III. GOVERNMENT OF, BY, AND FOR THE
NATIONAL CITY BANK
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.
[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 hand, 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 bonds, sold in France. These bonds were guaranteed by the Haitian Government at an interest of 6 per cent 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.
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.