File No. 838.00/1377.

Memorandum re the National Bank of the Republic of Haiti, submitted to the Department of State by Mr. Wehrhane January 4, 1915.

The National Bank of the Republic of Haiti is a French institution, created as a limited liability stock company under the laws of [Page 497] France, having a French charter, as the successor of the old Bank oi Haiti, which was entirely owned by French people. The present stock is divided between American and French interests, with a small amount held by German interests.

None of the capital of the Bank was furnished by or are any of the shares of the Bank owned by the Government of Haiti, the only relationship between the Government and the Bank being found in certain contracts providing for a loan by the Bank to the Government of three million francs and a contract under which the Bank performs for the Government the service of the Treasury, receiving all revenues of the Government and making payments therefrom for the account of the Government. The contract with the Bank contemplated an entire reform of the Haitian currency and provided in this connection that the Bank should have the exclusive note-issuing privilege maintaining a gold reserve equal to one-third of the amount of notes so issued. Apart from its contractual obligations, the Bank has in the past under a convention made from year to year voluntarily advanced to the Government the sums necessary to meet certain salaries and governmental expenses.

As a result of almost continuous revolutionary conditions for the last three years, the revenues of the Government have fallen off to such an extent that it can no longer repay the advances made by the Bank, and the Haitian Government is at the present time indebted to the Bank to the extent of approximately one and a half million dollars, Owing to the large indebtedness of the Haitian Government to the Bank, the Bank does not see its way clear to make further loans to the Government, and this refusal is the reason for the present animosity toward the Bank.

Out of the proceeds of a loan made in 1910 to the Haitian Government coincident with the reorganization of the Bank, a sum of ten million francs was set aside for the monetary reform which was to be undertaken under certain conditions. A portion of this sum has been used to retire Haitian paper money under a law of retrait, the operation of which law was suspended on August 14, 1914, on account of the existing serious revolutionary conditions. The remainder of the unused portion of the ten million francs ($2,000,000) is held by the Bank in trust, to be applied toward a monetary reform whenever the necessary legislation shall have been enacted. The original contract provided that the equivalent of ten million francs should be furnished when and as required for purposes of the monetary reform. It did not, however, stipulate that any amount need be sent to Haiti until required for the purpose.

Legislation just now promulgated by the Haitian authorities providing for the creation of a new Bank, for the emission of a large issue of paper money, the forcible taking from the Bank’s vaults of $65,000 in gold, are all violations of the contract between the Bank and the Government and these acts put in jeopardy the property and rights, not only of the American holders of the stock of the Bank, but those of the French and German stockholders as well. Even more serious than this, however, are the threats made by Haitian officials of bodily injury to some of the officials and employees of the Bank. These threats have resulted in the forced retirement of the [Page 498] acting director, Mr. Desrue, the compulsory closing of the Bank and threats of imprisonment and bodily injury to American and French citizens employed in the Bank.