
is to be expected at that time of the year.
The past year marked a break in the general upward trend of imports
which began in 1932 and continued until the early part of the fiscal year
under report.
The effect of the poor coffee crop on export values, by months, is shown
in Chart No. 1. Total exports, by months, usually are highest during the
November-February period when coffee is being shipped in quantity. In
1934-35, however, monthly exports did not rise above Gdes. 4,000,000 in
any month until March, when cotton and sugar exports produced a sudden





HAITI: REPORT OF FISCAL REPRESENTATIVE


increase in export values, and the export curve, at Gdes. 4,782,314,
reached a peak for the year. Of total exports in March, seventy per cent
were composed of cotton and sugar.
Practically all of the coffee crop had been shipped during the first eight
months of the year. By August, most of the cotton and sugar had been
shipped. The new coffee crop was late in reaching market, and sisal and
bananas alone accounted for most of the export values recorded in July,
August and September, when export values descended to exceptionally
low levels.
Extremely wide seasonal fluctuations in exports always have been a
characteristic of the export trade. The disadvantages are manifest, and
often have been pointed out. Efforts to achieve more diversification in

CHART No. 1
VALUE OF TOTAL IMPORTS AND TOTAL EXPORTS, BY MONTHS
FISCAL YEARS 1931-32 TO 1934-35
MILLIO/V OF
GOURDE/



a --I -



I I
IMPORPT/ EXPORT/








1931-1932 1932-1983 19B53-a1934 1934 -1835

exports have had as an object the distribution of exports with more
uniformity throughout the year. The emphasis placed on increased cotton
and sisal production already has produced marked results. To these
exports have now been added bananas. Development of this new industry
should eventually result not only in the diversification and augmenting of
production export, but it should iron out satisfactorily the seasonal curve
of commodity exports.

Commodities Imported

The decline in import values recorded in 1934-35 affected chiefly the
important groups comprising textiles and foodstuffs. Compared with
1933-34, imports of cotton textiles in value declined by 21.81 per cent;
manufactured cotton articles by 15.18 per cent; flour, by 11.62 per cent;
fish, by 14.93 per cent; and miscellaneous foodstuffs by 12.46 per cent.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Other groups of imports in which values declined included: iron and
steel manufactures (7.63 per cent); gasoline (21.64 per cent); soap (9.76
per cent); agricultural implements, jute sacks, meats, leather goods, lumber
and trucks.
Imports of chemical and pharmaceutical products increased in value,
when comparison is made with 1933-34, by 20.01 per cent; household
utensils by 26.76 per cent; and kerosene by 2.48 per cent. Increases in value
were recorded also in the case of cement, rice, liquors and automobiles.
Quantities of commodities imported declined generally throughout the
list along with values. An exception was gasoline. Receipts of gasoline
increased slightly when comparison is made with the 1933-34 total
although in terms of value, a decline of 21.64 per cent was recorded. Rice
imports declined in quantity, but increased slightly in value.
It is significant that the decline in imports affected principally the groups
of staple commodities such as textiles and foodstuffs, whereas a greater
share of import purchasing than usual was directed toward the semi-luxury
and luxury groups such as automobiles, liquors, chemical and pharmaceu-
tical products, various iron and steel manufactured articles, and household
utensils. This tendency away from the staple articles of import is
demonstrated in the table below, listing, during the last two years, the
principal groups of imported articles, and the relation between total import
values and imports by groups:
1933-34 1934-35
Per ce,: Per cent
Textiles, clothing, etc.................................. 33.3 29.9
Foodstuffs .............................................. 19.7 19.3
Gasoline, Kerosene, etc............................... 5.9 5.9
Iron & Steel products.................................. 4.1 4.3
Automobiles and trucks.............................. 2.5 2.9
Household utensils, etc............................... 2.0 2.8
Soap ....................................................... 2.7 2.7
Chemical & pharmaceutical products........... 1.9 2.5
Lumber ........................................................ 2.1 1.7
Liquors and beverages................................ 1.3 1.5
Jute bags, etc................................................. 1.7 1.5
Agricultural implements.............................. 1.4 1.3
All other imports ...................................... 21.4 23.7
Total.................................................... 100.0 100.0

Ordinarily, imports of textiles and foodstuffs comprise more than half
the value of total imports. In 1934-35, this percentage dropped to 49.2
per cent, with a corresponding increase affecting most of the other com-
modities named above. This change in large part was due to speculative
purchases of Japanese textiles in 1934. Stocks in the hands of importers
and merchants in the early part of 1934-35 were considerably in excess






HAITI: REPORT OF FISCAL REPRESENTATIVE

CHART No. 2
QUANTITIES OF LEADING COMMODITIES EXPORTED AND IMPORTED
FISCAL YEARS 1916-17 TO 1934-35

fX PORT/ IMPORT/
MILLOrI/ Orf itILO./ MILLION/ OF" KIL.O/
50 5
COf- A A A



S\ 2 Tf-rILn /


MILLION / Of" KILO/

COTTON?






8


4 '



MILLION/ OfP" KIL-O/
35
0 /UOAR=
20

J -1v -
I'l l' f I l I I I I I ,


MIL-L 10o/ OF KILO/
F'L.OUR
40 ----- A---------

20S-

:IC^


NUMBfftFW


40AUTO/ AD
TRUCK/
4 ---U-M -----L


17l8 Il 9O ZlEW2425262Fl2h303I32333435


17 1819 202I2 2324252627O2830313233435





HAITI: REPORT OF FISCAL REPRESENTATIVE


of consumer demand. The subsequent decline in imports of textiles was
simply a natural adjustment between supply and demand. Also, the higher
duties applied since April, 1935, to imports of Japanese goods probably
tended to reduce purchases of cotton goods.
On the whole, the reduction in textile imports has had a beneficial effect
on the important domestic cotton goods trade. Wholesalers and retailers
in September, 1934, had been confronted with the problem of disposing of
excessive stocks in the face of a poor coffee crop and limited purchasing
power. Moreover, purchases of Japanese goods were restricted by the
inability of importers to carry on further transactions with Japan on what
amounted to a cash basis, as demanded by exporters in Japan. Finally the
establishment of the maximum tariff put an end to speculative excesses in
textile importing. The trade re-adjusted itself quickly to the change.
At the end of the fiscal year 1934-35, the decline in textile imports had
reduced stocks to reasonable limits, and the trade had before it prospects
of a good coffee crop and renewed activity in consumer purchasing.
A decline in food imports invariably accompanies a poor coffee crop. Past
experience shows that the planting of domestic food crops increases notice-
ably in poor coffee years, causing a decline in purchases of imported flour,
fish, meat and other staple foodstuffs. This increase in food production
assists in bringing a quick and automatic adjustment between export and
import values without any great strain on the economy of the country. On
the other hand a considerable lag is usually noticed between a poor coffee
crop (and hence reduced purchasing power) and imports of gasoline, au-
tomobiles, manufactured articles, pharmaceutical products, wines and
liquors, and other luxuries or semi-luxuries. These groups of imports in
1934-35 apparently were little affected by the decline in exports. Undoub-
tedly, another year of poor crops, or lower prices for export products,
would see a marked drop in imports under these categories; but with a
good coffee crop in prospect for 1935-36, and bananas, sisal, sugar and
other commodities probably making important additions to export values
in that year, it can be expected that semi-luxury imports will increase.
Construction activity was not interrupted by the poor crop year. Cement
imports have increased steadily each year since 1931-32 to a peak of
7,419,770 kilos in 1934-35. Although lumber imports declined in the latter
year, other building materials, particularly paints, steel roofing sheets, and
structural steel, increased in values imported, and in spite of less activity
in government construction projects.
The unit prices of imported commodities, averaged over the fiscal year
1934-35, on the whole show comparatively little change from average
prices in 1933-34. Textiles, for example, remained at the same average
price per kilo (Gdes. 3.31) in both years. Foodstuffs and liquors increased
in price in 1934-35. Imported meats in particular were affected. The unit
prices of cement, lumber, soap and gasoline declined.






HAITI: REPORT OF FISCAL REPRESENTATIVE 25

: Unit prices in 1933-34 of the principal import commodities, taken from
customs records, are given in the table below. For sake of comparison,
prices are also given for each of the three prior years:

PRICES PER UNIT
1931-S2 1932-33 1933-34 1934-35
Unit G'rdc. Gourdes Gorde Gourdes
Cement..........Kilo.................. 0.06 0.05 0.06 0.05
Fish............i.... ..Kilo ................. 0.47 0.38 0.43 0.49
Wheat flour...Kilo................. 0.25 0.25 0.28 0.30
M eats............Kilo................. 0.90 0.73 0.75 1.11
Rice..............Kilo................. 0.25 0.22 0.26 0.27
Liquors..........Liter................. 1.32 1.27 1.75 1.78
Lumber..........Cubic meter...... 89.00 85.95 99.95 89.61
Gasoline.........Liter................... 0.21 0.16 *0.15 0.11
Kerosene........Liter................ 0.23 0.23 0.23 0.24
Soap..............Kilo................. 0.48 0.41 0.47 0.46
Textiles.........Kilo................. 3.31 3.06 3.31 3.31 :
Tobacco.........Kilo................. 1.90 1.93 2.31 2.36

Commodities Exported
The value of the annual coffee crop usually constitutes between seventy
and eighty per cent of total export values. In 1934-35, however, coffee
exports amounted only to 53.59 per cent of total export values.
The declining importance of coffee in the export trade was due not only
to the exceptionally poor coffee crop, but also to the rising importance of
cotton, sugar and bananas.
The gradual increase in agricultural production for export which has
taken place in recent years is most encouraging. Sugar exports reached a
record figure in 1934-35. Cotton exports were greater than in any year
with the exception of 1931-32. Sisal exports in 1934-35 were close to the
record figure of the previous year, and a still higher total seems assured
for the current year. An examination of Chart No. 2, showing exports of
principal commodities, will reveal a marked upward trend in the prodactio-a
of cotton, sugar and sisal.
To these accomplishments has been added the production of bananas for
export. In the short space of two years banana exports have doubled in
value and have become fifth in importance among Haitian export products..
The relative importance in 1934-35 of the leading export commodities is.
shown in the table below: Value
>lrd,' Per cent
Coffee ............................................... 19,092,092 53.59
Cotton............................................... 7,666,639 21.52
Sugar ................................................ 3,487,502 9.79
Sisal ........................................... 2,029,404 5.69
Bananas ......................................... 763,256 2.14 : .
Cottonseed cake................................. 549,652 1.54
Goatskins ................................ .... 426,270 1.20
Cacao ...................................... 402,963 1.13
Logwood............................................ 366,931 1.03
* M olasses........................................... 321,610 0.90
Rum ............................................... 179,349 0.50
Honey................................................ 124,915 0.35
All other exports................................ 218,622 0.62
To a'........ ...... .......................... 35,629,205 100.00





HAITI: REPORT OF FISCAL REPRESENTATIVE


Coffee, cotton, sugar, sisal and bananas alone constituted 92.73 per cent
of total export values in 1934-35. Coffee shipments, in value, had amounted
to 70.68 per cent of total exports in 1933-34, as against only 53.59 per cent
in 1934-35. All other principal export commodities, with the exception of
logwood, increased in relative importance in the latter year. In the case
of bananas, exports valued at Gdes. 320,561 in 1933-34 were only 0.6 per
cent of total exports in that year. In 1934-35 banana exports increased
to Gdes. 763,256 in value, and constituted 2.14 per cent of total exports.
Notwithstanding the gains made in the production of the commodities
mentioned, coffee remains predominant among Haitian exports; and in all
probability coffee will remain for many years the one export commodity
on which the prosperity of the country will largely depend. Cotton, sisal
and sugar can hardly do more than supplement coffee exports. Banana
production will have to be gradually increased over a considerable period
of time before shipments in any year will approach the value of the annual
coffee crop.

Coffee
The 1934-35 coffee crop was the smallest recorded during the past
nineteen years. Shipments of 19,031,749 kilos in that year were less than
half the total of 41,745,766 kilos exported in 1932-33, when shipments
reached a record figure.
In 1933-34, coffee exports amounted to 34,028,058, kilos from which the
1934-35 total represents a decline of 14,996,309 kilos, or 44.07 per cent. The
1934-35 crop was forty per cent under the average crop of 32,000,000 kilos.
Coffee production in Haiti always has varied considerably from year to
year. Ordinarily, however, these variations do not exceed 25 per cent above
or below normal production. The 40 per cent crop recorded in 1934-35 is
an extreme fluctuation which probably will not be repeated for many years.
Nothing comparable has occurred since the crop-year 1917-18 when only
19,151,000 kilos were shipped; but that was a war year when much of the
coffee harvested could not be exported. On only two other occasions within
the last twenty years have coffee exports approached the low level of
1934-35. These were in 1920-21, when coffee exports totalled 22,367,000
kilos, and 1931-32, when only 23,205,000 kilos were shipped.
In seeking an explanation, it might be supposed that the decline was
due to a sudden reduction in the area planted to coffee, or to the with-
holding of coffee from market because of low prices. However, neither
factor affected coffee exports in 1934-35. There were no storms or
hurricanes which damaged crops. Practically all of the coffee grown was
harvested and shipped within the fiscal year. Damage done to coffee before
reaching market, such as through mould in wet weather, careless prepa-
ration, and similar causes, was no greater than normal. The carryover both
at the beginning and at the end of the fiscal period was negligible.






HAITI: REPORT OF FISCAL REPRESENTATIVE


The only reasonable explanation is that climatic conditions had been
unfavorable to the flowering of the trees, and the maturing of the cherries.
To be sure, the weather preceding and during the crop year had not been
so abnormal as to indicate a short crop. But in all probability rainfall
combined with other climatic factors over an extended period had affected
the growth of the trees and their productivity. Influences still imperfectly
understood cause atmospheric conditions, and the coffee crops, to vary in
broad and ill-defined cycles which roughly correspond in length and
intensity. The coffee trees in 1934-35 apparently reached a low point in
the production cycle, after two years of good crops (one of them, 1932-33,
a year when coffee exports reached a record of nearly 41,000,000 kilos).
If past experience may be accepted as a guide, it will be many years
before coffee production even approaches the low figure of 1934-35, and
there is good reason to believe that the next two or three crops will be at
least average in size.
It is true that coffee production in 1934-35 was disappointing, and
that business and government revenues suffered directly as a result.
Nevertheless, there is satisfaction to be had in the fact that a year of a
phenomenally short coffee crop has passed without serious consequences.
Business was adjusted quickly to reduced purchasing power, and govern-
ment activities continued at an even nace through the utilization of cash
reserves stored up in more prosperous years.
We have seen that the small size of the coffee crop was a purely tempo-
rary feature of the year. There need be little fear of another small crop
in 1935-36. Unfortunately, the same cannot be said of coffee prices, con-
cerning which we have no assurance of immediate improvement.
The 1934-35 coffee crop was valued at Gdes. 19,092,092, compared with
coffee exports valued at Gdes. 36,433,430 in 1933-34. The decline amounted
to Gdes. 17,341,338, or 47.59 per cent. The average price for the year was
a fraction more than one gourde per kilo, or (in commercial terms) $10.03
per 50 kilos. The price compares as follows with average prices during the
past seven years:
Fiscal years Dollars per 50 hi!os
193 4-3 5............................................................ 10. 0 ,
1933-34 ............................................................ 10.71
1932-33 ................................... ................ 8.6S
193 1-32............................................................ 11.35
1930-31...................................... ................. 12.71
1929-30............................................................ 15.16
1928-29 ............................................................ 22.58

Excepting the low figure of $8.68 in 1932-33 (when, incidentally, the
largest crop on record was harvested), average coffee prices were lower
in 1934-35 than in any other year of the period given. The decline from
the 1933-34 average amounted to 6.34 per cent. Thus, low coffee prices,
*- in addition to a poor crop, were responsible for the drop in export values.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Quotations for Haitian coffee remained steady during the first three
months of the fiscal year 1934-35, though at a somewhat lower level than
had prevailed throughout most of the previous year. In January, prices
weakened noticeably, and by the end of March they were 23 per cent lower
than the January high. Unfortunately, the decline took place during the
months when over a third of the year's crop was being exported. When
prices partially recovered (in April and May) only a small part of the
crop remained for shipment.
During the last two months of the year prices descended below the low
point touched in March. At the close of the fiscal year prices were quoted
in the vicinity of only $8.00 per 50 kilos, and up to the present writing
they have advanced only a fraction beyond that figure, which is close to
the lowest price quoted for Haitian coffee during the last several years of
low coffee prices.
CHART No. 3
COFFEE PRICES-FISCAL YEARS 1933-34 AND 1934-35
rDAric/ PER
50 KILO/
25"
HAITI "COPITRACT 2 '/II,v- OuofI,-a/


/ATO, 'GOOD AVERAG. Qof

DOLLAR/ PER
50 KILCV
14
13 -I
HAITI 'COIITACT 2" F.O.B HA,,l
I1






a' --- --------------,-~i- --------------Vv^-

Oct Nov Dec Jan Feb Mar April Moy .ume Ju Aug /ept Oct /v Dec Jor Feb Mar April May Jwe Jdly Aug /ep
1933--34, 1934 35

Weakness in coffee prices can have far more serious consequences than
variations in quantities produced. After all, it is the value of the crop
and not its physical quantity which is important. Even the short crop of
the past season, if sold at 1929 prices, would have produced close to Gdes.
40,000,000 instead of the Gdes. 19,000,000 obtained in 1934-35. Business
and revenues would have improved correspondingly. Then too, prices
cannot be depressed beyond a certain point without affecting production.
Recent experience shows that producers are reluctant to sell when prices
are in the neighborhood of $8.00 per 50 kilos. A further decline might
well discourage planters from harvesting the crop.






HAITI: REPORT OF FISCAL REPRESENTATIVE


There is nothing reassuring about the future of coffee and coffee prices.
Brazil still holds enormous surplus stocks, in spite of coffee destruction.
It is predicted that the surplus during the next coffee year will be even
greater. Meanwhile, consumption is declining both in Europe and the
United States. In European areas the distribution of coffee for con-
sumption is reported to have fallen off 10.2 per cent in the year ending
June 30, 1935, when comparison is made with the previous year. A similar
decline 4.4 per cent occurred in the case of American coffee consumption.
Quotas, exchange control and other measures to promote economic self-suf-
ficiency have reduced sales to Europe. The repeal of prohibition is
believed to have been in part responsible for the reduction in coffee con-
sumption in the United States.
Even more significant, from the point of view of the Haitian coffee trade,
is the fact that deliveries of the so-called "mild" coffees to European
markets have declined far more extensively than Brazilian coffees.
Comparing the same periods referred to above, deliveries of Brazilian
coffees fell off only 3.5 per cent, whereas deliveries of "mild" coffees
dropped 18.7 per cent. Haitian coffee is, of course, classed as one of the
mild coffees.
Conversely, deliveries of Brazilian coffees to the United States, as
reported by the New York Coffee and Sugar Exchange, declined by 10.2
per cent, whereas deliveries of coffees "other than Brazilian" increased
by 10.4 per cent.
To Haiti, this means that a remarkable shift is taking place in the con-
sumption abroad of the variety of coffee produced in Haiti. Europe is
consuming a far greater proportion of Brazilian coffee than heretofore,
whereas American consumers are turning to the mild grades.
What has happened is that European quotas and trade restrictions have
affected particularly coffee coming from countries other than Brazil. Mild
coffee which could not be delivered in Europe has sought its only other
important outlet which is the United States. As a consequence, prices for
"milds" are lower in the United States than in Europe. Supplies of mild
coffees are excessive in the United States and scarce in European markets.
As might be expected, considering the large supply of mild coffees, the
usual premium which Haitian coffee enjoys over Brazilian varieties has
narrowed appreciably. Chart No. 3 shows that at .Havre Haitian coffee
obtained a premium of 27 per cent over a certain grade of Brazilian coffee
at the beginning of the fiscal year 1934-35. During the next six months
this price differential diminished steadily until it amounted only to 11
francs, or 7.7 per cent, at the end of March, when most of the Haitian
coffee crop had been shipped. It is true that the premium widened
subsequently, but this was due in all probability to the small size of the,
crop, and the scarcity of Haitian deliveries in the Havre market.





HAITI: REPORT OF FISCAL REPRESENTATIVE


Haiti has been fortunate thus far in being able to sell most of its coffee
at relatively high prices in the European market. Other countries have
been compelled to dispose of mild coffees in increasing amounts in the
United States, and at prices which appear to rule from ten to fifteen per
cent under the prices offered for similar grades in European markets.
The warning given to the Haitian coffee trade is obvious. Sooner or
later the European market may be blocked to Haitian coffee. The immi-
nence of this danger must be admitted, and measures taken to counteract
its effects. Already, Germany will only buy in exchange for merchandise
sold. Italy and Spain (once important outlets) are practically closed to
Haitian exports. France for a brief period last season, refused Haitian
deliveries.
The course of action to be taken in defense of coffee is clear. First,
Haiti must endeavor to retain, so far as possible, undoubted advantages
of selling coffee in Europe by diversifying its European outlets and
securing through trade agreements where possible the right to continue
marketing coffee in Europe. Secondly, (and because of the danger that
the closing of European markets may materialize) exporters must be
prepared to market coffee in the United States and Canada where the
Haitian variety is practically unknown, and where deliveries cannot be
made unless the trade is built up with types of coffee suited to these
markets and a reputation for Haitian quality established. It would be
disastrous to the coffee trade and to Haiti if (as might very well happen)
the European market is closed completely and exporters suddenly are
compelled to dump accumulating stocks on the North American market at
whatever prices they may bring.
Increasingly onerous demands for trade concessions and special privi-
leges make it doubtful that all European markets can be made more secure
than they are at present. The willingness or unwillingness of European
countries to buy Haitian coffee after all depends upon economic and
political conditions in Europe, trade policies, and other factors over which
Haiti has no control. Better prepared coffee, the necessary attention and
study of market methods and demands, advertising, and coffee propaganda,
may result in higher price possibilities in North American markets for
Haitian exporters and producers; but efforts in that direction can give
little assistance in the matter of retaining European sales. The basic
difficulties in Europe are political and financial. While endeavoring to
secure such trade concessions as some European countries may be willing
to grant at a price Haiti can afford, Haiti will have to await eventualities
and meanwhile do what may be done to assure a market for coffee in
North America. That part of the world is the only remaining great coffee-
consuming region.
We have seen above that mild coffees are being sold in increasing
quantities in the United States. This new trend in no way helps Haitian






HAITI: REPORT OF FISCAL REPRESENTATIVE


sales. Increased deliveries of "milds" in the United States mean lower
prices and increased competition between countries supplying the American
market.
However, exporters should be able to overcome the present difficulties;
in selling coffee in North America; and for the reasons already indicated,
it is essential that a beginning should be made at once. The disposal of
sizeable lots of coffee would relieve the tension in Haiti's trade relations
with European countries before any markets there are further limited orT
perhaps closed completely. Haiti would be in a far more favorable position,
to bargain for new trade arrangements in Europe if its imports and
exports were better balanced as to European markets.
As to the sale of coffee in the American market, success, in the opinion
of this office, is contingent upon: (1) better preparation of coffee for
exports; (2) the formation of a syndicate of exporters to permit satisfacto-
ry marketing of large orders.
The government already has taken important steps to promote the
better preparation of coffee for export. At the end of the year under review
the sale of coffee to middlemen was prohibited except in the cities and at
points approved by the National Agricultural Service. This measure should
improve the quality since coffee brought to market by producers henceforth
can be disposed of only to merchants equipped with facilities for grading
coffee properly. Efforts are being made to promote the use of mechanical
decorticators in order to reduce the percentage of broken beans. At least
two large exporters are now buying coffee in cherry form in order to assure
proper decortication and drying. Intensive efforts in many directions are
being made by the government to improve the quality of the product
shipped.
Standardization is producing better coffee, although the higher grades
constitute a relatively small portion of total exports. More than six per
cent of coffee shipments in 1934-35 were classed as Types 1, 2 and 3,
compared with 4.75 per cent in 1933-34. Percentages of total exports by
types during the last four years are given below:
1934-35 1933-34 1932-33 1931-32
Type Per cent Per cent Per cent Percent
1............................ .95 .72 .57 1.20
2........................ .44 .27 .17 .55
3.......................... 4.77 3.76 5.55 7.71
4.......................... 7.73 10.57 11.86 15.32
5.......................... 76.34 74.16 72.47 66.77
6.......................... 1.95 1.09 .91 1.12
7............................ 7.82 9.43 8.42 7.33
Parchm ent coffee.... ............ ............ .05 ............
100.00 100.00 100.00 100.00

The formation of syndicates and cooperative organizations for the
defense of the coffee trade has been practically universal in other coffee
countries. The coffee trade in Haiti has accomplished nothing in this





HAITI: REPORT OF FISCAL REPRESENTATIVE


direction. Repeated efforts heretofore to secure cooperative action among
coffee merchants have been without success. Unless merchants voluntarily
organize and themselves regulate the marketing of the crop there remains
the prospect that the government itself may be forced by circumstances
outside of its control to create a government coffee monopoly or otherwise
regulate the flow of coffee abroad.
In 1934-35 practically all coffee, as usual, was shipped to European
countries, especially to France, Belgium and Denmark. Exports of coffee
in 1934-35 by countries of destination are shown below:
Country Kilos Per cent
France ............................................. 12,166,839 64.0
Belgium ............................................ 3,110,317 16.4
Denmark .......................................... 2,258,371 11.9
Italy .................................................. 847,508 4.4
Spain ................................................ 169,011 0.9
Germany............................................ 144,895 0.8
French Africa .................................. 85,205 0.5
Sweden.............................................. 76,600 0.4
Netherlands ...................................... 62,809 0.3
United States .................................... 62,103 0.2
Norway................................................ 24,014 0.1
All others ........................................ 24,077 0.1
Total......................................... 19,031,749 100.0

During the previous year France absorbed 67 per cent of the crop.
Belgium and Denmark increased their shares from 9.5 per cent and 8.7
per cent respectively in 1933-34. Italy and Spain, however, took only a
small part of the crop in 1934-35, whereas Italy in 1933-34 had bought
11.0 per cent of the crop and Spain 1.6 per cent.
The decline in coffee production in 1934-35 affected all coffee-growing
regions of the Republic to a like extent. From the central part of Haiti
(Port-au-Prince, Saint Marc and Gonaives) 40.7 per cent of the total crop
was exported. This compares with 39.0 per cent in 1933-34. The northern
ports (Cap Haitien and Port-de-Paix) shipped 17.3 per cent of total coffee
exports in 1934-35, compared with 15.2 per cent in 1933-34.

Cotton
Cotton exports in 1934-35 totalled 6,177,551 kilos, compared with
5,301,796 kilos in 1933-34. The increase amounted to 875,755 kilos, or
16.5 per cent.
The 1934-35 total was the largest recorded in any year with the exception
of 1931-32, when cotton exports reached 6,308,335 kilos.
Cotton prices were relatively stable throughout the fiscal year 1934-35.
In January and February, 1935, prices rose slightly and then declined
during March and April when the heaviest shipments from Haiti took
place. Exports benefited somewhat from a recovery in prices in May, but
by that month most of the year's crop had been exported.






SHAITI: REPORT OF FISCAL REPRESENTATIVE 33

In value, 1934-35 exports totalled Gdes. 7,666,639, or Gdes. 821,763
more than the value of total shipments in 1933-34. The increase amounted
to 12.0 per cent. The average price of cotton exports, according to customs
records, amounted to Gdes. 1.24 per kilo. This compares with prices
obtained during the previous four years as follows:
Fiscal years Gourdes per Kilo
193 4-35 ................................................................ 1.24
1933-3 4..................................... ............. ... 1.29
1932-33........................................... ................ 0.79
1931-32 ................................................................ 0.64
1930-31 ................................................................ 1.02
Thus cotton prices remained at approximately double the mid-depression
figure of Gde. 0.64 per kilo. Cotton, of all Haitian exports, has benefited
most from the general recovery in world prices for raw materials which
has taken place during the past two years. Unfortunately, coffee and sugar
have not benefited to a like extent.
The cotton industry in Haiti has made steady progress in recent years.
The area planted to cotton has been increased gradually, and production
has followed a marked upward trend. In addition, the quality of the fibre
has been improved through selection and development of a special long-
fibre coton which experience has demonstrated can be grown successfully
in Haiti. Haitian long-fibre cotton is similar in quality to the Egyptian
variety, and ordinarily commands a premium of from 20 per cent to 50
per cent over the usual grade of Haitian cotton. Prices for the latter.
closely follow quotations for American middling cotton, which it resembles
in length of fibre and other characteristics. However, even the ordinary
Haitian cotton, which makes up the bulk of exports, is gradually improving
with respect to length of fibre through government distribution of selected
seed and a campaign to have the crops harvested with proper care. Most
of the cotton exports at present consist of mixtures of selected cotton and
ordinary short-fibre cotton, with the latter quality greatly predominating.
Eventually, however, areas planted to the selected variety will be sufficient-
ly productive to warrant shipment of the two varieties in separate lots.
Even now, commercial shipments of selected cotton are being made.
Selected cotton shipped abroad without admixture still comes chiefly from
government experimental farms, or plantations where the government
directly or indirectly gives assistance to growers. Selected long-fibre
exports in 1934-35 totalled 40,500 kilos, registering an increase of 10,500
kilos, or 35 per cent, from exports of 30,000 kilos in 1933-34.
Further progress in the cotton industry may be retarded by the existence
in certain parts of Haiti of the Mexican boll weevil. Cotton plants in the
Jacmel regions in January, 1935, were found to be infested with this insect
pest which has destroyed enormous quantities of cotton in other cotton-
producing parts of the world. The boll weevil was later found in limited
numbers on roads and trails leading from Jacmel to Port-au-Prince and
in the immediate vicinity of Gonaives.





HAITI: REPORT OF FISCAL REPRESENTATIVE


The government took immediate measures to combat the pest by es-
tablishing drastic quarantine regulations. Interior transportation of all
cotton from the infested regions was prohibited by an executive order
dated February 11, 1935. Cotton sacks cannot be transported unless
previously sterilized under government supervision. The sum of Gdes.
50,000 was appropriated to carry out experimental work for ascertaining
the most effective methods of retarding the spread of the pest to other
parts of Haiti and mitigating its ravages.
Considerable time must elapse before the effect of the boll weevil on
future crops can be determined. It may be found that climatic conditions
and other factors peculiar to Haiti will make control of the pest compara-
tively simple, although at the same time there remain considerable grounds
for apprehension as to the yield of future crops.
The boll weevil reduced cotton exports at Jacmel from 481,091 kilos in
1933-34 to 238,074 kilos in 1934-35. At Gonaives, exports remained
practically the same in both years, although increased production in
1934-35 had been expected. Undoubtedly, failure to show better results
at Gonaives was due to boll weevil infestation.
Fortunately, the Saint Marc district, where 41 per cent of the cotton
crop was produced in 1934-35, thus far has been entirely free from the
boll weevil. Natural barriers surrounding the region give reason to hope
that the pest may be prevented from entering.
The United Kingdom took 55.52 per cent of cotton exports in 1934-35,.
compared with 51.53 per cent in 1933-34. France's share declined to 19.53
per cent in 1934-35 from 46.92 per cent in 1933-34. Shipments to Germany
increased from only 44,155 kilos in 1933-34 to 851,097 kilos in 1934-35.
Similarly, Japan increased its share from 26,920 kilos to 689,259 kilos.
Cottonseed cake exports in 1934-35 increased both in quantity and value.
Shipments of 8,229,917 kilos in that year exceeded 1933-34 shipments by
2,322,786 kilos, or 39.32 per cent. In value, exports of cottonseed cake
increased by Gdes. 90,655, or 19.75 per cent.

Sugar
Raw sugar exports broke all records in 1934-35 with a total of 32,557,458
kilos. The latter figure is 10,293,061 kilos, or 46.23 per cent, greater than
the total exported in 1933-34. The highest previous figure was recorded
in 1932-33 when raw sugar exports totalled 24,648,573 kilos.
A good sugar yield and increased acreage planted to cane accounted for
the rise in exports. Sugar production has increased gradually since the
establishment of the local industry. Since 1928 the progress made has
been more rapid than in the earlier years. Exports in 1934-35 were more
than three times the quantity exported six or seven years ago.
The sugar industry has been unfortunate in that prices have been lower
in the years when production reached its highest levels. In 1932-33, when





HAITI: REPORT OF FISCAL REPRESENTATIVE


production was high, sugar prices were very low. The average price,
according to customs figures, declined from Gde. 0.1057 per kilo in 1931-32
to Gde. 0.089 per kilo in 1932-33. Next year, with a decline in exports,
prices increased to Gde. 0.1082 per kilo; and in 1934-35, when production
was the greatest on record, the average price declined further to Gde. 0.1063
per kilo.
In value, the 1934-35 output, according to customs records, totalled Gdes.
3,461,284, registering an increase of Gdes. 1,051,890, or 43.65 per cent, from
the 1933-34 figure.
Despite generally rising commodity prices abroad, sugar prices on world
markets have shown no upward tendency. Production for years has been
artificially stimulated by preferential tariffs and quotas which have pre-
vented a natural adjustment between supply and demand. Marginal pro-
ducers incapable otherwise of operating at world prices none the less have
been able to survive whenever they have been included in the economic
spheres of the large consuming nations which have afforded them protec-.
tion. These same producers, by dumping surplus production on world
markets, have depressed world prices beyond the point where sugar can be
produced at a profit.
The local industry receives no tariff preferences or quotas, excepting,
during the current year, a quota of 450 tons in the American market. This
quota is subject to revision each year, and there is always the possibility,
that a more favorable quota will be granted in the future. In fact, the
Haitian quota already has been raised from 300 tons.
In addition, the local industry is protected by a high tariff rate (Gde.
0.40 per net kilo) on imports of refined sugar. Thus, a portion of the Hai-
tian output of refined sugar can be disposed of in the domestic market at
high prices. Semi-refined and raw sugar production is similarly protected,
so far as concerns domestic consumption, but production for export must
be sold at world prices in competition with sugar produced at a loss by
mills which sell much of their output at a profit in export markets which
are protected. Under the circumstances, the immediate outlook for the
local industry is not particularly bright.
To give further assistance to the sugar industry, the export duties on
raw sugar, molasses and cane syrup were removed by an executive order
dated May 28, 1935. This measure, together with a recent increase in the
quota granted by the American government to Haitian sugar, should help
the domestic industry.
Sugar is produced efficiently in Haiti. The industry should be able to
survive the present difficult period. Inevitably, and in spite of efforts to
circumvent economic forces, the collapse of marginal producers, inter-
national limitation of production, or a rise in sugar consumption, will bring
about a needed adjustment in price.




HAITI: REPORT OF FISCAL REPRESENTATIVE


Molasses exports in 1934-35 totalled 10,047,149 kilos, valued at Gdes.
321,610. Compared with the previous year, exports increased by 55.5 per
cent in quantity, and 73.2 per cent in value. Molasses was exported only
to the United States.
Small shipments of refined sugar supplemented the output of the Haitian
sugar industry in 1934-35. Exports valued at Gdes. 26,218, compared with
Gdes. 44,907 during the previous year. Most of the refined sugar exported
was taken by the Virgin Islands.
Of the 1934-35 output of raw sugar, 94 per cent was disposed of in the
United Kingdom, and 3.12 per cent in the United States. The American
sugar quota admitted 300 tons of sugar for domestic consumption. The
remainder of the 1,015,867 kilos exported to the United States was entered
there under drawback privileges to permit refining and re-export. Prefer-
ential tariffs and quotas limit the sale of Haitian sugar either to the Ameri-
can or to the British market for consumption in those countries. Practi-
cally all of the Haitian sugar output is refined by the purchasers abroad
and re-exported to other countries. English firms are engaged in the largest
industry for refining and re-exporting sugar. Hence, most of the Haitian
output finds its way to England.

Sisal
A decline of 17.5 per cent in sisal exports in 1934-35, when comparison
is made with the previous year, is of no particular significance. Figures
covering shipments in 1933-34 had been inflated by exports of a large carry-
over from the preceding year. Also, the necessity of re-planting large areas
to replace sisal plants which had reached the end of their life cycle brought,
in 1934-35, a temporary interruption in the upward trend of sisal production.
Total exports amounted to 4,983,158 kilos in 1934-35, compared with
6,041,051 in 1933-34, when export production reached its highest peak. Indi-
cations are that exports during the current year will surpass the 1933-34
figure. New acreage is coming into production, and prices recently have
advanced sharply.
Sisal exports in 1934-35 were valued at Gdes. 2,029,404, compared with
Gdes. 2,523,901 for the larger quantity shipped in 1933-34. In value, the
decline amounted to 19.59 per cent. Average prices, as computed from
customs records, showed a decline from Gde. 0.418 per kilo in 1933-34 to
Gde. 0.407 per kilo in 1934-35. In spite of the decline, prices remained con-
siderably above the level of the preceding two years when sisal exports
were valued at an average price of about Gde. 0.30 per kilo. Prices
remained fairly steady at a level which should promote further expansion
of this new industry.
Exports of sisal were fairly uniform from month to month throughout
the past year. One of the advantages of the industry is that production
is continuous and not subject to the marked seasonal variation characteristic





HAITI: REPORT OF FISCAL REPRESENTATIVE


of coffee, cotton and sugar exports. This permits the steady employment
of libbr on the largest sial 'plafltationhand year-rou6nd cargoes for carrying
vessels.
Sisal is grown for export only in the regions 'around the ports of Fort
Liberte, Port-au-Prince, Saint Marc and Cap Haitien. Exports from
Fort Libert6, where more than eighty per cent of the 4aitian output is
produced, declified'from 4,894,190 kilos'in 1933-34 to 4,328,793 kilos in
1934-35. At Port-au-Prince, exports declined frbm'270,887 kilos in 1933-34
to 242,792'kilos in 1934-35 and at Saint Marc frdm 696,617 kilos to 210,259
kilos. New plantings at Saint Marc to replace old stock had not matured
during the past year and exports of the fibre declined sharply.
The United States in 1934-35 continued to be the principal market for
sisal, although as usual small quantities were 'disposed of in Canada.

Bananas
From a position of minor importance on the export list, shipments of.
bananas in 'a year's time have more than doubled in value, and have become
fifth in importance among export commodities.
In 1934-'35'bahamis'comiprised 2.14 per cent of all exports. This is an
increase from 0.62 per cent in 1933-34, and 0.11 per cent in 1932-33.
Shipments in 1934-35 -ere valued at Gdes. 763,256, compared with Gdes.
320,561 in 1933-34. The increase amounted to 138.1 per cent.
In volume, shipments increased from 272,820 stems in 1933-34 to 519,710
stems in 1934-35, indicating an increase of 90.5 per cent.
No more 'striking evidence than these figures is needed to show the
adaptability of'banana cultivation to conditions in Haiti. This new indus-
try in little more than one year has been made an important source of
new income to the country. Moreovem, the progress recorded until the
present time has been brought about without the aid of large capital
outlays and organized plantation development. Arrangements made to
assure a steady market for the fruit and fixed minimum prices by them-
selves have been sufficient to cause exports to double.
\ith the'expenditure of private foreign capital, only now beginning on
a large scale, for model plantations, nurseries, irrigation and technical
assistance, it is expected that during the present year exports steadily
will continue to advance until shipments for the year reach a figure at
least double the 193-1-35 figure. 'Thee valie of the 1935-36 crop should be
about Gdes. 2,000,000.
It will be recalled that the establishment of a banana industry first was
given loIipular attention 'during 1934 'when efforts were made to organize
the production and marketing of the fruit in the northern part of the
Republic. Exports increased rapidly in Septenber and October, 1934,
with two companies operating in the same region.




IAITI: REPORT OF FISCAL REPRESENTATIVE


It soon became evident that while the fruit companies were seriously
interested in the possibilities offered by Haiti as a potential producer of
bananas, nevertheless, a stable industry, assured of steady growth, would
not be possible without the formulation of a more comprehensive plan of
development, including in its scope, if possible, all of the banana-producing
areas of the Republic.
Negotiations were commenced early in the year which resulted in the
signing on February 25, 1935, of a contract between the government and
the Standard Fruit and Steamship Company, Inc., of New Orleans. This
contract grants to the company the exclusive privilege of buying bananas
for export in all parts of the Republic. The Company, in turn, is required
to accept all bananas offered to it which are suitable for export, are
accessible, and are offered in reasonable quantities. Prices are fixed at
certain minimum figures which assure the planters of a steady market and
perhaps fair returns for the present, considering that the industry is a new
development. The company likewise undertakes to expend such capital as
is necessary, with the object of bringing average yearly production to
2,000,000 stems annually during the first three years, and thereafter in-
creasing, over a period of years, to minimum exports of 4,000,000 stems at
the end of seven years.
Among the more interesting provisions of the contract are those by
which the company undertakes to instruct planters in the best methods of
banana cultivation, the care of the fruit, methods of transporting bananas
and precautions to be taken to avoid plant diseases. Detailed provisions
also are included in the contract by which the company can enter into
separate contracts with planters, following certain approved contract types,
or under special contracts with planters, the terms of which must give the
planters advantages at least equal to those accorded under the contract
types. Banana lands are to be officially registered; privileges are granted
respecting the construction of wharves, railroads, depots, and warehouses.
Private telephone lines and radio communication are permitted. In short.
the contract contemplates the investment of large sums of capital, and
the orderly and thorough development of an industry which is new to
Haiti.
A local company was organized which commenced operations under
the contract immediately. Buying was resumed after a lapse of a month.
Exports increased steadily thereafter from month to month until August,
when they reached 81,642 stems.
It is true that up to the end of the fiscal year 1934-35, no contracts had
been signed with individual producers. This is a development which ought
to come soon, as it is clearly foreseen in the company's contract with the
government as part of the company's undertaking. Action in that direction





HAITI: REPORT OF FISCAL REPRESENTATIVE


should go far to increase production and exports of the fruit. But even with
this feature of the program still in abeyance, steady progress has been
made, as is shown in the table below:
Months Stems Gourdes
October, 1934.................................... 123,437 206,634
November .................................... 51,714 101,424
December .................................. 22,326 40,088
January, 1935.................................. 39 11
February .................................... 14,496 24,126
March ............................ 20,144 27,769
April ............................ 22,679 29,224
May .................................. 28,125 28,405
June ............................ 41,462 49,441
July .................................... 49,252 59,497
August ................................... 81,642 108,949
September .................................... 64,403 87,688

Total............................................ 519,719 763,256

Perhaps the most satisfactory feature of the new industry is the fact
that it benefits practically all sections of the country. In 1933-34 practically
all banana exports had been made from Port-de-Paix and Cap Haitien.
In 1934-35, exporting had been extended to all other seaports with the
exception of Jer6mie and Fort Libert6. Shipments by ports in 1934-35
are shown below:
Ports Stems Gourdes
Cap Haitien ....................................... 206,684 353,400
Cayes.................................................. 16,841 21,154
Gonaives ......................................... 177 313
Jacmel ................................................ 21,917 27,608
M iragoane ......... ................................. 12,778 16,112
Petit Goave.......................................... 9,184 10,332
Port-au-Prince .................................... 27,056 40,808
Port-de-Paix ........................................ 210,957 278,935
Saint Marc............................................ 14,125 14,594

Total............................................ 519,719 763,256

Bananas in 1934-35 were shipped exclusively to the United States, where
Haiti under its new commercial convention is assured of a free market,
unimpeded by future tariff barriers.
A tax of Gde. 0.10 per standard stem added a new source of direct
revenues in 1934-35. Receipts from this source, classified as customs
revenues, produced Gdes. 28,240.35 in that year.

Other Exports
Logwood, which only a few years ago added several million gourdes
annually to export values, is now one of the minor export products.
Shipments in 1934-35, valued at Gdes. 366,931, showed a decline from the
corresponding total for 1933-34 of Gdes. 837,356 or 56.2 per cent. The
market for logwood is very limited. Synthetic dyes are replacing logwood
extract, although the latter is still the highest quality of black dye




HAITI: REPORT OF FISCAL REPRESENTATIVE


obtainable, no synthetic dyes, for example, have been produced which can
equal logwood extract for dyeing silk. There is little prospect that logwood
will regain its former important place among Haitian exports unless some
factor such as a change in styles for women's clothes produces a greater
demand for the dye. It is a curious fact that the logwood industry in Haiti
has become less important because black stockings for women are no longer
in style.
Haiti is one of the countries in the world were logwood grows in
commercial quantities. The trees are abundant in Haiti, and are believed
to be growing more rapidly than the present rate of consumption.
Cacao is another article of export which has been losing ground among
Haitian exports. A good year had been recorded in 1933-34, but in
1934-35 exports declined again to a low figure. Shipments during the
latter year were valued at Gdes. 402,963. or 16.02 per cent less than during
the previous year. In quantity, the decline amounted to 28.51 per cent.
Thus, production for export has declined in spite of an increase in unit
price.
Exports of goatskins in 1934-35 showed little variation from the previous
year's figures. Shipments in 1934-35 totalled 173,744 kilos, valued at Gdes.
426,270. Exports declined in value from the 1933-34 figure by Gdes. 2,095,
but quantities shipped increased by 11,719 kilos.
Rum exports have increased slowly but steadily during the past two
years. A seven per cent rise in quantity and value of exports was recorded
in 1934-35 when commercial shipments totalled 23,127 liters valued at
Gdes. 179,349. Rum purchased in Haiti by tourists, and taken out of the
country in passengers' baggage probably added an additional Gdes. 70,000
to the 1934-35 total.
The excellent quality of Haitian rum is gradually becoming better
known abroad, but the market for the high-grade Haitian product is
limited and very competitive, and its successful introduction abroad will
require sustained merchandising effort and a considerable capital outlay
for advertising and sales promotion.
Honey is the only other Haitian export of any importance. Shipments
in 1933-34 declined by Gdes. 51,784 to a total of Gdes. 124,915 for the year.
Honey exports vary little in quantity from year to year, but prices have
remained very low during the past several years. A further decline in
prices occurred in 1934-35.
Castor beans in 1933-34 reappeared upon the list of exports after an
absence of many years. The cultivation and exporting of this product
was favored by the removal of the export duties on castor beans in
August, 1935. There are possibilities that castor beans may become an
item of some value on the export list.
Pineapple exports remained negligible in 1934-35. Nothing was ac-
complished during the year in the way of rehabilitating the industry. The





HAITI: REPORT OF FISCAL REPRESENTATIVE


large and well-equipped canning plant at Cap Haitien lies unused, though
it is still maintained is good condition, and many acres of land planted to
pineapples and grape-fruit are still kept under cultivation. This enterprise,
undertaken at a considerable outlay of capital, thus far has been a complete
failure.
Over-production of pineapples during the early years of the depression
led to the sudden abandonment of the Haitian properties .two years ago
by the foreign corporation which had undertaken the development of the
enterprise. The withdrawal of foreign interest in pineapple production in
Haiti has been a blow to business at Cap Haitien and to the government.
But conditions in the canning industry abroad are believed to be improving.
Production has been brought under better control, and with the general
recovery in business abroad, it is to be hoped that foreign capital and
enterprise may again take an interest in pineapple-growing in Haiti.

Commercial Conventions
Important measures were taken in 1934-35 in defense of Haiti's foreign
trade, which had been threatened by the general upheaval in international
commercial relations accompanying the depression.
Old-established ideas of multi-lateral trade between nations, with money
(and the gold standard) as the medium of exchange, have narrowed with
the spread of the concept of national isolation until foreign trade has
become, between many countries, a kind of international barter, where
trade is restricted to an exchange of goods between two parties, to the
exclusion of any triangular or multi-lateral arrangement. In spite of the
elaborate machinery of present" day international commerce, with its
complications of tariff barriers, clearing agreements, and a multitude of
laws and regulations, the fundamental conception is as archaic as is barter
itself; and trade by barter has been so out-moded and improved upon by
the experience of centuries, that in ordinary domestic trade it is practically
non-existent. In order for trade to be fully effective, and to thrive, it is
essential that it should use fully the international commercial media which
have been developed in the course of time. This is as necessary in trade
between nations as it is in domestic commerce.
The restrictive effect on international trade of attempts to regulate
commerce by making it exclusive between two parties is well recognized
by most economists, and serious efforts are being made to overcome po-
litical movements now responsible for these effects. It is probably not far
from truth to say that the total volume of foreign trade of a nation
diminishes measurably with the number of exclusive and discriminatory
bi-lateral agreements to which it subscribes. Nevertheless, so strong has
been the desire for economic self-sufficiency among nations, and so inef-
fectual have been attempts to reduce international trade barriers, stabilize
currencies, and in other ways restore the exchange of goods between





HAITI: REPORT OF FISCAL REPRESENTATIVE


nations to the pre-depression level, that bi-lateral trade agreements, clearing
accords, and similar stratagems have been accepted by many nations as
their only means of protection.
Haiti's foreign commerce has been particularly vulnerable to the
measures of trade control adopted by the larger foreign market countries.
For many years Haiti has sold largely to France, which in turn has sold
commodities to other countries, which in turn have sold to Haiti the
manufactured articles, foodstuffs and other merchandise which Haiti
requires. This triangular trade is economically perfectly sound, and its
benefits inure not only to Haiti, but to each of the other countries involved.
But the forces which have compelled the raising abroad of higher trade
barriers for fostering home industries and for protecting currencies have
seriously interfered with this triangular arrangement. For several years it
has been obvious that Haiti sooner or later would be compelled to modify
its triangular trade so as to equalize to a greater degree exchange of
merchandise between individual countries.
To the already difficult problem of adjusting Haitian trade to conform
with new conceptions there were added, in 1934, new difficulties in the
form of a remarkable rise in the amount of merchandise sold in Haiti by
Japan. In a very brief period, Japan became second in importance among
Haiti's suppliers while at the same time, merchandise bought by Japan
from Haiti remained negligible in value. This sudden change in the
direction of foreign commerce exaggerated still further the triangular
nature of Haiti's trade and brought immediate repercussions in the form
of intimations of reprisals from the countries already dissatisfied with the
disequilibrium in merchandise exchanges.
Regardless of possible advantages accruing to Haitian consumers
through the purchase of low-priced merchandise from Japan, the danger
to which the export trade was subjected far outweighed any advantages,
and drastic measures were necessary to protect the commercial interests of
the country. No acceptable offers were made.by Japan to increase sufficient-
ly its purchases from Haiti. Accordingly, a law was enacted on April 15,
1935, establishing a maximum and minimum import tariff. The existing
tariff was declared as constituting the minimum tariff, while the maximum
tariff consisted of the same duties increased by 100 per cent. The minimum
tariff was applicable only to: (1) those countries enjoying most-favored-
nation treatment in trade with Haiti; (2) countries whose imports of
Haitian products in 1932-33 amounted to at least 1 per cent of total Haitian
exports in that year; and (3) countries whose exports to Haiti in 1932-33
had not exceeded 1/2 of one per cent of total Haitian imports in that year.
The new law will affect principally imports of merchandise from countries
whose goods are subject to the maximum tariff until such time as they
may enter into satisfactory trade agreements with Haiti. The immediate
effect was to restrict imports principally from Japan, without excluding





HAITI: REPORT OF FISCAL REPRESENTATIVE


them entirely. In fact, despite the increase of duties and a substantial
reduction in imports from Japan during the last half of the year, Japan in
1934-35 remained in second place as supplier of foreign merchandise to
Haiti. From imports of Japanese goods valued at Gdes. 8,829,263, in
1933-34, values declined only to a total of Gdes.7,270,260 in 1934-35,
although the new law was in effect during nearly six months of the latter
year.
This remedy for the lack of balance in Haiti's trade had hardly been put
into effect when a new threat to the export trade developed.
The commercial convention of April 12, 1930, with France together with
the rider of March 10, 1934, expired on May 26, 1935, and unexpectedly
'was not renewed. France had been going through a period of acute eco-
nomic and political difficulties which had endangered even the stability of
currency. It seems probable that these difficulties were responsible for this
sudden action of the French government.
With the expiration of the French convention, maximum duties auto-
matically became applicable to imports of Haitian merchandise. The effect
was to exclude completely all exports of coffee from Haiti's principal
outlet. Haiti replied by an executive order dated June 5, 1935, which
applied the newly established maximum tariff to imports of French origin.
This interruption in commercial relations between the two countries
naturally created much uncertainty and apprehension among merchants in
Haiti. Happily, however, trade relations were soon resumed through an
agreement between the two governments made effective on July 10, 1935,
by an exchange of letters dated July 5, 1935.
By the new agreement the former Convention, and the rider, were
renewed for a period of one year, with automatic renewal each year, there-
after, unless previously denounced. However, the arrangement may be
denounced by either party on only one month's notice.
The Haitian government, moreover, undertook to purchase from France
30 per cent of the imports of merchandise required by public services such
as the Public Works Service, the National Public Health Service and the
Garde d'Haiti. In addition, the Haitian government agreed that importers
would buy 300,000 coffee sacks each year from France, and that a sub-
stantial part of the coffee destined for France would be shipped by ex-
porters on French vessels, or if transshipped at New York, that the coffee
would proceed from that port to French ports via French ships.
SThus, a reasonably satisfactory solution was found for the trade diffi-
culties with France. Since, however, the convention may be denounced at
any time on only a month's notice, there is little assurance given to exporters
and importers in Haiti that their trade with France will not again be
interrupted. It remains for Haiti and France to negotiate a more permanent
arrangement, entirely satisfactory to both parties.




HAITI: REPORT OF FISCAL REPRESENTATIVE


To increase Haitian purchases of French merchandise presents many
difficulties. Imported commodities are chiefly cotton goods, flour, soap,
gasoline, fish and miscellaneous foodstuffs, household utensils, and
manufactured iron and steel products. France is an importer, rather than
an exporter, of gasoline, flour and other foodstuffs. To divert purchases of
cotton goods, soap, and certain classes of manufactured articles from
Great Britain to France would only increase the difficulties of marketing
raw cotton and sugar in Great Britain. France already supplies a goodly
share of Haitian purchases of pharmaceutical products, wines and liquors.
perfumes, cosmetics and miscellaneous manufactured articles.
The fact is that Haiti simply cannot create a broad enough market for
the luxury articles, fine textiles, wines and other specialties in which
French producers excel. In spite of the many concessions already made to
favor French products, the value of such imports shows only a limited
increase. Even if further concessions could be made, it is extremely
doubtful if merchandise exchanges with France would even approach an
equilibrium. The fundamental defect in trade relations with France would
still exist and Haiti would continue to be faced with the persistent threat
of sudden and complete interruptions of its commerce with that country, as
long as the principle of triangular trade is not equally recognized by both
countries.
One phase of the Haitian program to diversify export markets was
completed during the year under report with the signing at Washington,
on March 28, 1935, of a reciprocal trade agreement with the United States
which became effective on June 3, 1935. Negotiations had continued for
several months prior to that date, and they resulted in the conclusion of
this agreement which should soon prove to be a vital link in the chain of
new trade agreements with foreign countries by which Haiti must con-
solidate and develop its foreign trade.
The new agreement remains definitely in effect for a period of three
years. Thereafter, it remains continually in effect unless either country
files six month's notice of intention to terminate the agreement.
As to the detailed provisions respecting import duties, the United
States guarantees the continuance of a market free of all import duties on
shipments from Haiti of coffee, bananas, plantains, sisal, logwood, and
cacao. Thus Haiti is assured that no tariff restrictions in the United States
will in the future be levied on any of the principal export products of
Haiti, with the exception of sugar. The United States is the only country
which has granted such broad privileges to Haiti. In doing so, it has
established a fixed outlet for increased production of bananas and sisal,
and it has made possible the diversion of at least part of the coffee export
trade to that market, bringing with it a solution of the trade difficulties
which threaten the marketing of coffee in Europe.





HAITI: REPORT OF FISCAL REPRESENTATIVE


In addition, the new agreement reduces the American import duty on
rum to $2.50 per gallon, which is the maximum reduction the authority
given by the American Congress permitted the United States to offer.
Other Haitian products favored with minimum duties are pineapples,
mango pastes, preserved guavas, and ginger root.
Similarly, Haiti has undertaken not to increase the present duties on
imports of plain glass, plate glass, iron pipes and fittings, electrical
appliances, automotive products, pickled meats, and cigarettes. Duties
are reduced on certain other imports such as pharmaceutical products,
sewing machines, fresh meats, fruits, common wines, mineral waters, cheese
butter, evaporated and powdered milk.
Imports of the above articles on which reductions in duties are provided
are comparatively small and revenues are expected to be little affected.
However, three other classes of imports mentioned in the agreement are
of greater consequence among Haitian imports. These are rubber tires, lard
and radio receiving equipment. The agreement provides for substantial
reductions in the duties on these articles, but the new rates will not go
into effect until the annual budget of expenditures of the Republic is
promulgated in the amount of Gdes. 40,000,000 or more. Thus, the
machinery for an actual reduction in tariff barriers has been set in motion,
without affecting the revenues of the country to an important extent until
such time as general revenues are adequate.
More important than the .individual changes in the tariff schedules is
the inclusion in the agreement of the unconditional most-favored-nation
clause. A similar provision already had been in effect between Haiti and
the United States through the modus-vivendi of September 30, 1926. The
new agreement, therefore, simply renews this provision, with the added
feature that the new modifications in tariff rates apply equally to other
countries enjoying most-favored-nation privileges with the respective
parties to the agreement.
In arranging the inclusion of this clause in the new agreement, Haiti
and the United States have carried out the policy adopted by the twenty-
one American states at the Montevideo conference of 1933. It was
recognized by participants at that conference that the rehabilitation of
foreign trade lay in the extension, so far as possible, of the most-favored-
nation principle.
Haiti has reason to take considerable pride in the fact that it has been
one of the first countries since the conference was held to put into operation
a new international trade.agreement embodying the principle of reduction
in tariff barriers through the extension of unconditional most-favored-
nation privileges.
By an exchange of letters in May and June, 1935, Haiti and Canada
agreed to a prolongation of the modus-vivendi respecting commerce
between the two countries. The present arrangement, under which Ca-





HAITI: REPORT OF FISCAL REPRESENTATIVE


nadian imports are admitted under the minimum tariff, will remain in
force for nine months from July 15, 1935.
Much of the flour and salted or pickled fish imported into Haiti comes
from Canada. Aside from small quantities of sisal disposed of in that
country, Canada purchases very little from Haiti. It is highly important
that trade between Haiti and Canada should be regulated by some com-
mercial agreement having a more permanent character than the existing
modus-vivendi, and permitting Haiti to sell part of the coffee crop and
other export commodities in this large and near-by market.
Recent events unfortunately have interrupted negotiations for a new
commercial arrangement with Italy. Financial restrictions against imports
in that country, made imperative by the economic and political situation as
well as by the need for financing the Italian expedition in Africa, make it
seem doubtful that Haiti for some time will be able to export to Italy.
However, an early solution of the present difficulties between Italy and the
League of Nations should go far to permit the reestablishment of com-
mercial exchanges between Haiti and Italy.
Germany has a long-established and flourishing market for its manu-
factured products in Haiti, but excepting raw cotton there is little that
Germany buys from Haiti. It is to be hoped that negotiations between the
respective governments aiming toward a new commercial arrangement
before long will result in a more equitable and mutually advantageous
exchange of goods between the two countries.

Tariff Modifications
During 1934-35 there were made a number of changes in the export and
import duties in addition to the modifications which went into effect as
a result of new commercial agreements.
By an executive order dated January 15, 1935, logwood and logwood
roots were exempted for an additional year from payment of the export
duties. This exemption has continued since 1931 when the duties were
suspended in order to aid the logwood industry. Unfortunately, the
logwood exporting trade has shown no signs of recovery.
On May 28, 1935, the export duties were removed, by executive order,
on exports of raw and refined sugar, molasses, and cane syrup.
The sugar industry in terms of volume was flourishing during the past
season, but in actual value of the product, and with respect to the returns
to the manufacturer, that industry has been anything but prosperous. The
export duties on sugar and its by-products were removed to aid the
domestic industry.
By an executive order dated August 10, 1935, the duty on exports of
castor beans was removed. Castor beans had.disappeared years ago from
the export schedule. The demand for the beans is limited, and prices were
insufficient to give encouragement to producers. It is hoped that removal





HAITI: REPORT OF FISCAL REPRESENTATIVE


of the duties may again permit the exportation of the beans in quantity.
A small quantity of castor beans already has been shipped since the duty
was removed.
Similarly, the duty on guano exports was reduced on October 10, 1935,
to Gdes. 7.50 per ton, to permit exports which until then had been
prohibited by a high rate of duty established at a time when the value of
the product was considerably greater than it is now. The reduction of
the duty should permit exploitation of a guano concession obtained during
the year under a contract dated June 27, 1935. The concession grants
exclusive privileges for the extraction for export of guano taken from
deposits in the central and northern parts of the Republic.
Besides these various modifications in the export duties, an important
law was enacted on March 29, 1935, and published on April 1, 1935, which
established modifications affecting a considerable number of paragraphs
in the import tariff.
The new law removed the internal revenue tax of Gde. 0.25 per gallon
on gasoline and replaced it by doubling the import duty bringing the total
amount of the duty to Gde. 0.50 per gallon. This modification brought a
needed change in the manner of obtaining revenues from gasoline. The
former arrangement of both a customs duty and an internal tax had been
unnecessarily cumbersome.
Otherwise the tariff revisions consisted mainly of an upward scaling of
certain tariff rates for the purpose of obtaining additional revenue.
Increased duties were applied to cotton textiles of certain varieties common-
ly imported into Haiti. Cotton stockings were similarly affected. Other
increases in duties, none of them very great, were applied to a long list of
import duties including those on cement, lumber, mineral oils, certain
crude chemicals, common soap, calf hides, electrical apparatus, and slot
machines. The former sliding scale of duties applied to wheat flour was
replaced by a fixed tax of Gde. 0.25 per net kilo. The high duties on
cigars and smoking tobacco had practically prohibited legal imports. In
order to discourage contraband in cigars and tobacco the duties were
reduced .
By the same law a number of modifications in the wording of the tariff
legislation were put into effect. Provisions covering the responsibility of
the State in the case of merchandise damaged while in the custom houses
W modified for sake of clarity. Minor changes were made in the pro-
visions respecting the information required to be furnished on bills of
lading and ships' manifests. Finally a provision was inserted in the tariff
law of 1926 to permit the deposit of ships' stores in customs entrep6t, and
subsequent re-export. This was a much-needed change in the law. Its
Purpose was primarily to enable ships in port to replenish their supplies
when necessary without payment of duties-a reasonable facility from
which they had been prohibited under the former wording of the law.





HAITI: REPORT OF FISCAL REPRESENTATIVE


On the whole, the new customs and tariff modifications have worked
well in practice. Some increase in revenues has been obtained without
interfering with established commerce. Certain obscure or equivocal
expressions in the regular tariff have been clarified, and the customs regu-
lations established by prior legislation have been improved.

Customs Administration
The new customs organization formed on January 1, 1934, under au-
thority of the Agreement of August 7, 1933, between Haiti and the United
States remained without change throughout the fiscal year 1934-35. The
general plan of the new organization was described in the last annual
report of this office.*
Customs revenues continued to be collected effectively and with economy.
The actual volume of transactions handled during the year showed no
appreciable decline despite the recession in foreign trade. Most of the
decline in customs receipts was due to reduced exports. Clerical and ad-
ministrative work in connection with collecting duties on exports is a
relatively small part of customs activities. It is the import trade, with its
great number of individual transactions, and an immense amount of clerical
detail, which requires the maintenance of large staffs at the custom houses.
We have seen that the import trade declined comparatively little during
the year.
The present Haitian customs service has evolved gradually during the
years that it has functioned under the Treaty of September 16, 1915, and,
more recently under the Agreement of August 7, 1933. Customs officials
and employees today are being called upon to perform more varied and
complex services than heretofore. Changes in tariff rates and in customs
laws and regulations have been frequent. The import tariff, with its five
per cent surtax, and minimum and maximum duties, together with the new
trade agreements with foreign countries requiring special treatment of
a vast number of articles passing through the custom houses, make the
revenue-collecting function far more complex now than it was a few years
ago. The application of standardization regulations to export products
further adds to the complexity of customs operations. Nevertheless,
officials and employees in general have shown aptitude in learning to carry
out their manifold activities. These added burdens have been assumed by
the existing employees, and without apparent loss in the efficiency with
which customs revenues are collected.

Internal Revenue Inspection Service
Details of the work performed by the Inspection Service in 1934-35
are given in the report of the Inspector General, Internal Revenue In-
spection Service, annexed to this report.

*Annual Report of the Fiscal Representative, fiscal year 1933-34, page 50.






HAITI: REPORT OF FISCAL REPRESENTATIVE


No changes in the operation of the Inspection Service were made during
the course of the year, except that for reasons of economy the number of
travelling inspectors was reduced and economies in other directions were
effected. The Inspection Service expended during the year a total of Gdes.
184,754.53, representing the total cost to the Haitian government of its
operations.
Inspection involved control at intervals of all internal revenue offices
and also visits to the thousand or more distilleries operating in Haiti.
Such inspections numbered 5274 during the course of the year. In addition,
there were numerous examinations of gasoline depots and factories
producing articles subject to excise.
Revenues derived from sources (particularly alcohol) requiring part of
the inspection work undertaken by its Inspection Service totalled not more
than Gdes. 500,000. Full benefit from the existence of the Internal Revenue
Service and of the Inspection Service cannot be realized unless, and until,
ihe present policy regarding the excise on alcohol and tobacco is changed,
3o that these articles are made to produce their fair share of government
revenues.


Government Revenues

Total Revenues
Government revenues totalled Gdes. 30,091,640.96 in 1934-35. This
iomrpares with Gdes. 36,752,165.28 in 1933-34 and Gdes. 37,305,298.67.
during the previous fiscal year.
The revenue decline from the 1933-34 total amounted to Gdes.,
6,660,524.32, or 18.1 per cent. Decreased receipts were recorded under all
of the principal revenue categories. Customs receipts dropped by Gdes.
6,118,224.02, or 20.1 per cent; internal revenue receipts by Gdes. 529,397.86,
or 10.3 per cent; miscellaneous government revenues by Gdes. 9,418.39, or
0.9 per cent; and the special "prelevement" set aside from communal reve-
nues by Gdes. 3,484.05, or 1.5 per cent.
The revenue curve shown on Chart No. 4 indicates that total receipts
in 1934-35 were lower than in any year of the last fourteen, with the
exception of the mid-depression year of 1931-32, when revenues descended
to the low level of only Gdes. 28,023,742.10. Foreign commerce in the latter
year, particularly the import trade, was less active even than in 1934-35.
The fact that revenues in 1934-35 exceeded the low figure of 1931-32 by
more than two million gourdes is due very largely to the new revenue
measures enacted since then, such as the five per cent customs surtax,
various tariff modifications and the tax on gasoline. Revenues, therefore,
have not fallen off to the extent that foreign trade values have declined.







HAITI: REPORT OF FISCAL REPRESENTATIVE


The relative importance of the principal revenue categories is given in
the following table, showing receipts in 1934-35:


Source


Gourdes


Customs:
Imports ................................. 17,764,303.92
Exports. .................................. 6,387,351.37
Miscellaneous .......................... 163,303.34
Internal revenues............................. 4,519,504.32
Miscellaneous government receipts.... 989,814.39
Receipts from Communes................. 267,363.62

Total revenues, 1934-35........ 30,091,640.96


Per cent

59.1
21.2
0.5
15.0
3.3
0.9

100.0


CHART No. 4
TOTAL REVENUE RECEIPTS OF HAITI AND EXPENDITURES FROM REVENUES
FISCAL YEARS 1916-17 TO 1934-35
MILLION/ OF GOURDE/


16-17 17-18 18-1919-20 20-2121-2~22-&23-23424-2525-26 26-727-2828- 29-30303SO31-3232-3333-34 34-35

/URPLU/ : DEFICIT
Customs Receipts
From Gdes. 30,433,182.65 in 1933-34, total customs receipts dropped to
Gdes. 24,314,958.63 in 1934-35. The decline amounted to Gdes. 6,118,224.02,
or 20.1 per cent.
Of total revenues received from customs sources in 1934-35, the import
tariff produced 73.0 per cent, the export duties 26.3 per cent, and miscel-
laneous sources (storage charges, fines and penalties) 0.7 per cent. During
the previous year the corresponding percentages were 63.7 per cent, 35.8
per cent and 0.5 per cent respectively.
The yield of the import tariff declined from Gdes. 19,394,235.80 in
1933-34 to Gdes. 17,764,303.92 in 1934-35, or by 8.4 per cent. Export duties
produced Gdes. 10,888,737.01 in 1933-34, from which figure receipts fell
to Gdes. 6,387,351.37, registering a drop in revenues from this source of






HAITI: REPORT OF FISCAL REPRESENTATIVE


Gdes. 4,501,385.64, or 41.4 per cent. The short coffee crop was of course
chiefly responsible for the decline in revenues derived from the export
duties.
Coffee alone yielded Gdes. 5,766,061 in direct revenues during 1934-35.
The latter amount is 90.27 per cent of the total yield of the export duties.
Sugar during the first eight months of 1934-35 yielded Gdes. 152,630
in export duties (Gdes. 127,431 during the full twelve months of the
previous fiscal year) despite the removal of the export duties on sugar at
the end of May, 1935, when part of the sugar produced during the year
had not yet been exported. The export tax on cotton yielded Gdes. 131,787
in 1934-35, as compared with Gdes. 113,177 in 1933-34. All other export
duties yielded Gdes. 336,873 in 1934-35, as against Gdes. 300,101 in 1933-34.
The increase largely was due to the new tax of Gde.0.10 per stem on
banana exports.
The export duties are all specific rates, and revenues consequently vary
in direct proportion to changes in export volume, except as rates are
modified. Removal of the export duties on sugar in May, 1935, reduced
revenues which otherwise would have been collected on sugar shipments
by approximately Gdes. 14,000. Also, a somewhat greater proportion of
coffee was exported in 1934-35 under the three higher types of coffee
exports on which lower rates of duties are levied. This factor tended to
reduce collections derived from the export duties in 1934-35.
Customs receipts still comprise by far the greater part of government
revenues, although the customs share of the total declined from 82.8 per
cent of total revenues in 1933-34 to 80.8 per cent in 1934-35. The import
tariff produced 59.1 per cent of total revenues in 1934-35, compared with
52.8 per cent in 1933-34. Decreased exports, however, affected the yield
of the export duties in 1934-35, and revenues from that source amounted
only to 21.2 per cent of total revenues in 1934-35, compared with 29.6 per
cent in the previous year.
Internal revenues in 1934-35 were 15.0 per cent of total revenues. The
corresponding figure for 1933-34 was 13.8 per cent. The outstanding
characteristic of revenues from that source is their relative stability. The
decline in internal revenues in 1934-35 was not nearly so abrupt as in the
case of customs receipts. Unfortunately, no important measures have
been taken to make the internal taxes again productive of a more pro-
portionate share of normal government revenues.
This office for years has advocated the replacement of the economically
undesirable export duties by increased revenues from internal sources,
particularly from excise taxes. Nothing was accomplished in 1934-35 with
S the exception of the establishment of small taxes on matches, soap, lard
substitutes and vegetable oils produced in Haiti. These sources probably
will yield about Gdes. 150,000 in revenues per year, or about enough to
S compensate for the loss in the sugar export tax mentioned above.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Meanwhile, however, the yield of the alcohol taxes, which in 1929-30
alone produced Gdes. 1,642,067.01, ,dropped in 1934-35 to only Gdes.
453,486.13. Thus, the newly-created sources of revenue will recover only
a very small part of the million or more gourdes per year in revenues
which have been lost through the changes made in the alcohol tax
legislation.
Gasoline, salt, matches, and similar articles can never produce the excise
income which can be obtained from properly designed taxes on alcohol
and tobacco. Haiti can not have a properly baJlanced revenue structure
unless it profits by the experience of other countries and relies upon the
excise on alcohol and tobacco as a major source of government revenue.
It has been remarked by this office on many occasions that high duties
on export commodities are undesirable in that they constitute an unnatural
impediment to the free movement and competitive selling price of exporta-
ble commodities abroad. It would be far better if revenues at present
obtained by direct levies on exports were derived from other sources,
particularly from internal taxes. Export duties yield annually from Gdes.
6,000,000 in poor years, to amounts, in good coffee years, in excess of Gdes.
13,000,000. Proper changes in the internal revenue legislation should result
in annual yields from domestic alcohol and tobacco of at least Gdes.
3,000,000 instead of the half million gourdes obtained from these sources
at present. In 1929-30 more than Gdes. 2,700,000 were collected from the
taxes on alcohol and tobacco. If adequate revenues from these sources
were restored, it should be possible to equalize the present unbalanced
incidence of taxation and to cut in half the revenues at present derived
from the economically undesirable export taxes.
Already, some progress in that direction has been made. The new reve-
nues from salt, matches, soap, lard substitutes and vegetable oils have
compensated for the removal of the sugar duties. Export duties on many
minor export commodities have been removed or reduced during the last
few years. Castor beans and guano were added to the favored list during
1935. The coffee standardization plan grants lower duties to the better
grades of coffee. The total burden of the export duties (relation between
export revenues collected and value of total exports) has diminished pro-
gressively from 28.35 per cent in 1932-33 to 21.12 per cent in 1933-34 and
17.93 per cent in 1934-35. Direct revenues from exports in the 1934-35
were lower than in any year of the past nineteen.
In the case of revenues derived from the import tariff the burden of
taxation remains very high. Duties collected in 1934-35, and totalling
Gdes. 17,764,303.92, amounted to 43.16 per cent of the value of imported
merchandise in that period. The corresponding tax burden during the
previous year was 42.45 per cent. Tariff modifications which became
effective on April 1, 1935, increased the duties under a number of tariff
articles, particularly in the case of cotton piece goods of the grades






HAITI: REPORT OF FISCAL REPRESENTATIVE


commonly imported into Haiti. Also, the unification under a single tariff
rate of the former internal tax and customs duty applied to gasoline
imports had the statistical effect of apparently augmenting the tax burden
on imports.
The burden of the import tariff is very high. Trade would be promoted
and consumers would benefit if the tariff could be lowered. But the import
trade furnished the government with by far the greater part of its total
annual income. Unless revenues are obtained from other sources, there is
no possibility of reducing the tax burden on imports. Moreover, even if
new sources of revenue are found, it is essential that the export duties
should first be reduced, and perhaps removed altogether, before any
measures can be taken to relieve the burden of the import tariff. Haiti's
tax structure is far from ideal. It needs renovation. Much was ac-
complished in the three years ending in 1931. Since that time, however,
alcohol and tobacco have been very nearly abandoned as revenue sources,
and Haiti has returned to the archaic system which emphasizes customs
revenues supplemented by a multitude of internal revenue taxes, expensive
and difficult to collect, many of which are of the type technically character-
ized as "nuisance" taxes, each productive of no more than an infinitesimal
share of total revenues. Unless the more modern system is adopted, the
only prospect remaining is a continuation of the present top-heavy customs
revenue structure, with government receipts fluctuating violently from year
to year in accordance with the vagaries of the annual coffee crops.
Fluctuating revenues, during the last decade at least, have caused no
serious complications. Treasury reserves have been ample to meet obli-
gations in recurring poor crop years. Gradually, however, these reserves
have been reduced through the years of world depression until the point
very nearly is in sight where expenditures each year cannot possibly
exceed treasury receipts, except at the cost of borrowing capital. The
ability to borrow advantageously, especially during such periods of need,
always is problematical; and experience proves that the greater the need,
the more difficult it is to borrow. In any event, borrowing necessarily is
expensive, regardless of the credit standing of the Republic.
If more stable sources of revenue had been developed, and maintained,
the threatening revenue uncertainties caused by widely varying foreign
commerce values would have been lessened; or at least the tax structure
would have produced a sufficient lag between fluctuating foreign trade and
its effects on government revenues to permit adjustments to be made
without haste. Under the present tax system, revenues fluctuate immediate-
ly, and in almost direct proportion, with variations in foreign commerce.
The government has no opportunity to adjust its income until after the
damage has been done. On the other hand, if there were greater emphasis
on internal revenues, the government could anticipate declining revenues by
observing the trends of foreign:trade and domestic business. A probable





HAITI: REPORT OF FISCAL REPRESENTATIVE


decline in revenues could be calculated in advance, and expenditures or
revenue sources adjusted in time to compensate for the movement without
the use of treasury reserves as a cushion. It is well to devise and carry out
a fiscal plan which will provide stability in government income along the
lines indicated. An essential feature of that plan must be the replacement
of a large part of customs revenues by income derived from internal
taxation.
In view of the reduction in treasury reserves occasioned especially by
the demands of the last fiscal year, with its poor coffee crop, it is now
more than ever desirable to give immediate attention to this suggestion.

Internal Revenue Receipts
On January 1, 1934, this organization ceased to administer the collection
of internal revenues, in accordance with the provisions of the Agreement
of August 7, 1933, between Haiti and the United States. However, under
the same Agreement the recording of government receipts is still a function
of this office; and in view of the responsibilities of this office with regard
to the inspection of internal revenues and cooperation in the maintenance
of a balanced budget, a brief analysis of internal revenue collections is
appropriate in this report.
Tables showing details of internal revenue collections in 1934-35 and in
prior years are annexed to the Annual Report of th- Inspector General of
Internal Revenue following this report. They show that tax receipts in
1934-35 totalled Gdes. 4,519,504.32, compared with Gdes. 5,048,902.18
during the previous fiscal period. The decline amounted to Gdes.
529,397.86, or 10.48 per cent.
Although internal revenue receipts fell off to some extent, it should be
noted that the decline was not so sharp as in the case of customs revenues,
which dropped 20.1 per cent. Moreover, the decline in tax receipts was
due more to changes in tax legislation rather than to declines in the yield of
the taxes.
On April 1, 1935, for example, the internal tax of Gde. 0.25 per gallon
on gasoline imports was abolished and replaced by an equivalent increase
in the import duty. As a consequence, internal tax receipts from this
important source dropped from Gdes. 549,608.68 in 1933-34 to Gdes.
237,601.24 in 1934-35. Quantities of gasoline imported in both years were
substantially the same. Unification of the customs duty and internal tax
on gasoline was logical in that it simplified revenue collection and lowered
collecting costs. On the other hand, the effect of the change was to reduce
the total of internal revenue collections by approximately Gdes. 300,000
in 1934-35.
Another measure having the effect of reducing tax receipts was the
"Avenant", or rider,'to the Franco-Haitian commercial convention. Under
the provisions of the rider, maximum customs duties are established on






HAITI: REPORT OF FISCAL REPRESENTATIVE


imports of various French wines and liquors. Since the maximum customs
duties collected include all tax charges tax receipts from the excise on wine
dropped from Gdes. 81,607.91 in 1932-33 to Gdes. 41,512.33 in 1933-34 and
Gdes. 7,492.66 in 1934-35. The rider to the French convention became
effective in March, 1934, and tax receipts consequently were affected by the
measure only during the last half of that fiscal period. Due largely to
these changes in the taxation of gasoline and wines, receipts in the excise
group totalled Gdes. 1,379,168.61 in 1934-35, or Gdes. 425,370.18 less than
during the previous fiscal year.
Receipts were lower in 1934-35 than in 1933-34 under most excise cate-
gories. The yield of the tax on prepared tobacco, for example, declined by
Gdes. 97,070.04,* or by 68 per cent; on malt liquors, by Gdes. 33,512.21, or
49 per cent; and on salt, by Gdes. 4,448.26. The tax on alcohol derived
from cane juice, however, yielded Gdes. 380,620.83, or Gdes. 26,290.55 more
than in 1933-34, registering an increase of 7.4 per cent; and the cigarette
tax produced an increased yield amounting to Gdes. 13,923.05, or 3.7 per
cent more than the total of Gdes. 377,356.78 collected from this source
in 1933-34.
Excise receipts totalling Gdes. 20,396.53 were collected in 1934-35 from
domestic manufacturers of matches, soap, lard substitutes and vegetable
oils. These taxes had been in effect only during the last two months of the
fiscal year, and hence had little effect on the total for the year. However,
the experience of two months indicates that these new sources of internal
revenues should yield about Gdes. 150,000 in 1935-36.
In the group of internal revenue taxes other than excise, the trend in
1934-35 was slightly downward. Totals in this group were Gdes.
3,244,363.39 in 1933-34, and Gdes. 3,140,335.71 in 1934-35. The drop
amounted to Gdes. 104,027.68, or 3.2 per cent. Declines were general
throughout the list of taxes, the only important exceptions being increases
of Gdes. 19,682.39 in the case of telephone service collections; Gdes.
7,872.10 in the case of water service rents; and Gdes. 18,329.59 under the
"miscellaneous" heading.
The largest decline was registered in the case of public land rentals.
Receipts from this source dropped from Gdes. 389,872.46 in 1933-34 to
Gdes. 345,618.91 in 1934-35, or by 11.35 per cent. The past year was the
first fiscal period in which land rental collections failed to increase since
intensive efforts to produce revenues from this source were begun some
ten years ago.
Stamp tax receipts, aggregating Gdes. 679,984.87, were Gdes. 30,734.24
less than in 1933-34. Similarly, registry fee collections declined by Gdes.
24,494.63 to Gdes. 311,725.01, and receipts from the occupational tax on
foreigners by Gdes. 14,138.57 to Gdes. 291,534.78.
*The detailed figures for tax receipts which follow were taken from the tables accompanying the report of
the Inspector General annexed to this report. They are figures arrived at after auditing, and differ in some
cases from the corresponding figures published in the Monthly Bulletin of this office. In every case the differ-
ences involve only fractional amounts.





HAITI: REPORT OF FISCAL REPRESENTATIVE


About 35 per cent of internal revenue receipts are collected with the aid
of government services other than the Internal Revenue Administration.
This is true particularly of water service collections, telephone and tele-
graph collections, postage stamp sales, post office box rentals, registry fees,
vital statistics fees, and imports subject to the excise (wines, cigarettes,
etc.). The yield of certain other taxes also is derived largely from other
services, as in the case of consular fees; trade mark registrations and
certain stamp taxes. Other taxes, (and these include most of the excise
group, together with important sources such as the income tax, irri-
gation tax, and public land rentals) to be productive of revenues require
constant administrative effort to secure proper response from taxpayers
to the provisions of the law. Here as in other countries, unless there
is an impartial and through-going application of the taxes, the tendency
is for taxpayers and tax collectors alike to avoid or ignore their obli-
gations to the State. Leniency towards taxpayers with respect to the
collection of taxes under one law inevitably leads to laxness in the
application of other taxes, and negligence on the part of citizens to pay
those taxes. Collections decline and the government treasury suffers.
Taxes on tobacco yielded Gdes. 1,090,411.74 six years ago (in 1929-30).
In 1934-35, tobacco produced only Gdes. 468,170.70 in the form of internal
revenues, and of that amount nearly half was revenue derived from the
application of the excise to tobacco imports. Alcohol distilled in Haiti
yielded Gdes. 1,475,212.56 in 1929-30, and only Gdes. 453,486.13 in 1934-35.
Much of this loss in government income has, of course, been due to basic
changes in the taxation of these articles and to the effects of the depression
in foreign trade and business. But in addition, a great deal of revenue has
been lost through the principle accepted more or less generally since 1931
of following a policy of endeavoring to assist taxpayers faced with
increasing difficulties caused by poor crops, low prices, restrictions in
foreign markets and other factors on which the capacity of the taxpayer
to pay his obligations to the State depends. 'This deference to taxpayers,
particularly in the matter of alcohol and tobacco taxation, not only affects
revenues from those sources, but it tends to create an attitude on the part
of the public of hoping to obtain further relief from tax measures. The
recent decline in revenue from rentals of state lands demonstrates this
point.
As already remarked, increased revenues from internal taxes provide
the only means by which the undesirable export duties can be reduced and
by which wide fluctuations in government revenues can be avoided. In
considering future tax policies it is be.eved to be imperative to signal
attention to the trend in the mild coffee markets abroad. Increased world
production of mild coffees has tended to decrease progressively the
premium accorded mild coffee over other types. The time may not be far
distant when reduction of coffee export taxes will become necessary if





HAITI: REPORT OF FISCAL REPRESENTATIVE


Haitian coffee is to be marketed at all. Unless the situation is anticipated
and adequate steps are taken to prepare public opinion and modify the
tax structure, grave embarrassment to the treasury must result. The
Internal Revenue Service already has many accomplishments to its credit.
Recent declines in tax receipts have not been due to deficiencies in the
tax-collecting organization, but rather to inadequate legislation and a
,poor crop year.
The figures given above demonstrate that internal revenues, compared
with customs receipts, provide a relatively stable source of income. The
present problem, then, is to augment revenues from internal sources. It
should be possible to increase greatly the yield of the present taxes by
adhering to a policy of rigid tax enforcement. Further increases should be
easily attainable if present tax legislation is improved and new taxes
provided. Alcohol should be taxed more heavily, and on the basis of
volume produced, rather than on the capacity of the stills. Attempts to
foster domestic industry by favoring the distillation of alcohol by
hundreds of small and inefficient producers should be abandoned, although
it is recognized that in order to avoid hardship those engaged in inefficient
and uneconomic production will have to be aided in entering in new lines
of effort such as bananas, limes, ginger, etc. Raw tobacco should be both
taxed and controlled. Exemption of raw tobacco from control simply
encourages contraband importations which enter Haitian consumption and
cause far greater loss to Haitian producers than payment of an adequate.
tax. Constructive Legislation is urgently required. Irrigation tax legis-
lation should be completely revised to provide revenues commensurate
with the cost to the government of maintaining irrigation systems. Part of
the population at present receives benefits from irrigation paid from gener-
al treasury funds, placing an unfair burden on those who do not enjoy this
privilege. The public domain of the state should yield a more profitable
return to the treasury. New taxes should be devised, such as a poll tax.
A definite policy of augmenting internal revenues should be adopted. And
such a policy should be adhered to consistently.

Miscellaneous Receipts
There was little change in 1934-35 in the amount of income received by
the treasury from miscellaneous sources. The total received during the
year amounted to Gdes. 989,814.39 compared with Gdes. 999,232.78 during
the fiscal year 1933-34, registering a decline of Gdes. 9,418.39.
Interest on treasury investments in securities of the Republic is the
chief source of miscellaneous income. Interest on government deposits,
particularly interest received on the 1910 loan redemption account, provides
most of the remainder. Comparatively small amounts also are received
in the form of interest and amortization on treasury loans to communes,
and from funds reverting to the treasury through prescription of unpaid
treasury checks.




58 HAITI: REPORT OF FISCAL REPRESENTATIVE

In 1934-35, interest received on government balances and on treasury
investments in bonds declined when comparison is made with the previous
fiscal year. Income from other sources registered an increase.
Interest on treasury investments in Series A, B, and C bonds, together
with interest on balances in government time accounts, totalled Gdes.
628,351.72 in 1934-35, compared with Gdes. 635,689.02 in 1933-34. Interest
received on time deposits remained at 1/2 per cent throughout the last
two fiscal periods with the exception of July, August, and September of
1935, when the rate dropped to 1/4 per cent. The drop in the interest rate
accounts for part of the decline of Gdes. 7,337.30. Sales of treasury in-
vestments accounted for the remainder of the decline. However, the greater
part of such sales took place after payment of the April 1, coupon. Hence,
there was no appreciable drop in income during 1934-35. Revenues from
this source, however, will fall off sharply in 1935-36, since a large part of
treasury holdings in bonds of the Republic were disposed of in 1934-35.
The franc account for redemption of outstanding bonds of the 1910 loan
produced Gdes. 289,001.10 in interest in 1934-35, compared with Gdes.
319,630.85 in 1933-34. Income from this source varies with: (1) the rate
at which interest accumulations are converted into dollars; and (2), the
size of the balance remaining in the redemption account. The exchange
rate remained relatively steady throughout the year. The decline of Gdes.
30,629.75 consequently was due in the main to additional bond redemptions
which reduced the interest-bearing balances in the account. The number
of bonds redeemed in 1934-35 totalled 8,758, having a face value of
Fcs. 4,379,000.
Funds advanced to communal governments by the treasury showed a
balance of Gdes. 808,812.48 as of September 30, 1935. Repayment of princi-
pal, together with interest payments, totalled Gdes. 35,551.32 in 1934-35,
compared with Gdes. 19,963.69, in 1933-34. These amounts are accounted
for as miscellaneous receipts of the government. Largely because of this
increase in the service of communal loans, miscellaneous receipts other
than interest on investments and on government accounts increased from
Gdes. 43,912.91 in 1933-34 to Gdes. 72,461.57 in 1934-35.

Receipts from Communes
During the past two years the Internal Revenue Service has been charged
with the collection of communal revenues in all parts of the Republic, with
the exception of the commune of Port-au-Prince. A service charge
amounting to 15 per cent of communal revenues collected is retained by
the Internal Revenue Service to cover the cost of collection. This service
charge totalled Gdes. 267,363.62 in 1934-35, compared with Gdes. 270,847.67
in 1933-34. These amounts, for accounting purposes, are included under
a separate classification in all tables showing government revenues
appearing in this report. Also, the service charge is included in figures for
total government revenues wherever they appear in the text.


: 1





HAITI: REPORT OF FISCAL REPRESENTATIVE


The small decline (1.29 per cent) in the amount of the service charge in
1934-35, when comparison is made with the corresponding figure for
1933-34, indicates, of course, a similar percentage decline in revenues
received by the various communal administrations. The small extent of
the decline is surprising in view of the poor coffee crop and the much
greater decline in total government revenues. The explanation probably
lies in the fact that in 1933-34 the collection of communal revenues was a
new function of the Internal Revenue Service. Another year has passed,
and with the experience gained, taxes are being collected with greater
uniformity and thoroughness.
The transfer of the tax-collecting function from the individual communal
administrations to the Internal Revenue Service has been one of the most
progressive and beneficial fiscal measures put into effect by the government
in recent years. To a great extent it is enabling communes, through
increased availabilities, to carry out civic betterments, improve sanitary
conditions, retire indebtedness and accomplish other objects which had not.
before been possible. Revised communal taxes recently established by law
should bring further support to the local administrations.

Government Expenditures
Expenditures from revenues in 1934-35 totalled Gdes. 42,355,010.66,
compared with Gdes. 36,802,275.73 in 1933-34.
These amounts apparently indicate an increase in government dis-
bursements of Gdes. 5,552,734.93 over the 1933-34 figure, and an excess of
expenditures over receipts in 1934-35, amounting to Gdes. 12,263,369.70.
However, it should be borne in mind that these figures, together with
amounts covering government expenditures carried in the various tables
annexed to this report, include the sum of Gdes. 5,000,000 disbursed on
July 8, 1935, and representing the purchase price of the capital stock of
the Banque Nationale de la Republique d'Haiti. This outlay in no way
represents an operating expense, but for sake of accounting convenience,
and to show clearly at all times the cash position of the treasury, it has
been considered advisable to include the item among disbursements made
by the government from revenues during the year.
In effect the bank purchase involved the exchange of liquid cash assets
for a stock investment of equivalent value in a profitable enterprise. The
expenditure should not be confused with operating costs of the government,
and consequently, in analysing government expenditures in 1934-35, de-
duction should be made of the sum of Gdes. 5,000,000, representing the
purchase price of the bank stock.
After making this deduction, we find that expenditures during the fiscal
year 1934-35 totalled Gdes. 37,355,010.66, as against Gdes. 36,802,275.73 in
1933-34, inidcating an increase of Gdes. 552,734.93, or 1.50 per cent.





HAITI: REPORT OF FISCAL REPRESENTATIVE


"'Chart No. 4 shows revenues by years since 1917-18, together with
expenditures from revenues. The relatively wide spread between revenues
and expenditures in 1934-35 is due to the fact that the figure used for
expenditures in that year includes (as in the tables annexed to this report)
the sum of Gdes. 5,000,000 representing the purchase price of the capital
stock of the Banque Nationale de la R6publique d'Haiti. If allowance is
made for this factor, it can be seen that the spread between revenues and
expenditures was not exceptionally wide. On the whole, reviewing the past
six years of world depression, it is remarkable that the yearly spread
between revenues and expenditures has been no wider. It should be noted
that in one of the depression years (1932-33) receipts actually exceeded
disbursements, and that in the following year (1933-34) receipts and ex-
penditures were very nearly equal. Few countries can exhibit a better
record in the management of government receipts and expenditures during
the difficult period of the past six years.
Segregating disbursements from extraordinary appropriations, and dis-
bursements from ordinary (and supplementary) appropriations the record
of expenditures during the past two years was as follows:
1934-35 1933-34
Gourdes Gourdes
Expenditures from ordinary and supplement-
ary budgetary appropriations .................. 34,136,000* 32,588,000*
Expenditures from extraordinary appropri-
ations ...................................................... 3,219,000 4,214,000
Total disbursements from revenues........ 37,355,000 36,802,000

From the above, it appears that ordinary expenses in 1934-35 increased
by Gdes. 1,548,000, while disbursements from extraordinary appropriations
declined by Gdes. 995,000.
In explanation of the increase in ordinary expenditures, it should be
recalled that the general reductions in salaries and various other ex-
penditures which previously had been in force were not continued during
the fiscal year 1934-35. Also a substantial increase in ordinary expenditures
of the Garde d'Haiti was necessitated by the withdrawal of American
military support in August, 1934. Supplementary appropriations in favor
of the Garde d'Haiti totalled Gdes. 1,072,868 in 1934-35. Restoration of
salary reductions and cuts in various other budgetary appropriations added
to expenses in 1934-35. The National Public Health Service received a
supplementary allocation of Gdes. 170,000. Allocations in the prorogued
budget to cover contractual payments for debt service had to be increased
by the amount of Gdes. 35,156.40. All of these adjustments necessitated
-ipplementary appropriations, established by law, the total of which in

*These items represent ordinary and supplementary expenditures of the Government during the year including
the full cost of service of the public debt. Expenditures from accruals to the operating funds of the services
charged with revenue collection are also included.
**This figure does not include Gdes. 5,000,000 expended for purchasing the capital stock of the Banque.
National de la Ripublique d'Haiti.

mli






HAITI: REPORT OF FISCAL REPRESENTATIVE


1934-35 amounted to Gdes. 2,249,209.47. As a consequence, expenditures
from the ordinary budget registered a substantial increase when com-
parison is made with similar disbursements the previous year.
On the other hand, as already noted, expenditures from extraordinary
appropriations in 1934-35 dropped by nearly a million gourdes from the
1933-34 total. Declining revenues necessitated economies in disbursements
of that nature, and new extraordinary appropriations during the year,
exclusive of the sum of Gdes. 5,000,000 appropriated for purchase of the
capital stock of 'the Banque Nationale de la Republique d'Haiti, totalled
Gdes. 2,822,795.04, as against Gdes. 3,708,990.00 during the previous year.
These appropriations covered a wide variety of objects, which may be
classified as follows:
Gourdes
Drainage, irrigation and flood controlh.................................. 650,000.00
Roads, trails and bridges........................................................ 386,000.00
Public buildings and churches........................................... 369,000.00
National plebiscites..................................... ........................... 300,000.00
Public receptions and celebrations............................................ 267,500.00
Special missions (frontier commission, etc.).......................... 189,000.00
Telephone improvements, etc.................................................... 175,000.00
Banana plantations, boll weevil control, etc........................... 120,000.00
Various civic improvements.................................................... 112,950.00
Expenses connected with the purchase of the Banque Na-
tionale de la Republique d'Haiti..................................... 71,097.50
E education ................................................................................ 64,760.00
M miscellaneous .................................................................... 117,487.54
Total ...................................... ......................... 2,822,795.04

Extraordinary appropriations may be created by law or (when the le-
gislative body is not in session), by executive order. Since funds thus
appropriated remain available for use during two years following the date
of the appropriation, the above figures do not necessarily indicate actual
disbursements during the year. However, for the most part the ap-
propriations above enumerated were exhausted by the end of the fiscal
year 1934-35, at which time there remained unused the sum of Gdes.
309,468.22, compared with Gdes. 786,126.86 at the end of the previous
fiscal period.
Actual expenditures from extraordinary appropriations during 1934-35
are listed below by departments and services:
Gourdes
Public W orks Administration................................................ 2,191,299.82
Department of the Interior.................................................... 554,649.00
Department of Foreign Relations......................................... 251,458.75
Department of Finance ........................................................ 72,164.10
Department of Public Instruction........................................ 52,528.97
National Agricultural Service................................................ 40,680.91
Department of Public Works................................................ 21,000.00
Department of Commerce .................................................. 20,544.54
National Public Health Service.............................................. 9,575.87
Department of Religion........................................................ 5,000.00
Total ....................................................................... 3,218,901.96





62 HAITI: REPORT OF FISCAL REPRESENTATIVE

Public works expenditures from extraordinary appropriations comprised
a somewhat smaller share of the total in 1934-35 than in 1933-34. During
the latter period, Gdes. 3,043,890.38 were disbursed by that service from
extraordinary credits, compared with Gdes. 2,191,299.82, in 1934-35. As
indicated in the table above showing appropriations by objects, the greater
part of public works expenditures was devoted to drainage, irrigation,
flood control, new roads and trails, repairs to bridges, the construction of
new bridges, and similar projects which should aid agricultural production,
and particularly the new banana industry. New roads have been built,
and existing roads repaired, especially for the purpose of aiding com-
munications and enabling banana planters to bring their fruit to market.
The ability to transport fruit quickly and without damage is essential to
progress in exporting bananas. Roads must be kept open throughout the
year, for the fruit matures during all seasons.
It should be possible for banana deliveries to increase far beyond the
present volume, using only the existing road system of the Republic. But
it is vital that the main roads should be maintained in good condition
throughout the year. Interruption in communications will discourage
planters and interfere with exports. Consequently, any fiscal program
contemplating the expenditure of funds for road building should emphasize
work on existing roads, rather than extension of the road network into
sections not yet opened to communication. Banana cultivation must first
take place in sections having access to the present road system. Other
sections can be opened up whenever revenues rise to the point where
adequate maintenance of a more extensive network of roads is assured. It
would be most unfortunate if, in the desire to secure a rapid expansion of
banana planting, surplus government funds were used for building new
roads. Such roads require for maintenance the addition of large sums to
the already heavy burden imposed on the budget for road repairs. With
little margin between the government income and the minimum cost of
operating the government, it is prudent to avoid the risk of assuming new,
and heavy, recurring charges for road maintenance when a year of low
revenues, or abnormal atmospheric conditions, may make difficult even
the maintenance of already existing roads. The danger of too much
emphasis on the construction of new roads and bridges was fully brought
out in the last annual report of this office.*
Treasury reserves are very low. The government no longer can rely on
reserves with which to repair unusual damage to roads and bridges such
as inevitably occur from time to time in a mountainous country like Haiti.
The damage caused by the recent storm in the south of Haiti demonstrates
this need for concentrating public works on road maintenance, to the
exclusion of building new roads. There is always present the danger that

*Annual Report of the Fiscal Representative, Fiscal year 1913-34, pages 67 and 96. ..
'





HAITI: REPORT OF FISCAL REPRESENTATIVE


\ exceptionally heavy rains may destroy sections of the main arteries of
communication, and large sums for repairs may be badly needed at times
when funds are not available.
The construction of new roads has absorbed approximately Gdes. 740,000
during the past two years. Meanwhile, storms have destroyed entire
sections of important roads in the South which are far more necessary to
communication than many of the new projects which have been completed
or are contemplated.
In certain other directions considerable sums have been expended for
projects which -experience may show from a fiscal point of view
might better have been deferred. However, a bad crop or flood damage
bring about the inevitable result of poverty and unemployment with
corresponding demands for relief. Thus, the Public Works Administration
was called upon after the recent flood disaster, and the expenditures made
were largely relief measures. Similarly, the construction in 1934-35 of
new public buildings, certain new bridges, and useful, but not necessarily
essential, civic improvements, were undertaken largely because the work
gave employment to the laboring classes. Permanent betterments of this
kind without question have benefited the communities affected; but the
public treasury was not in a position to afford such improvements except
as they were justifiable because they were in the nature of relief measures
such as any government must make in times of unemployment and distress.
Continuation of a program to undertake public works of this nature cannot
be expected until such time as treasury resources have been brought to
higher level.
For the most part the increase in disbursements other than for relief of
unemployment during the past year was brought about by unanticipated
circumstances, such as in the case of money expended for public cele-
brations, for increasing the strength of the Garde d'Haiti, repairs to the
telephone system, national plebiscites, and boll weevil control. Also, it was
deemed advisable, as remarked above, to restore government salaries by
the amount of the reductions which previously had been put into effect
as a necessary measure of economy. In a year of crop failure for coffee
and loss to cotton producers because of the boll weevil many government
employees were called upon to give assistance to members of their families
who were in less fortunate circumstances. The restoration of salaries
therefore served to distribute aid where it was most needed. These mea-
sures combined to raise operating expenditures to a level somewhat higher
than they had been in any of the previous four years.
The various factors mentioned altered considerably the distribution of
expenditures in 1934-35 between departments and services. Notably, dis-
.bursements for maintenance of the Garde d'Haiti increased considerably,






HAITI: REPORT OF FISCAL REPRESENTATIVE


whereas public works expenditures declined by a figure almost as great
The table below shows these changes:
Total Expenditures Increase over
1934-35 1933-34
Gourdes Gourdes
Garde d'Haiti............................ ....... 6,680,679.81 818,185.00
Department of the Interior............. 2,342,121.74 254,667.52
Department of Public Instruction..... 2,010,879.16 178,984.95
Department of Justice ..................... 1,408,092.38 145,749.08
Department of Foreign Relations..... 789,547.47 131,758.55
Department of Labor ...................... 562,579.50 44,992.75
Department of Agriculture ............ 1,722,842.65 40,167.82
Department of Religion .................. 439,610.16 37,354.14
Service of Series A, B, & C Loans.... 8,659,644.40 28,091.80
Department of Public Works........... 52,702.73 23,861.98
International Institutions................... 75,000.00 10,000.00
Office of the Fiscal Representative.... 1,409,310.63 8,217.45*
Department of Commerce............... 359,870.01 25,890.16*
Internal Revenue Service.................. 945,289.27 71.049.48*
Department of Finance.................... 898,432.79** 92,639.24*
Public Works Administration............ 6,264,147.55 786,682.96*
National Public Health Service........ 2,734,260.41 176,599.37*
Total ...................................... 37,355,010.66 552,734.93
(net increase)

In addition to expenditures from revenues, there are also the relatively
small sums disbursed :from funds derived from other sources. These
include revolving funds, (such as the accounts used by the Public Works
Administration and the Bureau of Supplies to facilitate government
purchases) the savings accounts and pension fund operated by the Garde
d'Haiti, and deposits of bonds and guarantees of various kinds. There are
about twenty such accounts in active use. Receipts and disbursements in
the aggregate are usually about equal. The sum of such transactions in
1934-35 resulted in the net disbursement of Gdes. 89,516.31, compared with
a similar net disbursement of Gdes. 68,432.47 in 1933-34.
The accounting system operated by this office permits a detailed analysis
of total government disbursements classified by functions and objects of
expenditures.
Of total government disbursements in 1934-35, (excluding, for sake of
comparison, the purchase price of the bank stock) 64.5 per cent was
expended for purposes under the general heading of "administration and
operation". The corresponding share in 1933-34 amounted to 60.85 per
cent. Of the balance in 1934-35, the sum of Gdes. 9,506,047.65, or 25.4
per cent (25.93 per cent in 1933-34) was devoted to the payment of fixed
charges, including particularly service of the public debt. Amounts ex-
pended for acquisition of property declined from 10.39 per cent of the total
in 1933-34 to 6.87 per cent in 1934-35. The cost of repairs and maintenance
increased from Gdes. 1,093,684.38 in 1933-34 to Gdes. 1,187,317.97 in
1934-35.

*Decrease.
**Not including Gdes. 5,000,000 representing the purchase price of the capital stock of the Banque Nationale
de la Ripublique d'HaTti.







HAITI: REPORT OF FISCAL REPRESENTATIVE


Subdividing administration and operating expenditures (totalling Gdes.
24,147,471.67) we find that salaries and wages absorbed a somewhat
greater share of the total in 1934-35 than in the previous year. The per-
centages were, respectively, 76.8 per cent and 75.06 per cent. The share
of the total expended for supplies and materials as well as for transpor-
tation was somewhat less in 1934-35 than in 1933-34, but under the "special
and miscellaneous" account expenditures increased from Gdes. 130,788.91
in 1933-34 to Gdes. 639,458.91 in 1934-35. The increase was due for the
most part to sums disbursed by the Department of the Interior in the latter
year for public celebrations, receptions and plebiscites.

Customs Service
The cost of customs operations and other expenses connected with the
activities of this office have shown remarkably little variation during the
past three years. Total expenses amounted to Gdes. 1,409,310.63 in
1934-35, compared with Gdes. 1,417,528.08 in 1933-34 and Gdes. 1,415,531.12
in 1932-33.
Availabilities during the same three years (5 per cent of customs reve-
nues collected) totalled Gdes. 4,300,718.24, compared with total expendi-
tures during the same three years amounting to Gdes. 4,242,369.83.
The operating fund at the beginning of the fiscal year inder report
contained an unused balance of Gdes. 251,911.11. Accruals to the fund
declined sharply during the year, along with the drop in customs col-
lections. At the end of the year, however, there still remained a small
balance in the fund amounting to Gdes. 58,348.41.
The Agreement of August 7, 1933, retained the system of restricting
expenditures for collecting customs revenues to a fixed percentage of
amounts collected. This percentages basis of fixing the amounts available
for customs operations has worked well in practice, giving the flexibility
needed to assure proper operation of the important revenue-collecting
function. To be sure, there have been times, as in 1931-32, when rather
drastic economies have been necessary in order to keep expenditures
within the limit of availabilities. The customs service, however, has
always been successful in keeping its expenditures within required limits.
With the last fiscal year another period of decreased availabilities has
passed without affecting the efficiency with which revenues have been
collected. On the contrary, the customs personnel has been strengthened
through granting salary increases occasionally to deserving employees.
Also, routine repairs to customs property have been kept up, and supplies
purchased have been adequate for customs needs.
In many respects, of course, there is still room for improvement in plant
and equipment. The custom houses in some cases are not provided to
the extent desirable with mechanical office equipment such as calculating
Machines and typewriters. Office furniture generally is antiquated, and






HAITI: REPORT OF FISCAL REPRESENTATIVE


customs offices and warehouses in a few instances are old or inadequate.
Except at Port-au-Prince and Cayes port officials are not provided with
motor launches for use in boarding vessels. The program of modernizing
customs plant and equipment, which had been pushed vigorously until
1930, has had to be suspended to some extent for lack of funds.
At the beginning of the fiscal year 1934-35 the customs office at Jacmel
was moved to a new building designed to house the recording office, the
revenue office and the postoffice at Jacmel as well as the customs service.
The building was constructed by the Public Works Administration from
an extraordinary appropriation. The cost therefore does not appear among
customs expenditures.
The Jacmel office is now well provided for. Other customs offices,
however, deserve better accommodations. This is true particularly at Cayes
and Cap Haitien.
Repairs and maintenance expenditures increased from Gdes. 15,288.16
in 1933-34 to Gdes. 21,216.57 in 1934-35. Similarly, disbursements for
transportation increased from Gdes. 53,957.79 to Gdes. 63,657.69, and
miscellaneous expenses from Gdes. 12,345.47 in 1933-34 to Gdes. 22,572.84
in 1934-35. Most of the latter increase was due to the special audit of
accounts which took place early in the year. Declining expenditures were
recorded under the headings "acquisition of property" and "communication
service". Also, sums expended for the purchase of supplies and materials
declined from Gdes. 65,526.32 in 1933-34 to Gdes. 56,239.64 in 1934-35.
Under "fixed charges", the sum of Gdes. 304,331.82 disbursed in 1933-34
dropped to Gdes. 243,149.59 in 1934-35. The only item under this classi-
fication is the payment made annually to the Banque Nationale de la R&-
publique d'Haiti of one per cent of customs revenues, representing the
bank's commission for services rendered by its offices as depositaries of
customs receipts. As usual, the customs service contributed the entire
amount due. Payment of the bank commission is an obligation of the
government which is assumed by the customs service whenever the
availabilities of that office are sufficient.
Disbursements for salaries and wages totalled Gdes. 980,282.72 in
1934-35, as against Gdes. 948,019.64 in 1933-34, registering an increase of
Gdes. 32,263.08, or 3.4 per cent.
Cost of general administration totalled Gdes. 597,774.34 in 1934-35,
compared with Gdes. 557,564.73 in 1933-34. Operation costs at the various
custom houses also varied little from the previous year. A total of Gdes.
534,129.65 was recorded under that heading in 1934-35, compared with
Gdes. 523,893.01 in 1933-34.
Tables annexed to this report give further details regarding the cost of
collecting customs revenues. They show that for every gourde in customs
revenues collected, Gde. .0360 in 1934-35 were expended for administration,
repairs and maintenance, acquisition of property, and for the one per cent






HAITI: REPORT OF FISCAL REPRESENTATIVE


" commission paid to the Banque Nationale de la Republique d'Haiti.
Customs operations, exclusive of the classes of expenditures already
mentioned, absorbed Gde..0220 of every gourde collected. This compares
with Gde. .0172 in 1933-34, and Gde. .0166 in 1932-33. The failure of the
coffee crop, coupled with the decline in coffee prices, accounts for the
relatively increase in customs costs. Many of the operating costs necessarily
are more or less fixed and cannot expand and contract in direct relation to
accruals to the operating fund.
A further examination into the cost of collecting customs revenues shows
that at Port-au-Prince the cost was lower (Gde. .0172 per gourde collected)
than at any other port with the exception of Gonaives, where costs
amounted to Gde..0165 per gourde collected. Similarly, other leading
custom houses reported the following costs: Cap Haitien, Gde..0259;
Petit Goive, Gde..0271; Cayes, Gde..0281; Jacmel, Gde..0294; and Saint
Marc, Gde..0318. The custom house at Port-au-Prince in 1934-35 collected
Gdes. 15,269,208.26, at a cost of only Gdes. 262,678.96.
As remarked in previous reports of this office, no instance has ever
come to the attention of this office where customs revenues of other
countries with similar conditions have been collected with so little cost to
the government. Comparison is difficult, because other countries usually
do not publish data as to customs costs with the completeness with which
they are recorded in Haiti. Nevertheless, all available evidence indicates
that collection costs are lower in Haiti than in other comparable countries.
This economy in customs operations has been made possible through
giving the closest attention to cost analysis and through careful budgeting
within the service. The cost accounting system put into effect in 1924,
and improved in 1928, has permitted full administrative control over the
cost of customs operations, without which the economies achieved would
not have been possible.

Internal Revenue Service
Until January 1, 1934, the Internal Revenue Service was administered
by the Financial Adviser-General Receiver. Expenditures were paid from
a fund consisting of 15 per cent of revenues collected. All functions of
the service, including internal revenue inspection, were financed from
this fund.
Since that date, the internal revenue organization has been separated
into two divisions. One division, charged primarily with the administration
and collection of internal revenues, operates from a fund consisting of
ten per cent of internal revenues collected, plus 15 per cent of communal
revenues collected by that service. The other division, known as the
Internal Revenue Inspection Service, operates from a fund consisting of
five per cent of internal revenue collected. Only the Inspection Service now
.comes under the direct administration of the Fiscal Representative.






68 HAITI: REPORT OF FISCAL REPRESENTATIVE

Accruals to the operating fund of the Internal Revenue Service in
1934-35 were as follows:
Gourdes
10 per cent of internal revenues........................... 451,950.43
15 per cent of communal revenues....................... 267,363.62
Total ................................................................ 719,314.05

In addition, the Internal Revenue Service at the end of the fiscal year
was credited with the sum of Gdes. 41,220.69, representing the unused
balance remaining at that time in the operating fund of the Inspection
Service. This payment was made in accordance with the Agreement of
August 7, 1933, providing that sums not required by the Inspection Service
within its allowance shall be made available to the Internal Revenue
Service.
The allowance of the Inspection Service (5 per cent of internal revenues)
totalled Gdes. 225,975.22 in 1934-35. Expenditures from this fund amounted
to Gdes. 184,754.53, classified as follows:
Gourdes
Salaries .................................................................... 104,730.00
Supplies .................................................................... 1,710.17
Transportation ......................................................... 66,955.14
M miscellaneous .......................................................... 237.50
R epairs .................................................................... 20.00
Equipment .......................................................... 11,101.72
Total ................................................................ 184,754.53

Considerable economies were effected during the year, particularly in
the case of expenditures for equipment and supplies. Disbursements during
the last nine months of the previous fiscal year, dating from January 1,
1934, when the new service was established, totalled Gdes. 174,797.24.
Thus expenses for the full twelve months of 1934-35 were only Gdes.
9,957.29 more than expenses during nine months of the prior year.
However, purchases of equipment at the time the new service was organized
in 1934 tend to exaggerate the total for the last nine months of 1933-34.
Nevertheless, the cost of inspection has been less than was originally
anticipated. It is hoped that during the present year the Inspection Service
may again be able to make a substantial contribution to the operating fund
of the Internal Revenue Service.
As in the case of customs collections, the government is under the obli-
gation of paying one per cent of internal revenue receipts to the Banque
National de la R6publique d'Haiti as its commission for services as de-
pository of tax collections. Of Gdes. 45,195.04 due the bank at the end
of 1934-35, the sum of Gdes. 41,343.26 was paid by the Internal Revenue
Service, representing the balance which remained in its operating fund
on September 30, 1935, including the contribution of Gdes. 41,220.69 made
available to that Service at that date by the Inspection Service. The small
balance due the Bank was paid from the general funds of the government.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Treasury Position
Treasury assets as of September 30, 1935, totalled Gdes. 15,008,815.79.
Liabilities totalled Gdes. 11,141,717.98, leaving an unobligated surplus of
Gdes. 3,867,097.81. The excess of assets over liabilities on September 30,
1934, amounted to Gdes. 15,535,190.80.
As in previous annual reports, there is again presented in Table No. 47
of this report a detailed statement of treasury assets and liabilities. Some
explanation is necessary, however, for a proper understanding of the items
included in the balance sheet.
A large part of treasury assets in prior years have been invested in
Series A, B, and C bonds of the Republic. About the middle of 1931 these
bonds, in common with most American issues of Latin American securities,
declined sharply in value as expressed by quotations for the bonds in New
York. Their marketability, and hence their value in terms of liquid cash,
was impaired. To show this effect properly on the treasury balance sheet,
this office each year has presented a simplified statement in which in-
vestments and other treasury assets have been segregated from current
cash assets.
This situation no longer obtains. Quotations for Haitian bonds rose
rapidly during 1935, and before the end of the fiscal year prices were high
enough so that treasury investments in Haitian bonds could be disposed of
with comparatively little difficulty, and at prices which were somewhat
above the average prices at which they had been acquired.
For sake of comparison, however, this report again presents a balance
sheet showing investments segregated from cash and other assets. The
statement which follows presents treasury assets and liabilities segregated
in that manner:
Sept. 30, 1935 Sept. 30, 1934
Assets Gourdes Gourdes
Current Assets............................ 2,645,990.26 9,434,391.04
Investments ............................... 7,944,260.55 9,041,512.45
Other Assets.................................. 4,418,564.98 4,284,540.31
15,008,815.79 22,760,443.80
Liabilities
Current Liabilities............................ 1,710,405.50 2,779,889.20
Reserves .......................................... 9,431,312.48 4,445,363.80
Surplus ........................................... 3,867,097.81 15,535,190.80
15,008,815.79 22,760,443.80

The operating deficit during 1934-35 necessarily produced a considerable
decline in current assets, represented by cash on demand deposit or cash
in time accounts requiring thirty days' notice of withdrawal. Dollar current
accounts in the Banque Nationale de la R6publique d'Haiti as of Sep-
tember 30, 1935, had balances totalling Gdes. 847,681.40, compared with
Gdes. 4,540,680.80 at September 30, 1934. Time accounts in New York
funds showed a balance of Gdes. 19,876.90 at the end of the fiscal year





HAITI: REPORT OF FISCAL REPRESENTATIVE


1934-35, compared with Gdes. 3,281,977.15 at the end of the previous fiscal
year. Funds in demand accounts, in gourdes, however, showed a balance
of Gdes. 1,668,610.83 on September 30, 1935, or Gdes. 166,422.02 more
than on the same date the previous year.
Other current assets, which include only receipts in suspense and cash
in the hands of disbursing officers, totalled Gdes. 109,821.13 as of Sep-
tember 30, 1935, and Gdes. 109,544.28 as of September 30, 1934.
Thus, the principal change in the current cash position between the two
dates was the reduction amounting'almost to Gdes.7,000,000 in cash
deposited in the time and sight accounts in New York funds.
Investments in Haitian bonds declined along with cash. Bonds were
sold during the year to satisfy amortization requirements (particularly in
the case of the B issue), to provide part of the funds for purchasing the
capital stock of the Banque Nationale de la Republique d'Haiti, and in
general to improve the cash position of the treasury.
Series A and C bonds having a face value of Gdes. 3,015,000 were sold
during the year, realizing Gdes. 2,757,900, or better than the average cost
to the treasury of the investment in these bond,;. Sales of Series B bonds
aggregated Gdes. 3,843,299.80 in face value. These bonds produced Gdes.
3,549,230.00 in cash.
Some holders of B bonds exchanged their securities during the year for
bonds of the A issue in accordance with the offer made by the government
on May 9, 1933, and still in effect. Bonds exchanged during the year had
a face value of Gdes. 43,500.
A new item among investments consists of Gdes. 82,665.00 representing
the purchase price of Series A bonds held for account of the Garde d'Haiti.
Of the bonds purchased, Gdes. 55,000, face value, were purchased from the
treasury investment account. The balance, amounting to Gdes. 41,500,
were acquired in the open market. The Garde d'Haiti for some years has
operated savings accounts for the benefit of its personnel. In order to
provide an income on funds deposited, part of the funds on deposit were
invested in Series A bonds.
The transactions described, after giving effect to a number of investment
purchases during the year both in New York and Port-au-Prince, reduced
treasury investments in Series A, B, and C bonds to a cost value of Gdes.
2,944,260.55, on September 30, 1935, compared with Gdes. 9,041,512.45 on
September 30, 1934.
As already remarked, these bonds now have an easily realizable cash
value, and properly could be included, as in years prior to 1931, among
cash assets of the treasury.
In addition to cash and investments in bonds of the Republic, there
appears among investments on the September 30, 1935, a new item of
Gdes. 5,000,000 representing the purchase price of the capital stock of
the Banque Nationale de la Republique d'Haiti, acquired on July, 8, 1935.






HAITI: REPORT OF FISCAL REPRESENTATIVE


As a matter of record, the cost value of the stock is included on the balance
sheet above as a treasury investment. Since, however, it is not a quick asset,
an equivalent amount has been set aside from surplus as a reserve.
Under "other assets" appear as usual amounts representing: (1) the
balance in the account maintained 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 increased to Gdes. 3,609,752.50 as of September 30,
1935, from Gdes. 3,461,676.51 as of September 30, 1934. Fiduciary currency
circulation at the end of the fiscal year 1934-35 was low, and the reserve
deposit therefore nearly reached the maximum figure agreed upon of Gdes.
3,622,500, or half the total issue of subsidiary coinage. The amount in this
special 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. The amount of this deposit will decrease, and treasury cash will
increase, as subsidiary coinage in circulation is lost or destroyed and as
commercial needs for subsidiary coins increase.
Only two new loans to communes were made during 1934-35. These
aggregated Gdes. 20,000. Reimbursements of such advances during the
year exceeded this increase, and balances outstanding therefore declined
to Gdes. 808,812.48 as of September 30, 1935, from Gdes. 822,863.80 at
September 30, 1934.
No other government assets are included on the treasury balance sheet,
although the state owns valuable lands and operating properties such as
the telephone and telegraph service, and municipal water services. In
addition it has a reversionary interest in properties represented by private
concessions. No value has been set upon these assets or on the value of
the private domain of the state. Also, a sum in excess of Fcs. 800,000
eventually will be paid to the treasury. This figure represents the probable
amount by which sums on deposit to retire outstanding bonds of the 1910
loan exceed requirements.
On the liability side of the balance sheet, changes during 1934-35 were
relatively unimportant. The balance remaining in extraordinary appropri-
ations declined from Gdes. 786,126.86 on September 30, 1934, to Gdes
309,468.22 on the same date in 1935. These appropriations are expendible
during a period of two years from the date they are created.- Balances
unexpended at the end of the fiscal year therefore constituted a treasury
obligation.
The balance in "non-revenue" accounts declined from Gdes. 516,642.39
on September 30, 1934, to Gdes. 497,123.89 on September 30, 1935. These
items represent balances in accounts composed of funds derived from
sources other than revenue. Various revolving funds, savings accounts
of the Garde d'Haiti, and deposits of bonds and guarantees made up most





72 HAITI: REPORT OF FISCAL REPRESENTATIVE

of the total. The figures mentioned represent the total amount which the
treasury might be called upon to pay.
The balance in the operating fund of the Fiscal Representative (the
"five per cent fund") declined from Gdes. 251,911.11 on September 30,
1934, to Gdes. 58,348.41 on Septemlber 30, 1935. Declining accruals to the
fund during the year of poor customs revenues, as already explained, made
it necessary to draw on the accumulated reserve.
The only other item listed among current liabilities is impaid treasury
checks. These declined in amount from Gdes. 1,225,2C8.84 as of Sep-
tember 30, 1934 to Gdes. 845,464.98 on September 30, 1935.
The items under "reserves" on September 30, 1935, consisted of amounts
set aside from surplus to cover: (1) the total obligation with respect to
fiduciary currency out of circulation and in the vaults of the Banque Na-
tionale de la R6publique d'Haiti; (2) the reserve to cover advances to
communal governments; and (3) the amount of Gdes. 5,000,000 explained
above in connection with the purchase of the capital stock of the Banque
National de la R6publique d'Haiti.
While the balance sheet shows a sharp decline in cash, it is believed that
cash reserves are ample to permit prompt settlement of all current obli-
gations of the government during the months when revenues are seasonally
low. However, it is obvious that prudence dictates a policy of building
up cash as quickly as possible before another year of poor crops brings
an unbalanced budget and the need for reserve funds with which to finance
ordinary government operations.


Public Debt

On September 30, 1935, the gross public debt of the Republic had been
reduced to Gdes. 54,930,599.85, from Gdes. 60,830,435.79 on the same date
of the previous year. Both figures include an item of Gdes. 3,622,500
representing the government's liability to protect fiduciary currency issued
in excess of circulation requirements.
Otherwise, the amounts representing the public debt of Haiti on the
respective dates consist simply of the face amounts of Series A, B and C
bonds outstanding, less balances remaining in the sinking funds and not
yet applied to amortization.
The speed with which Haiti has succeeded in reducing its indebtedness
is worthy of special mention. Only ten years ago, following completion
of the refunding operation which accompanied the issuance on the Ameri-
can market of the present dollar bonds, the public debt of the Republic
amounted to Gdes. 115,031,263.80. From that figure, the debt in only ten
years has been reduced to Gdes. 54,930,599.85, or less than half the original
amount.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Furthermore, if we go back another ten years (to September 30, 1915)
we find that the public debt at that time amounted to a total of Gdes.
153,861,068.85. The present debt is only a little more than a third of that
figure.
Various factors contributed to the rapidity of debt reduction during the
past decade. Of these may be mentioned: (1) the fact that the fiscal
agents have been able to purchase bonds for amortization since 1931 at
prices considerably under par; (2) the policy in the early years of the
present loan of devoting surplus revenues to debt reduction in excess of
contractual requirements; (3) the terms of the bond contracts, by which
amounts available for amortization increase each year as requirements for
interest diminish; (4) the accelerating effect of large disbursements for
debt retirement in the early years of the loan resulting in a rapid decline
in interest requirements, and leaving correspondingly greater amounts
available for amortization purposes; and (5) the fact that the authorized
issue of Series B bonds (on which the schedule of interest and amorti-
zation payments was based) was considerably greater than the amount
of bonds actually issued, resulting in especially rapid retirement of the
Series B issue.
Moreover, since 1926, bonds of the three issues have been frequently
purchased as treasury investments. On September 30, 1935, there remained
in the treasury the following bonds (face amounts) held as investments:
Gourdes
Series A ................................................................ 696,500.00
Series B ............................................................. 1,060,250.00
Series C ................................................................ 1,346,498.70
Total ............................... ........................ 3,103,248.70

In addition, bonds to the amount of Gdes. 96,500 were purchased during
1934-35 as an investment from funds held for account of the Garde d'Haiti
savings fund.
At the end of the fiscal year 1934-35, there remained the following
amounts in the respective sinking funds of the three bond series:
Gourdes
Series A ................................................................ 814,805.45
Series B ................................................................ 146,938.35
Series C ................................................................ 126,324.45
Total ...................... ......................... 1,088,068.25

The above amounts, on the date mentioned, had not yet been applied to
amortization.
The three series of the funded debt required payment of the following
amounts for interest and amortization during 1934-35:
Gourdes
Series A .............................................................. 5,850,000
Series B .............................................................. 1,812,000
Series C ................................................................ 968,406
Total ...................... ....... ......... ....... 8,630,406





HAITI: REPORT OF FISCAL REPRESENTATIVE


Payment of these amounts under the loan contracts may be made
in monthly installments. In accordance with past practice, however,
payments under the external loan contracts during 1934-35 were made
considerably in advance of the dates on which they were due. Since inter-
est at the rate of 24 per cent is paid on moneys on deposit in the Series
A and Series C debt service accounts with the fiscal agent, anticipated
payments result in a substantial additional income to the treasury. More,-
over, payments effected in advance of requirements permit market buying
for amortization throughout the year.
Payments to the fiscal agent for interest and amortization of the external
loans were made during 1934-35 on the dates and in the amounts shown
below:
Series A Series C
Gourdes Gourdes
October 5, 1934 ..................................... 2,925,000.00 484,203.00
April 15, 1935.................................. 1,950,000.00 322,802.00
August 15, 1935................................... 487,500.00 80,700.50
Sept. 15, 1935................................... 487,500.00 80,700.50
Total .............................................. 5,850,000.00 968,406.00

The Series B loan was serviced during 1934-35, as usual, by monthly
payments of Gdes. 150,500 to the Banque Nationale de la R6publique
d'Haiti, which acts as fiscal agent of the loan. Since the contract covering
the Series B issue does not provide for the payment of interest on moneys
in the sinking fund, there is no advantage in making payments in advance
as in the case of the external issues.
Prices for Series A bonds on the New York Stock Exchange advanced
steadily during 1934-35. From a low of 79 in October, 1934, quotations
reached a high for the fiscal year of 92 in July, 1935. In September, 1935,
the bonds were being quoted at prices between 90 and 91 5/8, and at the
present writing prices have risen further to the vicinity of 95.
This steady appreciation in the market price of Haitian bonds was
simply a part of the general rise in bond prices.throughout the year which
accompanied the improved business outlook abroad and gradual recovery
from world depression. Also, the increase in the amounts available for
amortization in 1934-35 in all probability tended to push prices higher.
The bond contracts provide for the payment of stipulated amounts from
which sufficient funds are set to cover the next interest coupon. The
balance must be applied to purchases of bonds in the open market at prices
not exceeding par, (or sufficient bonds must be called for redemption by
lot if bonds are not available at par or less). Consequently, as bonds
are retired and interest requirements diminish, correspondingly greater
amounts become available each year for amortization purposes. Also,
the interest and amortization schedules provide for slightly increasing
payments each year. The effect of these provisions is to make substantially
greater amounts available for amortization during each year of the life






HAITI: REPORT OF FISCAL REPRESENTATIVE


of the loan. In 1934-35, for example, interest requirements for the three
issues totalled only Gdes. 3,290,205.66, compared with Gdes. 3,595,138.15
in 1933-34. Amortization availabilities, on the other hand, increased from
Gdes. 5,000,111.45 in 1933-34 to Gdes. 5,340,200.34 in 1934-35.
Price appreciation gives visible evidence of the increased confidence in
the stability of Haitian finances and the undoubted ability of the Republic
to continue prompt service of its public debt. The high regard with which
investors now look upon the Haitian bonds give renewed assurance that
conditions in the money markets abroad soon will have reached the point
where new sums needed for constructive developments may be obtainable.

Service of Payments
Government accounting is centralized in the Service of Payments where
all vouchers covering authorizations to pay funds from the treasury are
received and checks are issued. An up-to-date bookkeeping system permits
close control over disbursements from all appropriations of government
funds. The extensive use of the preaudit system guards against the
misapplication of funds. Accounting control is maintained over all govern-
ment receipts and expenses as well as over accounts covering transactions
with the Banque Nationale de la R6publique d'Haiti, treasury investments,
"non-revenue" accounts, and disbursement in connection with the public
debt.
The accounting system permits detailed analysis of costs. Statistical data
are compiled which enable the Government at all times to have a complete
record of its financial transactions. The tables concerning financial trans-
actions which are published in this report, were compiled by the Service of
Payments.
All salaried government employees are paid monthly by checks prepared
by the Service of Payments. In accordance with the Agreement of Au-
gust 7, 1933, all salary checks, as well as all other checks drawn against
treasury funds (excepting checks drawn against funds to the credit of
the Fiscal Representative) are signed by the Secretary of State for Finance
or his delegate. Following signature, the Service of Payments sends the
checks to the offices where the expenses originated; or in the case of
salary payments the checks are distributed directly from the office at Port-
au-Prince or are delivered to the beneficiaries through agents in other
parts of the country. The Garde d'Haiti in 1934-35 continued the handling
of civil payments in sections which are not within easy distance of the
cities. Such payments are made by Garde officers during the course of
their regular inspection trips in the interior. In the cities, payments arc
effected through agents of the Service of Payments attached to the various
custom houses.
The system of effecting the greater part of government payments,
Including salaries of civil employees, by means of checks has worked well





76 HAITI: REPORT OF FISCAL REPRESENTATIVE
/-

in practice during the many years that it has been in effect. When
treasury checks are endorsed and paid, they constitute a formal and perma-
nent record of the transaction. From the point of view of the payee,
payment by check provides a convenient, easily negotiable, medium.
The work of the Service of Payments was complicated in 1934-35 by
the fact that the budget for the previous year had to be prorogued, and
appropriations adjusted by means of supplementary credits in order to
conform with various increased government activities authorized by law.
For example, the payroll and expense accounts of the Garde d'Haiti were
increased substantially. Moreover, as already explained, reductions in the
salaries of government employees were no longer effective at the beginning
of the fiscal year. This necessitated the establishment of many supple-
mentary appropriations to supply deficiencies in salary and expense
allocations in the prorogued budget. 'Many other adjustments were
necessary, all of them involving a considerable amount of clerical work.
Fortunately, the Service of Payments was able to carry out the additional
labor involved without increasing its personnel, and without affecting to
any great extent the usual promptness in making payments to civil em-
ployees, and settling the current obligations of the government.

Supplies
The Bureau of Supplies, which operates as a division of this organ-
ization, continued in 1934-35 to furnish stationery, office supplies, and
similar equipment to government departments and services. The central-
ization of government purchases, through the Bureau of Supplies, results
in important economies. Moreover, deliveries are expedited through
maintaining at all times adequate stocks of stationery and office supplies
in current use. Paper is purchased in wholesale lots, and cut to size in
accordance with requirements. Discounts are received on quantity
purchases of supplies, resulting in savings which would not be possible
without centralization of purchases through the Bureau of Supplies.
Gross sales of the Bureau declined from Gdes. 270,819.90 in 1933-34 to
Gdes. 182,122.93 in 1934-35. The volume of government business requiring
stationery, office supplies, etc., declined along with the decline in business
and revenues, affecting gross sales of the Bureau of Supplies. Nevertheless,
costs were reduced to a corresponding extent, and at the year end a net
profit of Gdes. 105.66 was recorded.
The Bureau is not operated to produce revenue. Charges are calculated
in such manner as to cover costs and leave only a nominal profit.
Inventories increased from Gdes. 148,529.25 on September 30, 1934, to
Gdes. 161,076.63 on September 30, 1935, while cash between the same dates
declined from Gdes. 17,630.17 to Gdes. 5,938.60. Accounts receivable and
equipment remained at substantially the same figures on both dates.







..AITI: REPORT OF FISCAL REPRESENTATIVE


The Budget and Financial Legislation

As explained in the last report of this office,* it was found necessary at
the beginning of the fiscal year 1934-35 to prorogue the ordinary budget
of expenditures from the previous year. At the same time, certain new
obligations created by law (particularly the restoration of salary cuts and
increased allocations for the Garde d'Haiti) made it necessary to increase
the prorogued appropriations from an aggregate, including supplementary
appropriations of Gdes. 32,863,794.84 in 1933-34 to Gdes. 33,407,720.33 in
1934-35. Subsequently, still further supplementary appropriations were
created by law. These increases in ordinary revenue appropriations, less
a number of administrative reductions in ordinary expenditures, carried
the net total of budgetary authorizations in 1934-35 to the sum of Gdes.
34,049,501.55.
The ordinary budget for 1935-36, as established by the law of June 27,
1935, added an additional amount of Gdes. 200,279.52 to total ordinary and
supplementary appropriations of the previous year, carrying total author-
izations for expenditure in 1935-36 to the sum of Gdes. 34,249,781.07.
Ordinary and supplementary appropriations from revenues during the
past four years, together with the ordinary budget appropriations for
1935-36, are set forth in tabular form below:
Ordinary and Supplementary
Fiscal Year Appropriations
Gourdes
1931-32................................................................ 31,901,127.10
1932-33................................................................. 32,096,549.66
1933-34................................................................ 32,863,794.84
1934-35................................................................. 34,049,501.55
1935-36 (ordinary budget).................................. 34,249,781.07

Thus, there has been during the period under examination a steady
increase each year in the amounts appropriated for carrying on the ordin-
ary operating activities of the government. In addition, extraordinary
appropriations from revenues have been as follows during the past four
years:
Fiscal Year Gourdes
1931-32 ................................................................... 1,465,250.00
1932-33..................................................................... 2,911,947.42
1933-34 ..................................................................... 3,708,999.00
1934-35 .................................................................. 2,822,795.04**

Extraordinary appropriations, of course, do not represent operating
expenses. The figures given above are added simply to show clearly the
relation between budgetary appropriations and authorizations to expend
surplus revenues (or reserves) for extraordinary, or non-operating,
purposes. It should be noted that extraordinary appropriations have
increased in each of the four years mentioned with the exception of 1934-35.

*Annual Report of the Fiscal Representative, fiscal year 1933-34, page 82.
"This figure does not include the sum of Gdes. 5,000,000 representing the purchase price of the capital stock
S of the Banque Nationale de la Ripublique d'Haiti.






HAITI: REPORT OF FISCAL REPRESENTATIVE


The enactment of a definitive ordinary budget of expenditures for the
fiscal year 1935-36 was a distinct accomplishment. It has already been
explained that it had been necessary to operate in 1934-35 under the au-
thority of a budget prorogued from the previous year. Many adjustments
were necessary, leading to a certain amount of unavoidable confusion and
extra clerical work in trying to adapt the budget of one year to a new fiscal
period when budgetary requirements were totally different. The new
budget for 1935-36 should eliminate these difficulties. It is believed to
provide adequate appropriations for all of the operating functions of the
government. Funds are appropriated to permit the operation of the Garde
d'Haiti on an enlarged scale. Full provision is made for the payment of
salaries at the rates effective before pay cuts went into effect.
Furthermore, total ordinary appropriations of Gdes. 34,249,781.07 are
believed to be within the limit of ways and means (estimated at Gdes.
34,250,000) unless the 1935-36 coffee crop should fail to reach the size
predicated. Of course, the recent floods in the South may affect the balance
of the budget, even though, as reports now indicate, the actual damage to
crops has been small. Government expenses at the present writing already
have been increased by this unfortunate calamity, due to the need for
reestablishing communications and bringing relief to flood sufferers. Also,
expected revenue measures for increasing ways and means have not yet
materialized. Nevertheless, it is believed that the new budget, if not
actually balanced, at least does not impose an excessive burden on current
treasury resources.
To permit a comparison between the new budget and total budgetary
appropriations in 1934-35, (including supplementary appropriations) there
is given below a table showing allocations by departments for both fiscal
periods:
Budget for Budget for Increase
Budget Chapters 1934-35 1935-36
Gourdes Gourdes Gourdes
Public Debt............ 8,747,906.00 8,802,063.00 54,157.00
Foreign Relations.... 546,680.50 592,630.50 46,000.00
Finance ................ 3,012,478.22 3,001,221.00 11,257.22*
Commerce .............. 342,835.00 342,835.00
Interior ................ 11,198,592.30 11,129,952.30 68,640.00*
Public Works.......... 4,109,779.76 4,109,700.00 79.76*
Justice .................. 1,423,450.00 1,412,106.00 11,344.00*
Agriculture ............ 1,682,534.77 1,670,534.77 12,000.00*
Labor .................... 564,183.00 659,163.00 94,980.00
Public Instruction.... 1.978,910.50 2,074,748.00 95,837.50
Religion ............... 442,151.50 454,777.50 12,626.00
34,049,501.55 34,249,781.07 200,279.52
(net increase)
The increase of Gdes. 54,157.00 in the allocation for service of the public
debt was due in part to the fact that the interest and amortization schedules
require slightly larger payments in 1935-36. Also, the allocation for
payments to various international institutions (included in the "Public
*Decrease.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Debt" chapter of the budget) was increased by Gdes. 15,000. A new
allocation in favor of the Department of Foreign Relations, to provide
funds for publicity and propaganda in connection with export markets,
increased the total budgetary availabilities of that department. Under
the Department of Labor, a new appropriation of Gdes.97,350.00 was
established to permit operation of the new vocational school to be
administered by the Salesian Fathers. A number of changes in the De-
partment of Public Instruction, including various administrative changes
and the creation of several new schools required an increase in the ordi-
nary budgetary allocations of that department by the net amount of Gdes.
95,837.50. In the Department of Religion, increased budgetary provision
for salaries of priests and travelling expenses accounted for most of the
increase of Gdes. 12,626.00 in the total allocation for 1935-36, when com-
parison is made with the 1934-35 total.
Increases in appropriations in favor of the departments mentioned
amounted to a total of Gdes. 303,600.50. Economies in the other de-
partments, totalling Gdes. 103,320.98, brought the net increase in budgetary
appropriations in 1935-36 to Gdes. 200,279.52. Total appropriations in
favor of the Garde d'Haiti and the National Public Health Service
remained the same in both years, except that the latter service under the
1935-36 budget will not receive the benefit of a supplementary credit in
the amount of Gdes. 170,000 (for the purchase of supplies etc.) created in
April, 1935. A number of minor adjustments in other allotments to the
Department of the Interior (mostly increases) brought the net saving under
that department to the figure shown in the table. Other net economies
were effected in the Departments of Finance, Justice and Agriculture.
On the whole the new budget is satisfactory. While it represents an
increase over the previous year's total allocations, it will probably be
found that ordinary expenditures will not be far out of line with revenue
receipts.
Aside from the enactment of a new budget, fiscal legislation during
1934-35 concerned chiefly the various tariff modifications enacted during
the year, including the sanctioning of the new commercial agreement with
the United States, the law establishing a maximum and minimum import
tariff, and the law sanctioning the contract with the Standard Fruit and
Steamship Company, Inc. Mention has been made of these, as well as of
the new law taxing domestic manufactures of matches, soap, lard and
vegetable oil.
Also, on September 2, 1935, there was published in the official gazette
a law sanctioning a public works contract, signed August 23, 1935, between
the government of the Republic and Mr. Jules Jean-Baptiste Debachy as
entrepreneur. This contract contemplated the undertaking of an extensive
public works program to be paid for from an appropriation of Fcs.
500,000,000, funds for which were to be obtained by the promoter under





HAITI: REPORT OF FISCAL REPRESENTATIVE


terms set forth in detail in the contract. A time limit is provided in the
contract within which the entrepreneur is to make his arrangements and
effect payment of the several installments of the loan.
Other fiscal legislation may be listed as follows:
(a) The law of March 28, 1935, sanctioning the contract for the purchase
of the capital stock of the Banque Nationale de la R6publique d'Haiti.
(b) The law of May 10, 1935, providing for a stamp tax on theatre
tickets.
(c) The law of June 3, 1935, sanctioning a new contract between the
State and the Electric Light Company of Port-au-Prince and Cap Haitien.
(d) A law dated July 6, 1935, establishing a system of pensions affecting
the personnel of the Garde d'Haiti.
(e) The law of July 7, 1935, sanctioning a contract for the exploitation
of guano deposits in Haiti.
(f) The decree-law of September 4, 1935, authorizing an increase in
the note issue of the Banque Nationale de la Republique d'Haiti to
Gdes. 20,000,000.
(g) The decree-law of September 16, 1935, regulating radio-communi-
cation, and providing for various licence fees, as well as a tax on radio
receiving sets.
(h) The law of September 18, 1935, sanctioning a contract of concession
granting to the "Socite6 Haitienne de Produits Alimentaires" the exclusive
right to manufacture for export banana flour, sliced bananas and manioc
derivatives.
(i) The decree-law of September 23, 1935, modifying the list of commu-
nal taxes.
(j) The decree-law of September 30, 1935, restricting commerce in coffee
and other export products to the cities of the Republic, or to suitable
localities designated by the National Agricultural Service.
The law (a) sanctioning the contract for the purchase of the capital
stock of the Banque Nationale de la Republique d'Haiti marked an im-
portant step in the negotiations leading to the acquisition of the bank.
The two new tax measures mentioned in (b) and (g) above will probably
be found to be of small importance from the point of view of revenue yield:
The new Electric Light Company contract (c) extends the former con-
cession for an additional twenty-five years dating from August 31, 1946.
Rates for current under the new contract are substantially reduced. The
company undertakes to extend its service to Petionville, and agrees to
install additional street lighting in Port-au-Prince, Cap Haitien and
Petionville. Consumers of electric current, including the government, will
benefit from the reductions in rates. The ratification of the new contract
brings a final solution to a matter which has been pending for several years.
The Garde pension law (d) is a measure which has long been needed.
The new law provides for a pension fund to be created through setting






HAITI: REPORT OF FISCAL REPRESENTATIVE


aside portions of salaries paid to members of the Garde, somewhat similar
to the arrangement by which civil pensions are paid. The Garde pension
system will not constitute a new charge on the budget. Provision is made
for retirement, under pension, because of age or disability incurred while
on active service.
The law (f) authorizing an increase in the total amount of notes which
may be issued by the Banque Nationale de la Republique d'Haiti was made
necessary by the reduction, at the time the bank was acquired by the
.government, of the capital of the bank from Gdes. 10,000,000 to Gdes.
5,000,000. Since the authorized note issue was limited to three times the
capital of the bank, only Gdes. 15,000.000 in notes could be issued by the
bank after its capital had been reduced. With a good coffee crop in
prospect, it was probable that commercial needs would be in excess of
the authorized issue. The right to extend the issue to Gdes. 20,000,000
under additional security guarantees was therefore accorded by law.
The new contracts covering the exploitation of guano deposits (e) and
the manufacture of banana flour for export (h) may result in the develop-
ment of new export industries of some importance. Guano already is being
exported in commercial quantities, although the development started too
late in the year to show results statistically in the tables annexed to this
report.
The new communal taxes (i) are designed to aid the communal ad-
ministrations through higher licence fees and taxes.
The law forbidding commerce in export products in localities where
proper grading facilities are not available (j) is intended in particular to
promote better preparation of coffee sold for export.

Currency

The poor coffee crop together with low prices for coffee and other export
commodities, produced some contraction in the circulation of currency
during 1934-35. Money in circulation on September 30, 1935, and on the
same date of the previous year, is shown in the table below:
Sept. 30, 1935 Sept. 30, 1934
Gourdes Gourdes
Notes of the Banque Nationale de la R6pu-
blique d'Haiti.......................... 6,660,705 7,687,129
United States currency (estimated)............ 2,125,000 2,500,000
Subsidiary currency.................................. 3,582,300 3,989,202
12,368,005 14,176,331
Usually, the circulation of notes of the Banque Nationale de la R6pu-
blique d'Haiti rises to a marked extent during the months from December
to May when coffee buying produces seasonal activity in domestic
commerce. In 1934-35, however, note circulation showed little variation
from month to month. At the end of March, for example, notes in circu-
lation totalled only Gdes. 8,941,188, compared with Gdes. 11,707,418 in





HAITI: REPORT OF FISCAL REPRESENTATIVE


March, 1934. The average of notes in circulation at the end of each month
during 1934-35 amounted to Gdes. 7,914,191, compared with Gdes. 9,049,244
during the previous year. The demand for subsidiary coinage also remained
low throughout the year.
An important change in the reserve requirements protecting the note
circulation was authorized by the law of May 21, 1935. Under the mone-
tary reform convention of April 12, 1919, the Banque Nationale de la
R6publique d'Haiti is required to maintain at all times a reserve consisting
of legal currency of the United States equal, at the rate of five gourdes to
one dollar, to at least one-third of the gourde notes in circulation. The
difference between this reserve and the value of total notes in circulation
must be represented by two-name commercial paper, having maturities not
exceeding 120 days. The new law to which reference is made permits the
substitution of Series A, B or C bonds of the Republic for commercial
paper, up to the extent of $600,000.
By permitting the use of government bonds as security behind the note
issue, the Banque Nationale de la R6publique d'Haiti, as a government
institution and sole bank of issue, is able to make profitable use of its
bond holdings. At the same time, the security behind the note issue is in
no way impaired.
Another change affecting currency was the authorization granted the
Banque Nationale de la Republique d'Haiti by the law of September 4,
1935, to raise the note issue from Gdes. 15,000,000 to Gdes. 20,000,000.
The reason for this measure, as explained in a previous chapter, was the
fact that the reduction in the capital of the bank at the time it was acquired
by the government restricted the note issue to a maximum of Gdes.
15,000,000, or three times the capital of the bank. Commercial requirements
for banknotes may exceed that figure, and it was therefore necessary to
authorize an increase in the note issue. Notes issued under the new au-
thority are protected by reserves under the same terms as in the case of
the issue of Gdes. 15,000,000, i.e., by United States legal money to the
extent of at least one-third of the issue, and the balance by approved
commercial paper; and as an additional guarantee, by the deposit of Series
A, B or C bonds to the amount of $100,000.
The Banque Nationale de la R6publique d'Haiti is required by the mone-
tary reform convention of April 12, 1919, to redeem its notes on demand at
the rate of five gourdes for one dollar United States legal currency. The
gourde therefore bears a definite relation to the dollar, and in view of
the reserve requirements described above, its value is firmly fixed to the
value of the dollar. There are, of course, no gold reserves in Haiti which
are pledged directly to the support of the gourde. Since, however, the
United States legal currency, commercial paper and dollar bonds of the
Republic which are pledged to the support of the note issue represent
obligations expressed in terms of American money, the Haitian currency


V ,





HAITI: REPORT OF FISCAL REPRESENTATIVE


is in effect backed by the gold and silver reserves as well as the credit of
the United States treasury. The United States treasury holds a greater
share of the monetary gold stock of the world than any other country.
The relatively small supplies of gold held in banks in Haiti have
no connection with the currency circulation. Nor, as is evident from the
above, is there any need for such support. Nevertheless, as an additional
precaution, the government by an executive order dated January 17, 1935,
placed an embargo on the exportation of gold in any form. This measure
was not necessitated by any abnormal gold movements. Rather, it was
prompted by the action of other governments in restricting the free
movement of gold in order to carry out widely accepted policies of setting
artificial valuations upon currencies in an effort to stimulate prices and
adjust disparities in foreign exchange.

Banking and Credit
Except for the acquisition of the Banque Nationale de la R6publique
d'Haiti by the government on July 8, 1935, there was little which occurred
during 1934-35 with regard to banking and credit which requires comment.
The two banks doing business inHaiti maintained a liquid position through-
out the year. They were in no way affected by the year's recession in foreign
trade and business, although of course the volume of business handled
by the banks declined.
There were no commercial failures of any importance in 1934-35. In this
respect Haiti has been extremely fortunate during the past several years.
Loans and discounts of banks averaged slightly lower in 1934-35 than
during the previous year. Combined figures for loans and discounts at the
end of each month, averaged over the year, amounted to Gdes. 6,362,868.52
in 1934-35, compared with Gdes. 6,430,287.53 in 1933-34. Thus, there was
little change in the amount of accommodation furnished business during the
year despite the sharp drop in foreign commerce and domestic trade. The
ratio of loans to deposits (36.4 per cent in 1933-34 and 36.8 per cent in
1934-35) showed practically no change.
The decline in trade is reflected more clearly in the figures for average
deposits in the banks. Excluding government balances, deposits at the two
banking institutions declined from an average of Gdes. 13,129,264.23
during 1933-34 to Gdes. 12,945,906.08 during 1934-35. Government deposits
at the Banque Nationale de la Republique d'Haiti naturally declined,
since the government operating deficit during the year produced heavy
withdrawals. Balances in government accounts declined from Gdes.
14,316,651.65 on September 30, 1934, to Gdes. 6,324,188.25 on the same
date in 1935.
Banks in Haiti, as elsewhere during the depression years, find their
lending capacity limited not so much by the desire for liquidity as by the
dearth of good loans. Low commodity prices and the restricted volume of





84 HAITI: REPORT OF FISCAL REPRESENTATIVE

business result in a lessened demand on the part of business for the usual
credit facilities offered by banks. The banks in their present liquid con-
dition probably could double their advances to commerce with safety,
provided that adequately secured loans were available. Thus, the trade
recession continues to restrict considerably the amount of business normal-
ly done by the banks.
Commercial demands for domestic credit accommodations have diminished
in part because of a change in the method of financing imports of Japanese
merchandise. A year or more ago, when importers were beginning to buy
from Japan, shipments were financed mostly by opening confirmed com-
mercial credits in favor of the shippers. Terms usually required drafts
drawn on the importer payable at sight. Merchants consequently relied on
the local banks for accommodation between the time when merchandise was
received and until it eventually was sold. In recent months, however, local
banks did not feel it was advisable to assume to so large an extent the
risk of financing such imports. At the same time, exporters in Japan are
becoming better acquainted with the local trade, and are showing a
willingness to assume more of the ordinary business risks, with the result
that merchandise frequently is being shipped to Haiti accompanied by
drafts drawn at 90 or even 120 day's sight. It is the foreign exporter and
his bank who now finance merchandise inventories rather than the local
banking institutions. Thus, the import trade in textiles is now receiving
practically the same accommodations from its suppliers in Japan that it has
always received from British and American exporters.
It is in the financing of the export crops that the local banking insti-
tutions fulfill their most important function; and in this respect they are
still handicapped by the lack of legislation covering the establishment of
bonded warehouses and the issuance of negotiable warehouse receipts. It
is true that so long as exporters are able to ship their coffee and cotton
abroad under prearranged credits permitting payment on shipment, there
is little need for loans against unsold commodities. But at present there
is no satisfactory way by which warehoused commodities can be used
directly as collateral against loans, although of course loans are made to
some extent against warehoused merchandise pledged to the banks. Ex-
porters for the most part receive accommodation because of their general
credit standing; and merchandise sold and ready for shipment can be
financed through the usual facilities provided by the banks. If, however,.
additional restrictions should be imposed in European markets, exporters
may be compelled either to suspend buying coffee from middlemen and
producers, or to sell their coffee at perhaps ruinous prices in markets not
yet prepared to receive the Haitian product. Any long suspension of coffee
and cotton buying would be a calamity to the predominant class of the
population which relies on a ready market for the commodities which it
produces as its sole source of income Bonded warehouses would assist





HAITI: REPORT OF FISCAL REPRESENTATIVE


exporters to continue coffee buying and facilitate financing through loans
obtained against collateral in the form of negotiable warehouse receipts.
The importance of providing legislation of this kind is perfectly evident.
A suitable project of law has been drafted, and it has come up for consider-
ation a number of times during the past two years. Thus far, however,
the project has not been enacted into law.
Another legislative need is a measure forbidding usurious rates of inter-
est. There are no penalties provided by law limiting the activities of
unscrupulous money-lenders. The instances are many where borrowers
deserving better treatment have been compelled through accumulations of
interest imposed at outrageous rates, to pay the principal of their loans
several times over. Such abuses seem incredible. They exist in part
because there is no usury law in Haiti and because there is no widespread
knowledge of the functions of banking institutions. Except for the larger
business houses, and the more prosperous class of the population, few
people make use of the banking facilities which are available to them.
With a population of well over two million inhabitants, bank deposits,
excluding government balances, average only Gdes. 13,000,000.
A project of law providing heavy penalties for lending at usurious inter-
est rates is now under consideration. At the same time it is planned to
extend so far as practicable the service rendered by banks in granting small
personal loans. The ability of a needy borrower to obtain loans at the
banks must, of course, still depend upon his credit standing; but it should
nevertheless be possible to divert much of the loan business conducted by
private individuals or business houses, under exhorbitant terms, to the
banking institutions where it properly belongs, and where due consider-
ation can be given to the rights of the borrower.
Government employees alone constitute a large portion of the borrowing
population which has been particularly subject to the abuses of money-
lenders. Measures are contemplated by the government which will permit
greater latitude in extending small bank loans to government employees in
good standing.
There has been a surprising amount of activity in home-building during
the past year. In Port-au-Prince and Kenscoff, particularly, many new
houses have been constructed. Undoubtedly the demand for new houses
and commercial buildings could be better supplied if there existed in Haiti
an institution where funds could be received in comparatively small
amounts for investment in mortgages against improved property. The
average citizen has insufficient resources to invest his savings in several
mortgages giving diversification as well as a fair return on his capital;
and if he attempts to invest his capital in only one or two mortgages against
property he runs considerable risk of loss through the lack of diversifi-
cation. The interest return of funds deposited in savings accounts neces-
sarily must be comparatively small. Moreover, the Haitian citizen has a





HAITI: REPORT OF FISCAL REPRESENTATIVE


far greater knowledge of the investment value of real property than he has
of the investment medium provided by stocks and bonds. Investments in
the latter form are easily available to the people of larger countries, but
the average person in Haiti must rely almost exclusively on property as
an investment. Even with his knowledge of property values, he has no
collective means of investing his funds in mortgages to the best advantage.
The solution of the Haitian investor's difficulties, as well as the pro-
motion of more activity in building, lies in the establishment of one or
more cooperative institutions preferably under the guidance of responsible
bank officials, which would be organized to accept regular deposits from
members, the proceeds to be invested in certain approved types of liens
against improved property. Similar institutions abroad, usually known
as "building and loan associations" have operated with considerable
success. There is no reason why the same kind of collective endeavor
should not be successful in Haiti.

Acquisition of the Banque Nationale de la R6publique d'Haiti
Negotiations for the acquisition by the government of the Banque Na-
tionale de la Republique d'Haiti ended on July 8, 1935, with the purchase
of the capital stock of the bank for the sum. of Gdes. 5,000,000.
Plans for the transfer of the bank to the government had first been made
early in the previous fiscal year, and a contract of sale had been drawn.
The contract was signed on May 12, 1934, subject to ratification by the
legislative body. The legislative session closed, however, before final action
was taken on the contract. In March, 1935, the legislative body again
took up consideration of the contract and it was finally sanctioned by a
law dated March 28, 1935. The law of sanction introduced a large number
of modifications in the wording of the contract, without, however, making
any sweeping changes in the general provisions of the contract. Consider-
able time had elapsed since the contract originally had been drafted, and
certain important parts of the document as sanctioned contained references
to dates and other provisions which no longer were applicable. Consequent-
ly, negotiations had to be resumed between The National City Bank of
New York and the government with a view to drafting a definitive contract
which would contain in substance the various modifications introduced by
the original law of sanction and which would at the same time be acceptable
to the two parties to the contract. A new draft was prepared which was
sanctioned by the law of May 21, 1935, which at the same time gave legis-
lative authority to the government to "make with the other contracting
party any adjustments in text, words or dates, or in the names of parties,
which might be recognized as necessary and which do not affect the
substance of the contract..."
The original contract contemplated payment of the purchase price
(Gdes. 5,000,000) in installments, the first of which would be in the amount I

I





HAITI: REPORT OF FISCAL REPRESENTATIVE


of Gdes. 2,750,000, the balance to be in the form of interest bearing notes
amounting to Gdes. 375,000 each, payable at the end of each six months'
period. The cash position of the treasury, however, made it desirable to
complete the full payment at the time of the sale. Accordingly, the contract
as finally modified and sanctioned provided for payment in full at the date
of the transfer of the capital stock to the government.
The actual sale of the bank took place on July 8, 1935, when the govern-
ment received all of the stock of the bank, representing its capital at the
reduced figure of Gdes. 5,000,000, in return for a cash payment to the
vendor of Gdes. 5,000,000.
In accordance with the terms of the contract, the books of the bank
previously had been audited by an independent firm of auditors, and a
liquidating dividend had been paid to the former stockholders consisting
of the capital and undivided profits of the bank at the date of sale in excess
of Gdes. 5,000,000.
The payment of the purchase price of the capital stock made the govern-
ment of the Republic sole owner of its central bank of issue and treasury
depositary. The bank is the largest banking institution in Haiti. In ad-
dition to its treasury functions, the bank is equipped to carry on all of the
usual functions of a commercial bank at its head office in Port-au-Prince
and through its branches in all of the principal towns of the Republic.
Moreover, it serves as fiscal agent of the Series B issue of government
bonds.
The terms of the contract of sale were carefully designed to maintain
the bank in a strong position. The bank keeps as its correspondent abroad
The National City Bank of New York and its many branches. It is the
policy to continue doing its foreign business through that bank as in the
past when the Banque Nationale de la R6publique d'Haiti was an affiliate
of that institution. The personnel and executive staff trained during the
years when the Banque Nationale de la R6publique d'Haiti was adminis-
tered by The National City Bank of New York has been retained.
In general, the bank remains fully equipped to continue rendering
banking service in Haiti much as it did when it was a private institution.
But in addition, the fact that it is now government owned brings with it
certain advantages which make the bank capable of rendering additional
service to business and to the government which was not possible under
foreign ownership. Policies can now follow more closely the needs of the
community. Under foreign ownership the Banque Nationale de la Repub-
lique d'Haiti formed a comparatively small part of an immense world-
wide banking organization, and general administrative policies tended more
to favor the needs of the organization as a whole, rather than the specific
requirements of the government and of business in Haiti. Routine matters,
requiring perhaps a quick decision, no longer have to be referred to
officials abroad before action can be taken. The government bank is not





HAITI: REPORT OF FISCAL REPRESENTATIVE


limited in its activities, as in the past, by regulations and policies dictated
by the parent institution. Expansion of the bank in the direction of
rendering greater service to the community is no longer restricted by
the unwillingness of the absentee owners of the bank to make further
commitments in Haiti.
These, and other advantages, have been gained without impairing the
strength of the institution. Resources remain more than adequate. Techni-
cal assistance in carrying out the intricate and highly specialized operations
of a modern banking institution are still available. Under the contract of
sale, administration of the institution is in charge of a board of directors
of six members who collectively are more intimately acquainted with the
banking needs of the community and of the government than could be
possible under the former arrangement of a directorship composed ex-
clusively of foreign officials, with administrative decisions under the control
of directors at their desks in New York.
By acquiring the Banque Nationale de la R6publique d'Haiti the Haitian
government has at last reached one of its most important objectives.



Claims

The sum of Gdes. 91,200 was expended during 1934-35 for the settlement
of court judgments and claims against the State, correction of over-
payments, adjustments of pensions and similar disbursements. Expendi-
tures of the same nature involved payments totalling Gdes. 114,605.56 in
1933-34, and Gdes. 82,035.89 in 1932-33.
Only a small part of the total payments made in 1934-35 represented
the settlement of court judgments or the administrative settlement of
justified claims against the State. None of these payments individually
involved large awards.
Haiti at present is fortunately free of the large floating debt of unsettled
claims against the State which in past years constituted a problem. The
work of the Claims Commission and the issuance of Series B bonds cleared
many of the more important of these charges from the books. Subsequently,
the new contracts entered upon with the National Railroad Company of
Haiti and the P. C. S. Railroad eliminated important claims against the
government.
New claims, of course, have arisen from time to time and occasionally
the State has become involved in litigation resulting in pecuniary awards.
Some of these in recent years have amounted to fairly large sums, but
during the past fiscal year there were no awards of more than a few
thousand gourdes each.






HAITI: REPORT OF FISCAL REPRESENTATIVE


Personnel
This organization lost one of its ablest officials by the death, on De-
cember 16, 1935, of Mr. Paul Sales, Legal Adviser of the Fiscal Repre-
sentative. To all members of the organization who had been associated
with him his death came as a sad blow.
Mr. Sales had been seriously ill for many months, and had been confined
to a hospital in Baltimore, Maryland, where he had gone in the hope of
regaining his health. Personal regard for Mr. Sales had given earnest
hope on the part of his friends and associates that he might be restored
to health and become again an active member of this office, where his
extensive knowledge of Haitian law, and the splendid services he rendered
the organization, earned for him the greatest respect. His death, at the
age of fifty, means the loss of a friend who endeared himself to all with
whom he was associated.
Mr. Sales joined this service on October 22, 1924, as Legal Adviser. In
a position requiring not only legal knowledge, but also tact and executive
ability, he carried out his duties loyally and with the utmost competence.
He was, to those who knew him well, one of the ablest Haitian lawyers,
and a man of outstanding integrity.
Mr. Henry H. Jones, who for many years had served as chief of customs
auditors in the Customs Control and Statistics Section at the head office,
died on April 10, 1935, of heart trouble, in New York. Mr. Jones had been
a customs employee before the service was reorganized under the General
Receiver in 1915, and he continued in the service during the twenty years
from that year until his ,death. Mr. Jones' long experience had given him
expert knowledge of the tariff and customs regulations. He rendered
valuable service to the organization over a period of many years.
The services of two American officials, Mr. Robert H. Farmer and Mr.
Joseph H. White, were lost during the fiscal year by resignation.
Mr. Farmer resigned in October, 1934, and left Haiti. He had joined
the customs service in August, 1929, as Deputy Collector of Customs at
Cap Haitien. Subsequently he became Collector at that port and later was
promoted to the post of Collector of Customs at Port-au-Prince. Under
the reorganization required by the Agreement of August 7, 1933, Mr.
Farmer was appointed to the post of Resident Inspector at Port-au-Prince
in charge of customs inspection at that port as well as in the district which
includes Petit GoAve, Miragoane, Jacmel and Belladere. Mr. Farmer
showed executive ability which made him a valued member of the organi-
zation, and resulted in rapid promotion to positions of responsibility.
Mr. White came to Haiti in May, 1933, and resigned in September, 1935,
to accept a position at the American Consulate in Port-au-Prince leading
to a career in the Foreign Service of the United States. He was a valued
member of the org-nization who had served in a number of capacities at





HAITI: REPORT OF FISCAL REPRESENTATIVE


the head office of the Customs Service, particularly as Assistant to the
Chief of Customs Control and as head of the Customs Statistics Section.
Mr. Farmer and Mr. White were replaced by changes within the organi-
zation.
The customs Directors in charge at the various custom houses remained
the same as during the previous year except at Belladere. Mr. A. Moise,
who had been Director of Customs at Belladere, was transferred to service
at the custom house at Port-au-Prince. He was replaced by Mr. L. Lhe-
risson, who had served as customs auditor at Port-au-Prince.

Conclusion

The record of the past fiscal year reveals a period replete with new
developments which cannot fail to have far-reaching effects on the future
of the Republic.
Many of these developments took the form of constructive measures
which should aid the country to advance economically. The signing of
the contract with the Standard Fruit and Steamship Co. Inc., has opened
the way for the development of an important new export industry. Bananas
already have become fifth in importance among Haitian exports. New, and
on the whole constructive, revenue measures have been adopted. The
government has become owner of its own central bank of issue and treasury
depositary. Drainage and irrigation systems have been constructed. Road-
building and new bridges have opened up large areas to agricultural
development.
Important measures have been taken in defense of foreign markets. The
American market has been made secure as an outlet for certain of Haiti's
principal exports by the signing of the new reciprocal trade agreement
with that country. Another agreement has up to date permitted exporters
to continue to sell coffee in France in return for certain concessions which
it is expected will tend to increase the French share of Haitian commerce
though it must be admitted that this agreement is somewhat precarious,
being denunciable on one month's notice. A modus-vivendi with Canada
for the time being solidifies trade with that country. Legislation adopted
during the year tends to equalize merchandise exchange with foreign
countries by limiting imports from countries which have failed to buy a
reasonable share of Haitian export commodities.
A new contract providing large sums to be available for new public
works, and for promoting the material development of the country, has
been sanctioned, though at the present writing the fulfillment of this
contract remains still in the future. Other contracts signed during the
year indicate that guano will be added to the list of export products and
that an industry for the manufacture and export of banana flour and manioc






HAITI: REPORT OF FISCAL REPRESENTATIVE


S derivatives will be established. Rates for electric current have been reduced,
and service improved, by a new contract granted the largest public utility
company in Haiti.
On the other hand, a year has passed during which foreign commerce
and government revenues have suffered a disquieting recession. To be sure,
the major part of the difficulty was due to an abnormally short coffee crop.
To this extent the downward movement of trade and revenues was tempo-
rary; but the fact remains that a year of low revenues and increased
government operating costs has depleted treasury reserves and has left the
government with the serious problem of adjusting higher operating costs
to revenues which still fluctuate violently from year to year. Income is
no longer supported by a comforting backlog of large treasury reserves.
Of course, the treasury is still in a reasonably secure position. Rising
prices for bonds of the Republic have added to the liquidity of treasury in-
vestments. It is true that the operating deficit has reduced cash reserves
and investments to the lowest figure reported in many years. Nevertheless,
they are adequate to support treasury operations on the scale set by the
new budget for the fiscal year 1935-36. Debt service has continued without
interruption. There are no legitimate economic or financial grounds for
apprehension as to the ability of the Republic to continue service of its
public debt and at the same time provide adequately for ordinary govern-
ment operations. In fact, the burden of the debt within the next year will
be greatly lessened by the probable extinction of the internal bond issue.
The budget for 1935-36, so far as can be determined by revenue forecasts
and expenditure appropriations, has been safely balanced.
However satisfactory the immediate situation may appear,' there are
other less tangible factors which indicate that the country is passing
through a critical period in its economic life.
In the first place, after an encouraging period of price recovery, coffee
prices have declined again to'a very low level and have remained at that
level for several months. Of itself, the decline is not particularly alarming.
Prices for coffee, as fixed by world markets, fluctuate widely. In 1933,
prices for mild coffee descended for a brief period close to the present level
and then recovered. Ordinarily it would be reasonable to expect that prices
at their present figure of between $8.00 and $8.50 per 50 kilos, after a brief
adjustment, would quickly recover to a higher figure. But several months
have passed without signs of an appreciable strengthening in prices. The
implications are self-evident. The former favored position of mild coffee
in world markets has been impaired perhaps for a long period by
trade developments in Europe which have diverted European consumption
to Brazilian and colonial coffees, throwing greater quantities of mild coffees
on the North American markets and depressing the world price for those
varieties of coffee. Haiti is a producer of mild coffee. Like other mild
. coffee countries it is faced with the problem of marketing its product at





HAITI: REPORT OF FISCAL REPRESENTATIVE


low prices; or if that cannot be done at an adequate return to producers
and exporters, production must decline until reduced world supplies have
raised prices to the level of economic production. An alternative, so far
as concerns Haiti, is to reduce the coffee export duties; and this Haiti
cannot afford to do because of the failure to build a revenue structure
based more largely on internal revenue taxation.
Coffee is still the life blood of the country. The sinister aspect of the
lower price level of this commodity cannot be avoided by trusting solely
in the hope that outside influences will bring a correction. The coffee trade
must organize to protect itself against the possibility of further closure of
present markets. Further restriction, or the disappearance, of these outlets
will necessitate the disposal of Haitian coffee in new markets. Coffee must
be prepared and exported under conditions as to quality which will give it
a competitive position equal to other mild coffees. Outlets should be
diversified and new markets built up at once as a protection against possi-
bilities of further restriction. The government must be prepared to
cooperate, if necessary, by taking measures which will permit the reduction
of coffee export duties. To this end, revenue possibilities from internal
taxation should be studied carefully.
New developments affecting cotton production give rise to further appre-
hension. Discovery that the boll weevil is present in Haiti may seriously
affect exports of the fiber over a period of several years at least. In other
countries boll weevil infestation usually has caused severe losses. More
intensive cultivation, radical changes in planting methods, and even the
abandonment of certain types of cotton usually have been necessary in
order to control the pest. No practicable means of entirely eradicating the
insect, once it makes its appearance in the cotton fields, has been discovered.
What effect the boll weevil will have on cotton production in Haiti
cannot yet be determined; but it is not unlikely that the productivity of
the existing areas planted to cotton will diminish as the area of infestation
gradually expands. Certainly, no appreciable 'increase in cotton exports
can be expected for several years. Fortunately, the new banana industry
should go far to compensate for any loss in the volume of cotton exports.
Sugar is another important export industry where there is little hope
of immediate recovery. Despite efficient production in Haiti, sugar has been
exported at a loss to the producers, because of low prices in the only ex-
port markets available to the Haitian product. The outlook for higher
sugar prices is anything but certain. Meanwhile, the domestic industry,
with its large capital investment, must choose between operating at no profit
on its exports or abandoning export production until prices recover. Sales
of sugar products for domestic consumption under protection of a high
tariff lead to the belief that the industry will be able to continue buying
cane and converting it into sugar.