Yet Another Loan
The second half of the 19th century should have offered Haiti an enormous opportunity. Global demand for coffee was high, and Haiti’s economy was built around it.
Across the Caribbean Sea, Costa Ricans were putting their coffee wealth to work building schools, sewage systems and the first municipal electrified lighting system in Latin America. Haiti, by contrast, obligated much of its coffee taxes to paying France — first to its former slaveholders, then to Crédit Industriel.
Despite all that, Haiti was a middle-of-the-road Caribbean economy, thanks to high coffee prices. But when the market tanked in the 1890s, Haiti’s coffee taxes exceeded the price of the coffee itself. The entire economic model was on the brink of collapse.
It was time for yet another loan: 50 million francs (about $310 million today) from the National Bank of Haiti in 1896. It was, once again, guaranteed by coffee taxes, the country’s most reliable source of money.
Haitians had been poor for generations. But this moment — when the country was tethered to coffee, C.I.C. and the national bank — is when Haiti began its steep decline relative to the rest of the region, according to data compiled by Victor Bulmer-Thomas, a British economist who studies Caribbean history.
“Haiti made plenty of its own mistakes,” he said, like taking on new debt and failing to diversify its economy. “But there’s no doubt, a lot of its problems from the late 19th Century onward can be attributed to these imperial powers.”
The Fall of the National Bank
Durrieu died in 1890, before the unraveling of the national bank he created.
The Haitian authorities began accusing the bank in 1903 of fraudulent overbilling, double-charging loan interest and working against the best interest of the country. But the bank reminded them of an important detail: It was chartered in France, and considered such disputes beyond the reach of Haitian courts.
Undeterred, Marcelin persuaded Parliament to retake control of the government treasury. Haiti would print its own money and pay its own bills.
But records in the French Diplomatic Archives show that the national bank still had a powerful ally in its corner: the French government.
In January 1908, France’s envoy to Haiti, Pierre Carteron, met with Marcelin and urged him to restore normal relations with the bank. Marcelin refused. The National Bank of Haiti, should it survive at all, would actually need to work toward the economic development of Haiti, he said.
That might be possible, Carteron replied. Of course, he added, Haiti would first have to return its treasury to French control. And besides: “You need money,” Carteron said, according to his own notes. “Where are you going to find it?”
As his handwritten messages show, Carteron suspected Marcelin would never agree to that. So he encouraged his colleagues in Paris to come up with a new plan.
“It is of the highest importance that we study how to set up a new French credit establishment in Port-au-Prince,” Carteron wrote, adding: “Without any close link to the Haitian government.”
That new institution opened in 1910 with a slight tweak to the name: the National Bank of the Republic of Haiti. France still had a stake, but, after 30 years, Crédit Industriel et Commercial was out.
By then, there was a new center of gravity in the financial world: Wall Street, and a swaggering group of bankers from the National City Bank of New York, which ultimately became Citigroup.
The American financiers continued operating from Durrieu’s playbook and became the dominant power, leading to a consequence even more lasting than the debt he helped orchestrate.
After all, Wall Street wielded a weapon more powerful than a French diplomat making oblique threats. American bankers called on their friends in Washington and, 35 years after Durrieu’s bank came into existence, the United States military invaded Haiti.
It was one of the longest military occupations in American history, enabling the United States to seize control over Haiti’s finances and shape its future for decades to come.
Once again, the country had been undermined by the institution President Salomon had so proudly feted that night at the palace: Haiti’s national bank.