The Pandemic Depression
The Global Economy Will Never Be the Same
THE American Government's official view regarding events in Haiti -- the view which guided the policy of the State Department from 1915 to within the last few weeks -- was that government had broken down in Haiti, that Haitian finances were in chaos, that foreign creditors were pressing, and that the United States was forced to intervene to straighten out the tangle. This invasion, vi et armis, was presented as altruistic, the extension of a helping hand to the helpless and hapless Haitian people.
The writer's contention as set forth in these pages [i] was, on the contrary, that the pressure of powerful private American interests with claims against the Haitian Government furnished the chief motivation for the intervention, and that these interests were able to utilize the naval and diplomatic forces of the United States to gain their ends. Summarized, this interpretation of the Haitian episode is that these claimants sought financial control of Haiti by the United States with a view to securing settlement of their claims, and failing in this endeavor through negotiation, succeeded in bringing about armed intervention. Then, by "military pressure," to use the exact words of Admiral Caperton, a treaty was imposed which gave the United States military and financial control and a pledge to settle foreign claims. Subsequently, when the Haitian Congress refused to adopt a constitution prepared in Washington, granting foreigners the right to own land for the first time in the history of Haiti, and placing the Marines' courts-martial above the Haitian courts in matters affecting the occupation, the Congress was dissolved by Generals Cole and Butler. The protocol arranging the settlement of claims and the contract for a loan to pay the claims were similarly imposed. The loan for $40,000,000 (of which $23,660,000 of six percent bonds was actually floated), dated 1922 and due in 1952, carried the further extraordinary provision that during the life of the loan United States financial control would continue. This was in effect an extension of the treaty for possibly sixteen years, and it was done without the consent of the United States Senate. As for the Haitian Congress, it was not permitted to re-assemble, and government in Haiti continued to be, in the phrase of one of the United States financial advisers, Mr. Arthur C. Mills-paugh, a "dictatorship by collusion."
In 1930 the mounting resentment of the Haitians at this chain of events culminated in riot and bloodshed. President Hoover, unexpectedly facing revolution where all had been reported serene, sent the Forbes Commission to investigate. This commission discovered that public opinion was highly inflamed, demanded amplified powers, obtained them, and reëstablished constitutional government in Haiti. The first free elections since the beginning of intervention were held, and a Senate and House of Deputies, and then a President, were chosen. The commission recommended military evacuation at an early date, prior even to the expiration of the treaty on May 3, 1936, and immediate preparation for such withdrawal. This preparation, in the form of "Haitianization" of the various services which had gradually been taken over by American officials, was indeed imperative, as many of these officials had apparently been acting on the assumption that the occupation would be permanent.
The Hoover Administration, while agreeing to this program as far as the military and civilian services were concerned, was adamant on the question of the financial services. It insisted on retaining fiscal control in Haiti, not merely until the expiration of the treaty, but for the life of the loan -- this control being administered at the Haitians' expense. A "treaty of friendship" negotiated along these lines between the Haitian executive and the American Minister, Mr. Dana Munro, and dated September 3, 1932, was hailed by the State Department as a happy solution of the Haitian episode. Nevertheless, twelve days later the treaty was rejected by the Haitian national assembly without a dissenting vote, the opposition being based on the continuation of the financial control beyond the expiration of the treaty of 1915.
The writer's article in the January 1933 issue of FOREIGN AFFAIRS concluded with a plea that the incoming Roosevelt Administration reverse the policy of the preceding Administrations and put into practice the attitude expressed by Franklin D. Roosevelt in an article in FOREIGN AFFAIRS in July 1928.[ii] In that article Mr. Roosevelt had criticized our Latin-American policy, had urged instead the application of the Golden Rule in our dealings with the republics of this hemisphere, and the starting of a fresh chapter in those relations.
During the first part of the Roosevelt Administration no change was noticeable in the policies of the Department of State. President Roosevelt was deeply absorbed in major domestic issues and Secretary Hull, just back from the London Conference, had not yet been able to familiarize himself fully with the manifold problems confronting the Department. An "executive agreement" continuing our fiscal domination in Haiti made its appearance, dated August 7, 1933. The new arrangement was apparently designed to obviate submission to the Haitian Assembly. Protests from Haitian senators and deputies -- the Assembly was not then in session -- were heard, as well as from various persons and groups in the United States who felt that the rôle of the United States Government as a collector for bondholders was in conflict with the professions of the "New Deal." However, the Administration publicly re-affirmed its policy, the President on November 28 last appending his signature to a reply to a letter from President Vincent of Haiti, declaring: "I may say that in my judgment this Government is under an unescapable obligation to carry out the Treaty of 1915 and the Protocol of 1919, and in the Agreement of August 7, 1933, it has made appropriate provision to that end. Except for this obligation, upon which the bondholders are entitled to insist, my Government would be only too glad to discontinue at once its connection with financial administration in Haiti."
This declaration seemed to signify that for some years to come a corps of American officials, drawing their salaries out of the Haitian treasury, would be superintending the collection of customs and other revenues, and that Haiti could not modify its tariffs or its taxes, or make any special appropriations outside of the budget, without the fiscal adviser's consent.
Six months later this policy was reversed. As this is written, plans are under way for a complete evacuation -- financial as well as military -- not later than November 1, 1934. The explanation of this change is that the larger purposes and policies of President Roosevelt and Secretary Hull are now being put into execution. Mr. Hull had begun personally to study the question in connection with his preparations for the Montevideo Conference. He reopened it immediately upon his return to Washington in January. President Vincent was invited to come to the United States to carry on the negotiations. The results, specifically, are as follows:
A new treaty -- a brief document -- cancelling the existing one, and making reference to a contract between the Haitian Government and the Bank of Haiti, will become effective immediately upon ratification by the Haitian Assembly and the United States Senate. Under the new arrangement, the Bank of Haiti (which has been since the early days of the occupation a branch of the National City Bank of New York), will take care of the service of the debt. This now consists of approximately $11,000,000 of six percent bonds, over half of the 1922 loan having already been amortized. Service by the bank will be on the basis of a private contract, similar to the arrangement in existence for some years by which the bank has served as the depository and treasury for the Haitian Government. With the signing of the contract and the ratification of the treaty the various American Treaty officials hitherto engaged in financial control, customs collection and supervision cease these functions.
But there is even more. Haiti will acquire the National Bank of Haiti by purchase. The price of $2,000,000 is to be paid, part in cash, part in notes, over a period of four years. The present management of the National City Bank, under the leadership of Mr. James H. Perkins, has acted wisely and understandingly, going far thereby to atone for less praiseworthy acts of previous bank officials that played so important a part in bringing about American intervention in Haiti. Until the payments for the bank are completed, as well as during the service on the debt, a majority of the directorate of the bank will represent American financial interests. Of six directors, during this transition period, two will be Haitian (one of them the Secretary of State for Finance, ex officio), two will represent the Foreign Bondholders' Protective Council, and two will be nominees of the present fiscal control. This arrangement is proper and protects all the interests involved, Haitian and American.
Thus the protracted Haitian episode is being brought to an end in a creditable and generous fashion. The change in the Administration's policy harmonizes its conduct in Haiti (hitherto a paradox) with its trail-blazing policies elsewhere in Latin-America -- the pledge of non-intervention, the continen-talizing of the Monroe Doctrine in President Roosevelt's Woodrow Wilson Day address last December 28, and the abrogation of the Platt Amendment. Mr. Roosevelt has, in short, validated his unofficial declaration of principles made in FOREIGN AFFAIRS six years ago when his entry into the White House was not foreseen. He has applied the Golden Rule, and has started a new chapter in the relations of the United States with our sister countries in this hemisphere. He has, in the brief space of fifteen months, put into practice his inaugural pronouncement concerning the rôle of our country as the good neighbor. The writer believes that this bread of good will cast upon the waters that wash the shores of our two western continents will return a hundred-fold.
[i] "The Issue in Haiti," by Ernest Gruening, FOREIGN AFFAIRS, January 1933.
[ii] "Our Foreign Policy: a Democratic View," by Franklin D. Roosevelt, FOREIGN AFFAIRS, July 1928.