-Caveat Lector-
Edited by Jim Zwick
Copyright © 1995-1999 Jim
Zwick
Self-Determining Haiti
III. Government Of, By, and For the National City
Bank
By James Weldon Johnson
The Nation 111 (Sept. 11, 1920).
Former articles of this series described the Military Occupation of Haiti
and the
crowd of civilian place holders as among the forces at work in Haiti to
maintain the
present status in that country. But more powerful though less obvious, and
more
sinister, because of its deep and varied radications, is the force
exercised by the
National City Bank of New York. It seeks more than the mere maintenance of
the
present status in Haiti; it is constantly working to bring about a
condition more suitable
and profitable to itself. Behind the Occupation, working conjointly with
the Department
of State, stands this great banking institution of New York and elsewhere.
The financial
potentates allied with it are the ones who will profit by the control of
Haiti. The United
States Marine Corps and the various office-holding "deserving Democrats,"
who help
maintain the status quo there, are in reality working for great financial
interests in this
country, although Uncle Sam and Haiti pay their salaries.
Mr. Roger L. Farnham, vice-president of the National City Bank, was
effectively instrumental in bringing about American intervention in Haiti.
With the
administration at Washington, the word of Mr. Farnham supersedes that of
anybody
else on the island. While Mr. Bailly-Blanchard, with the title of minister,
is its
representative in name, Mr. Farnham is its representative in fact. His
goings and
comings are aboard vessels of the United States Navy. His bank, the
National City,
has been in charge of the Banque Nationale d'Haiti throughout the
Occupation.(1) Only
a few weeks ago he was appointed receiver of the National Railroad of
Haiti,
controlling practically the entire railway system in the island with
valuable territorial
concessions in all parts.(2) The $5,000,000 sugar plant at Port-au-Prince,
it is
commonly reported, is about to fall into his hands.
Now, of all the various responsibilities, expressed, implied, or
assumed by the
United States in Haiti, it would naturally be supposed that the financial
obligation would
be foremost. Indeed, the sister republic of Santo Domingo was taken over by
the
United States Navy for no other reason than failure to pay its internal
debt. But Haiti
for over one hundred years scrupulously paid its external and internal debt
-- a fact
worth remembering when one hears of "anarchy and disorder" in that land --
until five
years ago when under the financial guardianship of the United States
interest on both
the internal and, with one exception, external debt was defaulted; and this
in spite of
the fact that specified revenues were pledged for the payment of this
interest. Apart
from the distinct injury to the honor and reputation of the country, the
hardship on
individuals has been great. For while the foreign debt is held particularly
in France
which, being under great financial obligations to the United States since
the beginning of
the war, has not been able to protest effectively, the interior debt is
held almost entirely
by Haitian citizens. Haitian Government bonds have long been the recognized
substantial investment for the well-to-do and middle class people,
considered as are in
this country, United States, state, and municipal bonds. Non-payment on
these
securities has placed many families in absolute want.
What has happened to these bonds? They are being sold for a song, for
the little
cash they will bring. Individuals closely connected with the National Bank
of Haiti are
ready purchasers. When the new Haitian loan is floated it will, of course,
contain ample
provisions for redeeming these old bonds at par. The profits will be more
than
handsome. Not that the National Bank has not already made hay in the
sunshine of
American Occupation. From the beginning it has been sole depositary of all
revenues
collected in the name of the Haitian Government by the American Occupation,
receiving in addition to the interest rate a commission on all funds
deposited. The bank
is the sole agent in the transmission of these funds. It has also the
exclusive note-issuing
privilege in the republic. At the same time complaint is widespread among
the Haitian
business men that the Bank no longer as of old accommodates them with
credit and
that its interests are now entirely in developments of its own.
Now, one of the promises that was made to the Haitian Government,
partly to
allay its doubts and fears as to the purpose and character of the American
intervention,
was that the United States would put the country's finances on a solid and
substantial
basis. A loan for $30,000,000 or more was one of the features of this
promised
assistance. Pursuant, supposedly, to this plan, a Financial Adviser for
Haiti was
appointed in the person of Mr. John Avery McIlhenny. Who is Mr. McIlhenny?
That
he has the cordial backing and direction of so able a financier as Mr.
Farnham is
comforting when one reviews the past record and experience in finance of
Haiti's
Financial Adviser as given by him in "Who's Who in America," for 1918-1919.
He
was born in Avery Island, Iberia Parish, La.; went to Tulane University for
one year;
was a private in the Louisiana State militia for five years; trooper in the
U.S. Cavalry in
1898; promoted to second lieutenancy for gallantry in action at San Juan;
has been
member of the Louisiana House of Representatives and Senate; was a member
of the
U.S. Civil Service Commission in 1906 and president of the same in 1913;
Democrat.
It is under his Financial Advisership that the Haitian interest has been
continued in
default with the one exception above noted, when several months ago
$3,000,000 was
converted into francs to meet the accumulated interest payments on the
foreign debt.
Dissatisfaction on the part of the Haitians developed over the lack of
financial
perspicacity in this transaction of Mr. McIlhenny because the sum was
converted into
francs at the rate of nine to a dollar while shortly after the rate of
exchange on French
francs dropped to fourteen to a dollar. Indeed, Mr. McIlhenny's unfitness
by training
and experience for the delicate and important position which he is filling
was one of the
most generally admitted facts which I gathered in Haiti.
At the present writing, however, Mr. McIlhenny has become a
conspicuous
figure in the history of the Occupation of Haiti as the instrument by which
the National
City Bank is striving to complete the riveting, double-locking and bolting
of its financial
control of the island. For although it would appear that the absolute
military domination
under which Haiti is held would enable the financial powers to accomplish
almost
anything they desire, they are wise enough to realize that a day of
reckoning, such as,
for instance, a change in the Administration in the United States, may be
coming. So
they are eager and anxious to have everything they want signed, sealed, and
delivered.
Anything, of course, that the Haitians have fully "consented to" no one
else can
reasonably object to.
A little recent history: in February of the present year, the
ministers of the
different departments, in order to conform to the letter of the law
(Article 116 of the
Constitution of Haiti, which was saddled upon her in 1918 by the
Occupation(3), and
Article 2 of the Haitian-American Convention(4)) began work on the
preparation of the
accounts for 1918-1919 and the budget for 1920-1921. On March 22 a draft of
the
budget was sent to Mr. A. J. Maumus, Acting Financial Adviser, in the
absence of Mr.
McIlhenny who had at that time been in the United States for seven months.
Mr.
Maumus replied on March 29, suggesting postponement of all discussion of
the budget
until Mr. McIlhenny's return. Nevertheless, the Legislative body, in
pursuance of the
law, opened on its constitutional date, Monday, April 5. Despite the great
urgency of
the matter in hand, the Haitian administration was obliged to mark time
until June 1,
when Mr. McIlhenny returned to Haiti. Several conferences with the various
ministers
were then undertaken. On June 12, at one of these conferences, there
arrived in the
place of the Financial Adviser a note stating that he would be obliged to
stop all study
of the budget "until the time when certain affairs of considerable
importance to the
well-being of the country shall be finally settled according to
recommendations made
by me to the Haitian Government." As he did not give in his note the
slightest idea what
these important affairs were, the Haitian Secretary wrote asking for
information, at the
same time calling attention to the already great and embarrassing delay,
and reminding
Mr. McIlhenny that the preparation of the accounts and budget was one of
his legal
duties as an official attached to the Haitian Government, of which he could
not divest
himself.
On July 19 Mr. McIlhenny supplied his previous omission in a
memorandum
which he transmitted to the Haitian Department of Finance, in which he
said: "I had
instructions from the Department of State of the United States just before
my departure
for Haiti in a part of a letter of May 20, to declare to the Haitian
Government that it
was necessary to give its immediate and formal approval to:
1. A modification of the Bank Contract agreed upon by the Department
of State
and the National City Bank of New York.
2. Transfer of the National Bank of the Republic of Haiti to a new
bank
registered under the laws of Haiti, to be known as the National Bank of the
Republic
of Haiti.
3. The execution of Article 15 of the Contract of Withdrawal
prohibiting the
importation and exportation of non-Haitian money except that which might be
necessary for the needs of commerce in the opinion of the Financial
Adviser."
Now, what is the meaning and significance of these proposals? The full
details
have not been given out, but it is known that they are part of a new
monetary law for
Haiti involving the complete transfer of the Banque Nationale d'Haiti to
the National
City Bank of New York. The document embodying the agreements, with the
exception
of the clause prohibiting the importation of foreign money, was signed at
Washington,
February 6,1920, by Mr. McIlhenny, the Haitian Minister at Washington and
the
Haitian Secretary of Finance. The Haitian Government has offically declared
that
the clause prohibiting the importation and exportation of foreign money,
except as
it may be deemed necessary in the opinion of the Financial Adviser, was
added to
the original agreement by some unknown party. It is for the purpose of
compelling
the Haitian Government to approve the agreements, including the
"prohibition clause,"
that pressure is now being applied. Efforts on the part of business
interests in Haiti to
learn the character and scope of what was done at Washington have been
thwarted by
close secrecy. However, sufficient of its import has become known to
understand the
reasons for the unqualified and definite refusal of President Dartiguenave
and the
Government to give their approval. Those reasons are that the agreements
would give
to the National Bank of Haiti and thereby to the National City Bank of New
York,
exclusive monopoly upon the right of importing and exporting American and
other
foreign money to and from Haiti, a monopoly which would carry unprecedented
and
extraordinarily lucrative privileges.
The proposal involved in this agreement has called forth a vigorous
protest on
the part of every important banking and business concern in Haiti with the
exception, of
course, of the National Bank of Haiti. This protest was transmitted to the
Haitian
Minister of Finance on July 30 past. The protest is signed not only by
Haitians and
Europeans doing business in that country but also by the leading American
business
concerns, among which are The American Foreign Banking Corporation, The
Haitian-American Sugar Company, The Panama Railroad Steamship Line, The
Clyde
Steamship Line, and The West Indies Trading Company. Among the foreign
signers
are the Royal Bank of Canada, Le Comptoir Français, Le Comptoir Commercial,
and
besides a number of business firms.
We have now in Haiti a triangular situation with the National City
Bank and our
Department of State in two corners and the Haitian government in the third.
Pressure is
being brought on the Haitian government to compel it to grant a monopoly
which on its
face appears designed to give the National City Bank a strangle hold on the
financial
life of that country. With the Haitian government refusing to yield, we
have the Financial
Adviser who is, according to the Haitian-American Convention, a Haitian
official
charged with certain duties (in this case the approval of the budget and
accounts),
refusing to carry out those duties until the government yields to the
pressure which is
being brought.
Haiti is now experiencing the "third degree." Ever since the Bank
Contract was
drawn and signed at Washington increasing pressure has been applied to make
the
Haitian government accept the clause prohibiting the importation of foreign
money. Mr.
McIlhenny is now holding up the salaries of the President, ministers of
departments,
members of the Council of State, and the official interpreter. [These
salaries have not
been paid since July 1.] And there the matter now stands.
Several things may happen. The Administration, finding present methods
insufficient, may decide to act as in Santo Domingo, to abolish the
President, cabinet,
and all civil government -- as they have already abolished the Haitian
Assembly -- and
put into effect, by purely military force, what, in the face of the
unflinching Haitian
refusal to sign away their birthright, the combined military, civil, and
financial pressure
has been unable to accomplish. Or, with an election and a probable change
of
Administration in this country pending, with a Congressional investigation
foreshadowed, it may be decided that matters are "too difficult" and the
National City
Bank may find that it can be more profitably engaged elsewhere. Indications
of such a
course are not lacking. From the point of view of the National City Bank,
of course,
the institution has not only done nothing which is not wholly legitimate,
proper, and
according to the canons of big business throughout the world, but has
actually
performed constructive and generous service to a backward and uncivilized
people in
attempting to promote their railways, to develop their country, and to
shape soundly
their finance. That Mr. Farnham and those associated with him hold these
views
sincerely, there is no doubt. But that the Haitians, after over one hundred
years of
self-government and liberty, contemplating the slaughter of three thousand
of their sons,
the loss of their political and economic freedom, without compensating
advantages
which they can appreciate, feel very differently, is equally true.
Notes
1. The National City Bank originally (about 1911) purchased 2,000
shares of
the stock of the Banque Nationale d'Haiti. After the Occupation it
purchased 6,000
additional shares in the hands of three New York banking firms. Since then
it has been
negotiating for the complete control of the stock, the balance of which is
held in
France. The contract for this transfer of the Bank and the granting of a
new charter
under the laws of Haiti were agreed upon and signed at Washington last
February. But
the delay in completing these arrangements is caused by the impasse between
the State
Department and the National City Bank, on the one band, and the Haitian
Government
on the other, due to the fact that the State Department and the National
City Bank
insisted upon including in the contract a clause prohibiting the
importation and
exportation of foreign money into Haiti subject only to the control of the
financial
adviser. To this new power the Haitian Government refuses to consent.
2. Originally, Mr. James P. McDonald secured from the Haitian
Government the
concession to build the railroads under the charter of the National
Railways of Haiti.
He arranged with W. R. Grace & Company to finance the concession. Grace and
Company formed a syndicate under the aegis of the National City Bank which
issued
$2,500,000 bond, sold in France. These bonds were guaranteed by the Haitian
Government at an interest of 6 percent on $32,500 for each mile. A short
while after
the floating of these bonds, Mr. Farnham became President of the company.
The
syndicate advanced another $2,000,000 for the completion of the railroad in
accordance with the concession granted by the Haitian Government. This
money was
used, but the work was not completed in accordance with the contract made
by the
Haitian Government in the concession. The Haitian Government then refused
any,
longer to pay the interest on the mileage. These happenings were prior to
1915.
3. "The general accounts and the budgets prescribed by the preceding
article
must be submitted to the Legislative Body by the Secretary of Finance not
later than
eight days after the opening of the Legislative Session."
4. "The President of Haiti shall appoint, on the nomination of the
President of the
United States, a Financial Advisor who shall be attached to the Ministry of
Finance, to
whom the Secretary (of Finance) shall lend effective aid in the prosecution
of his work.
The Financial Advisor shall work out a system of public accounting, shall
aid in
increasing the revenues and in their adjustment to expenditures...."
James Weldon Johnson (1871-1933) is probably best known today as the author
of
The Autobiography of an Ex-Coloured Man. He was secretary of the National
Association for the Advancement of Colored People (NAACP) and visited Haiti
to
investigate conditions there on its behalf. He later became a vice-chairman
of the
Haiti-Santo Domingo Independence Society, a member of the publications
committee
of the American Fund for Public Service Committee on American Imperialism,
and
served on the national committees of the American Civil Liberties Union and
the
Committee on Militarism in Education.
Citation: Johnson, James Weldon. "Self-Determining Haiti: III. Government
Of, By, and For the
National City Bank." The Nation 111 (Sept. 11, 1920).
http://www.boondocksnet.com/ailtexts/johnson200911.html In Jim Zwick, ed.,
Anti-Imperialism in
the United States, 1898-1935. http://www.boondocksnet.com/ail98-35.html
(April 23, 1999).
Self-Determining Haiti: IV. The Haitian People
Going somewhere? Start at Expedia Travel.
Amazon.com · Egghead.com · enews.com · Expedia Travel · Reel.com · Value
America
Anti-Imperialism in the United States, 1898-1935, edited by Jim
Zwick.
Copyright © 1995-1999 Jim Zwick. All rights reserved.
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