Front Cover
 Title Page

Title: Outline of financial history of the Republic of Haiti
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00094314/00001
 Material Information
Title: Outline of financial history of the Republic of Haiti
Physical Description: 24 p. : ; 31cm.
Language: French
Creator: Vincent, Sténio, 1874-
Publisher: Imp. de l'etat
Place of Publication: Port-au-Prince
Publication Date: 1939
Copyright Date: 1939
Subject: History -- Haiti -- 1844-1915   ( lcsh )
Economic conditions -- Haiti   ( lcsh )
Genre: non-fiction   ( marcgt )
Spatial Coverage: Haiti
General Note: "Extract from 'En posant les jalons', by Sténio Vincent."
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Bibliographic ID: UF00094314
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 01905052

Table of Contents
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Full Text
President of the Republic of Haiti
v /s

Extract from
' EN POSANT LES JALONS by his Excellency
President of the Republic of Haiti

f n $ ?y

Outline of Financial History of the Republic of Haiti
In order to realize our program of national equipment and bring our economy out of the marasmic condition into which it had sunk deeper and deeper each day since the independence of the country, I envisaged, from the beginning of my administration a financial operation of wide scope a loan of $25,000,-000 which would permit us to at last organize our agriculture, to develope it in a rational manner,and through the increase and diversification of our production, assure the national welfare of our people. It is useless to go over and over the Haitian problem, it is solely in the soil and in its development that the solution must be sought.
Persons of good faith I do not concern myself a great deal about others had said, on this subject, that the project in view was beyond our means, that we were going to meet with failure, because we would not be able to support the heavy charges that a $25,000,000 loan would place upon our shoulders during

a long period of time, and that it would constitute, in the last analysis, a grave danger to our future.
One day I discussed it with an American banker passing through Port-au-Prince. He had about the same remarks to make. According to him we did not have sufficient financial capacity for such an undertaking.
In reply to one arid all, it will suffice for us to sketch here, in outline, the history of the foreign debt, properly so called, of the Republic of Haiti, from 1825 to 1922.
It may be considered under two distinct aspects:
1) The French indemnity granted at the price of our independence;
2) The French loans.
French Indemnity.
Fixed at 150,000,000 francs, in 1825, the indemnity was to be paid in five annual payments of 30,000,000 each. The first payment was to be made December 31, 1825. Such a burden was evidently beyond the financial possibilities of the country. Furthermore, the first payment could only be made through a

loanin the sum of 30,000,000 from which the net proceeds amounted to 24,000,000 and had to be supplemented.
As was to be expected, the Haitian State found it absolutely impossible td pay the second installment of 30,000,000 at maturity, and a fortiori, the following installments.
This situation lasted until 1838. It forced itself upon the attention of the French Government and brought it to be more reasonnable. The latter finally had to agree, at that time, to reduce the balance of the indemnity from 120,000,000 to 60,000,000 payable in 30 installments graduated froni year to year, from 1838 to 1867.
The Foreign Debt from 1825 to 1838 could therefore be set forth,as follows:
... Indemnity Loan Total Debt
Situation in
1825 .......... 150,000,000 150,000,000
Situation in
1826 after the
first payment of ... .
30,000,000 ef-fected through
a loan of 30,000,00 (nominal value).... 150,000,000. 150,000,009

Situation in 18 38, the year in which the reduction of the balance of the indemnity to 60,000,000 was granted to the Haitian State..
Indemnity Loan
Total Dekt
60,000,000 30,000,000 90,000,000
If the total foreign debt of 90,000,000 francs (which in short was only the net remaining amount of the indemnity of which a part had been converted into a loan of 30,000,000) was to be amortized at the end of 50 years at the rate of 6% interest per year, the annual charges required would have been 5,709,960 francs, or a little more than a million piastres (or dollars).
In fact, after 50 years, that is to say in 1875, the Haitian Stade still owed, under its double debt, a balance of 13,730,589 francs. (1)
It follows therefore that the capital amount amortized from 1826 to 1875 amounts to
(1) (cf. Enquete sur l'Emprunt Domingue 4th. division, 2nd. series, 2nd. part of page 116.)

90,000,000, less 13,730,589, or in round figures 76,000,000 francs.
Since the indemnity had only commenced to bear interest from the time of the arange-ment, and since the loan of 1826 was not yet extinguished in 1875, calculations made on this basis, establish that the average annual charge which had made possible payment of 76,000,000 during this period necessarily was somewhat over 4,000,000 francs, or about 800,000 piastres (or dollars).
However, despite appearence, it was essentially a question, in effect, of paying the French indemnity. Not a sou, in fact, had been received by the Haitian state from the purely refunding loan of 1826. This loan, sold at 80, on the other hand caused us a loss at its floatation in the sum of 6,000,000 francs, a difference which had to be made up in cash.
This point should be emphasized. For it is evident that the capacity of payment estimated at an average of 4,000,000 francs annually (about $800,000) should not be confused with the capacity to reimburse a loan of which the capital amount would have been effectively paid into the public treasury and used for productive works which would cause, sooner

or later, an increase in the public wealth and substantial amelioration of the national economy of the country, v
In other words the service of the French indemnity' (reduced to 90,000,000 francs) of which the net proceeds were zero, had been made solely out of the national resources. There were, it is agreed, irregularities in the payments during the fifty-year period from 1826 to 1875. There was little resemblance to a real loan of 90,000,000 francs at 5% payable in 50 years which;, sold at 80, for example, would have effectively put the state in possession of 72,000,000 francs in extraordinary receipts;
There is no doubt that such a loan floated, even at these burdensome rates, would have been repaid before maturity. Since it is ascertained that from 1826 to 1875, without having received anything, the Haitian state was able, not to reimburse, but to pay, a capital amount of 76,000,000 francs of the 90,000,000, the net reduced amount of the indemnity granted France (not including interest).
In the light of these considerations we may conclude without hesitation that the financial capacity of the country, at that time, was

excellent, even surprising, since the newly created little nation was recovering with great difficulty, and unaided, from the devastation occasioned during the war for Independence.
On the subject of the catastrophe repercussions of the French indemnity on the future of our country, L. J. Marcelin carries, in his work already cited, the following particularly interesting extracts, from a Memoire on abolition of slavery in Haiti and its present results, drafted according to authentic documents by Mr. Clarekton and Mr. Macaulay and presented by Mr. Buxton to the Committee of the English House of Lords, charged, in the session of 1832, with the examination of th< question of colonial slavery:
Haiti did herself a great harm in imprudently binding herself to pay France the enormous sum of 150,000,000 francs as the price for recognition of her independence. In addition to the fact that this sum is beyond her means, the time at which she contracted this debt necessarily aggravated the harm in the most vexatious manner. This injury is a terrible blow to her destiny as a commercial

country, at the very moment when her agriculture was being reborn, when her people were beginning to acquire a taste for the pleasant and finer things of civilization, and when her institutions were about to attain the degree of maturity that they could expect from a longer period of experimentation.
Before this deplorable affair, all parts of the Republic had been united and such had been the rapid development of her resources that she was becoming able to depend upon her revenues to meet all of her needs. She had been able to reduce her army, and, by perfecting the discipline of a smaller force, now that she did not have to struggle against any internal enemy, she had built, against any invasions with which she should be threatened, a means of resistence still more efficacious than her hills and mountains. The desire which manifested itself amongst the citizens to better their material condition, already inspired in the government the salutary policy of reduced taxation, in order to place, as far as possible, articles of necessity and convenience within the

reach of the greatest number. The masses of the population gave evident signs that the sentiment of ownership and a more cultivated taste was creating new wants the extent of which was daily, becoming greater. A general expansion could be observed in the desire for a large number of possessions of which the working class had never before at any period of its history had even an idea, and of an abundance which was so grounded in necessity that privation was coming to be looked upon as a mark of inferiority approaching disgrace. It was in the midst of this state of progress, of tranquillity, of improvement, that the tribute of the French indemnity overwhelmed each individual with the force of its full weight,, These men had to pay in money what they had purchased with their blood. Taxes had to be levied for the execution of a measure which was generally odious; three of the principal cities refused their quotas; many regions were in a state of rebellion; the security of property was shaken and it depreciated in value; work did not go on with the same regularity;

public ffiurmUriugs soon- became clamours against the pusillanimity of the government; and those who could not escape payment of the tax, sought, at least, to .'diminish the amount thereof, and to escape from the oppression in affecting an appearence of ruin, by reducing their expenditures and their way of living, to ;take away, at least, any pretext for the taxing agency to charge them more.(l)
Moreover, we find in the Almanach Commercial de Port-au-Prince edited in 1863 by Duracine Pouilh the following comments on the. French indemnity arid its deplorable consequences:
The Ordonnance of King Charles X dated April 17, 1825, accepted by Boyer, and subsequently ratified by the Senate, exacted as indemnity in favor of French colonists, 150,000,000 francs payable in five equal installments annually beginning December 11, 1825; it furthermore reserved in favor of France the privilege of paying only half of the duties
(1) Memoire, etc. pages 5 8, 59 and 60.

payable by foreigners, which left during ten years an annual; deficit of about : P. 281,000 (two hundred eighty one,... thousand piastres) out of total revenues;i3 not exceeding P. 1,125,000 (one million one hundred and twenty five thousand piastres). ... .
To liquidate the first payment of P. 30,000,000. (thirty) the Haitian government had to have recourse to a loan which was contracted in Paris with the Maison Lafitte. But the Haitian had only won his liberty and his independence on a heap of ruins. The resources of the country were diminished by 50 (fifty) per cent: among other things, coffee only reached about 30,000,000 (thirty million) pounds against 76,000,000 (seventy six million) in 1789- Such a burden was therefore so beyond his name, that he had to default from the second year.(2). ,
(2V Almanack Commercial de Port-au-Prince, 1863, page.; 25,1..:.' ... : ..-.<. ;

The French Loan.
During the period comprised between 1875 and 1922, the Haitian Government contracted successively :
1. The loan of 1875, in a nominal of fifty million francs;
2. The loan of 1896, likewise of fifty million francs;
3. The loan of 1910, of sixty fixe million francs.
The principal and avowed purpose of these different financial operations was, first of all, the reimbursement, or rather the consolidation of the foreign debt. But, as a matter of fact, it was never 6o. To understand this, it is sufficient to follow the evolution of the foreign debt owed France beginning with the loan of 1875.
First, the amount of Haiti's new debt, created by this loan which was simply the subject of a scramble for booty participated in by financial groups, Haitian merchants, the beneficiaries of gratuitous concessions in which the interests of the country were literally sacrificed was not definitely fixed until

ten years later, in the sum of 25,960,380 francs, in accordance with the settlement of July 30, 1886 entered into between the interested parties and the Government of that date.
The loan of 1875 then had not served to extinguish the balance of the French indemnity called "the double debt", which amounted at that date to about 14 million francs, as established above. Moreover, this "double debt" 6eems to have lived until 1893, at which time it "was definitely amortized". (1)
Neither was the loan of 1896, nor that of 1910, used to consolidate the foreign debt, since, on December 31, 1915, the latter amounted to the sum of 120,912,060 francs as follows:
This point settled, a question arises: what use was made of the proceeds of these three
(1) F. MarcelinHaiti, Indemnite Franchise, page 60.
1875 loan balance outstanding. 189 6 loan balance outstanding. 1910 loan balance outstanding.
Frs. 19,252,560 37,638,500 64,021,000
Total as above.

loans in the following respective nominal
amounts: / 25,960,380 (1875 loan)
Frs. J 50,000,000 (1896 loan)
/ 65,000,0.00 (1910 loan) Total 140,960,380
The Archives scarcely permit a precise reply to this question. What is more than probable, is that 50 per cent at least of this total was absorbed by floatation losses (approaching 25 per cent), financial charges and expenses, fat commissions, etc.'
At any rate, the nominal amount of the loan made from 1875 to 1922 amounted to
i 1:9 22:. amounted ao.;....'..:..;...........-.........Frs. 1:40,9 6 0,3 8 0
to which.must be added the balance, of the .
French indemnity still unpaid'in 1875, or 14,000,000 Total............................I.:............. 154,960,380
If,"from 'this -last figure, we" '' '
subtract the nominal value of the Haitian bonds of which
the reimbursement was not, .....
according to amortization ta- .
files,' to be made until 1922, to wit:
.1) for the 1875 loan (maturity 1922) 2,) for the 1896 loan, 1923- . 1932 period, 49,038 bonds of 500 francs.... 24,510,000 3) for the 1910 loan, 1923-1961 period, 121,178 .': bonds.of 500 francs..., 60,589,000.85,108,000 The difference found, to wit........................ 69,8527380

expresses the nominal: capital of the foreign debt repayable (and in fact repaid) between 1875 and; 1922, i. ei at the end of 47 years, although, as usual, with delays or irregularities in the payment of interest and amortization.
Demonstrating. The same capacity for payment (70,000,000 francs in 47 years) as that established for the period 1825-1875 previously studied (76,000,000 francs in 50 years). ' '. "
It is not rash to affirm that, as previously, the inherent resources of the country had to be put largely Under contribution to make this payment. For if, in origin and essence the new burdens imposed on the Haitian collectivity differed from the French indemnity, they none the less, like the indemnity were, paid, rather than reimbursed, considering the disastrous conditions under which the loans of 1875, 1896 and 1910 were contracted and floated. Of these loans even the meager residue available seems not to have been employed for the useful purposes originally envisaged or avowed.
In resume, from 1825 to 1922, the country had entirely paid the approximate sum of 146,000,000 francs, or about 29,000,000 dol-

lars not including interest on this capital an amount drawn laboriously from its own resources to the great detriment of its economic and social development.
Be that as it may, we succeeded so well that, when the loan of 1922 was contracted, the service of the French debt was up to date. Situation after 1922
The reimbursement of the balance of the French debt with the aid of a part of the funds from the 1922 loan has been rather an anticipatory purchase of the capital amount of which the normal amortization was only payable beginning in 1923. This operation would have resolved itself into a refunding loan of about $6,000,000 if the liabilities of the Republic had carried only at the time the balance of the 1896 and 1910 bonds outstanding. Unfortunately the liabilities of the Republic had been meanwhile burdened to a very considerable extent with all kinds of internal debts, born of our maladministration and arising out a (a) local loans upon usurious conditions, (b) indemnifications accorded without rhyme or reason, (c) diplomatic claims nearly always unjustified or fantastic, (d) liberalities of all kinds, (e) revolutionary

debts, etc... the whole, liquidated, at the time of the consolidation of the public debt, in 1922, at more than thirteen million dollars, or more than double the amount used for the anticipatory repurchase of! the foreign French debt (about $6,000,000).
Whence, the residue, relatively meager, "of a little more than two million dollars remained available (from a nominal lo)an of about twenty four million), a residue which was chiefly spent in the construction of public buildings during the period from 1927 to 1932."(1)
It is undeniable that the loan of 1922 has permitted a real cleansing of our financial condition and the restoration of order and regularity in the administration of the Public Treasury. On the other hand, it has not served as one might have hoped towards the economic development of the country. No project of a productive character could be undertaken because of the lack of available funds. And again, there was our poor little state condemned, as before, to tighten more and more its belt, to bleed itself without respite or mercy, for the purpose of exacting from its resources
(1) Stenio Vincent. Efforts et Resultats page 51.

.the wherewithal to assure^ cost what it might,
the regular service of the debt. .......
.- If we take as a basis of comparison, the exportation of coffee, our basic product, we do not find as a matter of fact any progress in the volume of our production. The average annual quantity of this bean shipped from 1923 to 1932 scarcely exceeds 31,000,000 kilos, against an average of 29,000,000 kilos during the administration of President Darti-guenave, an average of 29,500,000 kilos during the administration of General Nord Alexis, .and against an average of 32,500,000 kilos during the administration of President Sam.
Nevertheless, in the course of the ten-year period from the fiscal year 1922-23 to the fiscal year 1932^33, the Republic of Haiti paid to its fiscal agents as interest and amortization on the Series A, B, and C loans the total sum of $19,587,034.86 demonstrating, thusly, an average capacity of payment approximating $2,000,000 per year. ...
One has a right to the opinion that the country would have been capable of producing more, if, during only these ten ydars, the intensification and the systematic diversification of production had been undertaken and

followed methodically and with tenacity. To take into account only coffee, for example, it is reported in the issue date February 13, 1939 of "Revue Latham and Gilg" of Havre, that the volume of French colonial coffee consumed in France rose from 210,000 bags in 1933 to 960,000 bags in 1938, or, in the short space of six years, an increase of 3501 per 'cent.-
If, during the ten years above mentioned, our coffee exportation had been able to 'advance in the proportion of only 100 per cent or even 50 per cent, our general situation, in spite of the serious crisis that we have suffered, would have certainly been better; ''-''' Without doubt a great deal of money would have been necessary to attain this result, and our various loans, alas! including that of 1922, have not produced any amounts available for such purposes. '
In the course of the four following fiscal years (1933-34 to 1936-37) annual payment made for service of the 1922 loan totalled $6,662,621, or an average of $1,662,655.25 per annum.
This letter average is more than $40,000 above the 'annual eharge required to amortize,

in 30 years, a loan of $25,000,000 at the rate of 5 per cent interest.
Note that the available balance from such a loan, after complete reimbursement of the present amount of the public debt ($9,000,-000) would be for the first time doubtless
something like $14,000,000 which invested in essentially productive works would infuse new blood in our general economy, impoverished and weakened by more than a century of carelessness and instability. We could have secured, surely, an appreciable increase of our general purchasing power, of our capacity for repayment, and of our public and private wealth.
Our present financial embarrassment is an accidental occurrence which is precisely due to the fact that the collapse of world prices has coincided as a final measure of misfortune
with an exportable production which is, generally speaking, stationary if not actually regressive, so far as concerns our coffee, the annual average exportation of which has fallen below 28,000,000 kilos according to the statistics for the last five fiscal years.
The difficulty, as alrealy stated and sufficiently established, lies in under-production.

The remedy, and the only remedy, is the investment of sufficient capital in works designed to increase our production.
Are we going to find this indispensable capital to repair the damage recently caused by the current crisis and bring about the necessary economic rehabilitation? In any event, it is clear from this rapid review of the regrettable fate of our different loans that the vital forces of this country are far from being exhausted.
And since our capacity of payment has not been lessened during fourteen consecutive years far from it and quite the contrary while the loan of 1922 has served almost exclusively to consolidate the public debt, hoir can admission be withheld, without denying the evidence, that the capacity of payment is great enough to assure the regular amortization of a new loan of $25,000,000 of which approximately three fifths would be available, this time, and seriously used for the economic development of the country.
There is a final consideration which merits some reflection. It is well known that the complete amortization of the three parts of the loan of 1922 (Series A, B, and C) is appor-

tioued under the loan contracts over a period of thirty years.
The bonds of Series B have been repurchased in totality at the end of fifteen years, thanks to a combination of particularly fa%forable circumstances, of which the public treasury has taken full advantage. This operation constitutes without question, a unique occurrence in the financial annals of this country. '
As for Series A and C, the amortization tables pertaining thereto show that the total burden of regular annual payments provided to September 1938 amounts to:
1). for Series A......!. ................... ......^ 18,360,000.00
'2$ for'"sWies c.......:.:'.:........... 2,855,345.86
' Total................ 21,215,343.86
But at this same date-
September 30> 1938, the"' ...
total,of 'effective remits. .......... ........
tances shows, for .....
Series A....................'..V. $19,550,242.41
for Series C............v..:'.: 3,055,068.64 22,605,311.05
A .difference, of.........,:'..."/,' $1,389,967.19
representing the excess of the total amount of effective remittances over the regular annual amount provided, despite the fact that, for the

last two fiscal years, amortization has been suspended. This appears surprising and even abnormal at first glance, but it is the natural consequence of contractual stipulations. It is evident that if the loan contracts of Series A, B, and C did not carry clauses automatically providing additional amortization, each time that general fiscal receipts are over seven: million dollars, we would still be far removed from the time when it would be necessary to obtain a moratorium from the holders of our bonds.
In drawing up these loan contracts, the parties concerned had certainly forgotten that every period of prosperity is followed generally by a period of depression: the eternal story of the years of plenty and the years of famine. It would have been wise, especially in the matter of additional undertakings, to have adopted a budgetary period more or less extended rather than to have taken the budgetary year as the basis. One cannot but regret that this was not thought of during the negotiations.
The contract entered into between the Government and The J. G. White Company renders us, without doubt, incontestable

services and will contribute to a certain amelioration of our situation. But the labor of material and moral rehabilitation towards which we are working requires still more. I am convinced that foreign capital and particularly American capital better informed today on Haiti's potentialities, will bring us still further aid for the definitive economic organization of this country whose agricultural possibilities still remain, in spite of everything, absolutely remarkable.
Extract From "EN POSANT LES JALONS" by His Excellency STENIO VINCENT.

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