How a French bank captured Haiti
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Far from an instrument of Haiti's salvation, its central bank was, from its very inception, an instrument of French financiers and a way to keep a suffocating grip on a former colony into the next century
BY MATT APUZZO,
CONSTANT MÉHEUT, SELAM GEBREKIDAN AND CATHERINE PORTER
14 min read
PUBLISHED: May 23, 2022
A branch of Crédit
Industriel et Commercial in Dijon, France, Feb. 11, 2022. At a time when CIC
was helping finance the Eiffel Tower as a monument to French liberty, it was
choking Haiti’s economy, taking much of the young nation’s income back to
Paris. Today it is a $355 billion subsidiary of one of Europe’s largest
financial conglomerates. Image: Dmitry Kostyukov/The New York Times
Every sentence of the invitation ended with an inky
flourish, a triple loop of calligraphy befitting a night of dinner, dancing and
fireworks at Haiti’s national palace.
Debt had smothered the country for more than a half-century.
Despite ousting its colonial rulers in a war of independence, Haiti had been
forced to pay the equivalent of hundreds of millions of dollars to its former
French slave masters, a ransom for the freedom it had already won in battle.
But on the night of Sept. 25, 1880, paying off the last of
that money finally seemed within reach. No longer would Haiti lurch from one
financial crisis to the next, always with a weather eye on the horizon for the
return of French warships. The new president, Lysius Salomon, had managed a
feat that had eluded the nation since birth.
“The country will soon have a bank,” he told his guests,
proposing a toast. Outside, soldiers paraded down streets festooned with
enormous flags.
 |
| A branch of Crédit Industriel et Commercial in Dijon, France, Feb. 11, 2022. At a time when CIC was helping finance the Eiffel Tower as a monument to French liberty, it was choking Haiti’s economy, taking much of t |
Now it was Haiti’s turn. Salomon called it “a great event,
which will go down in history.”
It was all a mirage.
The National Bank of Haiti, on which so many hopes were
pinned that night, was national in name only. Far from an instrument of Haiti’s
salvation, the central bank was, from its very inception, an instrument of
French financiers and a way to keep a suffocating grip on a former colony into
the next century.
Haiti’s central bank was set up by a Parisian bank, Crédit
Industriel et Commercial. At a time when the company was helping finance one of
the world’s best-known landmarks, the Eiffel Tower, as a monument to French
liberty, it was choking Haiti’s economy, taking much of the young nation’s
income back to Paris and impairing its ability to start schools, hospitals and
the other building blocks of an independent country.
Crédit Industriel, known in France as CIC, is a $355 billion subsidiary of one of Europe’s largest financial conglomerates. But its exploits in Haiti left a crippling legacy of financial extraction and dashed hopes — even by the standards of a nation with a long history of both.
Haiti was the first modern nation to win its independence
after a slave uprising, only to be financially shackled for generations by the
reparations demanded by the French government for most of the 19th century.
And just when that money was nearly paid, CIC and its
national bank — the very instruments that seemed to hold the promise of
financial independence — locked Haiti into a new vortex of debt for decades to
come.
French elites, including a descendant of one of the
wealthiest slaveholders in Haiti’s history, controlled Haiti’s national bank
from the French capital. Their ledgers show no investments in Haitian
businesses, much less the kinds of ambitious projects that modernized Europe.
Instead, original records uncovered by The New York Times
show that CIC siphoned tens of millions of dollars out of Haiti and into the
pockets of French investors.
The national bank that CIC created charged fees on nearly
every transaction the Haitian government made. French shareholders earned so
much money that in some years, their profits exceeded the Haitian government’s
entire public works budget for a country of 1.5 million people.
That history has been all but erased. Scholars say most of
CIC’s archives have been destroyed, and Haiti does not appear on the timeline
used to publicize the company’s history as one of France’s oldest lenders. When
it commissioned an official history to commemorate its 150th birthday in 2009,
Haiti barely warranted a mention. The scholar who wrote that history, Nicolas
Stoskopf, called the company “a bank without a memory.”
A spokesperson said the bank had no information about this
period and declined repeated requests to discuss it. “The bank that we manage
today is very different,” the spokesperson, Paul Gibert, said.
Today, the brazen assassination of Haiti’s president in his
own bedroom, the rampant kidnappings and the gangland lawlessness in the
capital have given fresh urgency to a question that has long bedeviled the
Western world: Why does Haiti seem perpetually stuck in crisis, with staggering
illiteracy, $2-a-day wages, hunger and disease? A country without public
transportation, reliable electricity, garbage collection or sewage systems?
Persistent corruption by Haiti’s leaders is surely part of
any answer. But another part can be found in long-forgotten documents sprinkled
in archives and libraries across Haiti and France.
The Times sifted through 19th-century texts, diplomatic
records and bank documents that have seldom, if ever, been studied by
historians. Together, the documents make clear that CIC, working with corrupt
members of the Haitian elite, left the country with barely anything with which
to operate, let alone build a nation.
By the early 20th century, half of the taxes on Haiti’s coffee crop, by far its most important source of revenue, went to French investors at CIC and the national bank. After Haiti’s other debts were deducted, its government was left with pennies — 6 cents of every $3 collected — to run the country.
The documents help explain why Haiti remained on the
sidelines during a period so rich with modernization and optimism that
Americans dubbed it the Gilded Age and the French called it the Belle Époque.
This extraordinary growth benefited both faraway powers and developing
neighbors, yet Haiti had vanishingly little to invest in basics like running
water, electricity or education.
The damage was lasting. Over three decades, French
shareholders made profits of at least $136 million in today’s dollars from
Haiti’s national bank — about an entire year’s worth of the country’s tax
revenues at the time, the documents show.
The Times vetted its methodology and sources for these
calculations with economic historians and accountants. Financial historian Éric
Monnet of the Paris School of Economics summed up the national bank’s role as
“pure extraction.”
But the cumulative losses to Haiti were far greater: Had the
wealth siphoned off by Haiti’s national bank stayed in the country, it would
have added at least $1.7 billion to Haiti’s economy over the years — more than
all of the government’s revenues in 2021.
And that is if the money had simply remained in the Haitian
economy, circulating among its farmers, laborers and merchants, without being
invested in bridges, schools or factories — the sort of projects that help
nations prosper.
More importantly, the toll Haiti’s national bank took came
after generations of payments to former slaveholders that inflicted as much as
$115 billion in losses to the Haitian economy over the last two centuries.
It did not take long after the fireworks and feasting at the
palace for Haitians to realize that something was not right. The national bank
extracted so much and returned so little that Haitians quickly called it “the
financial Bastille,” equating it with the notorious prison that became a symbol
of a despotic French monarchy.
“Isn’t it funny,” Haitian politician and economist Edmond
Paul wrote of the national bank in 1880, “that a bank that claims to come to
the rescue of a depleted public treasury begins not by depositing money but by
withdrawing everything of value?”
Hopes and Aspirations
Haiti’s president was not the only one with heady
aspirations. In Paris, Henri Durrieu, president of CIC, had ambitions of his
own.
Durrieu was not born into the world of high finance. He started his career as a tax collector, like his father, before striking off in his 40s to join a new bank, CIC. But the early years were tough. The bank had introduced the checking account to France, yet the novelty had not taken off, and by the 1870s, the company remained stuck in the second tier of French finance.CIC enjoyed an advantage, though. It was the preferred bank for much of the nation’s Catholic bourgeoisie, clients who had money to invest and expected returns.
Durrieu, with a taste for risk-taking, drew inspiration from
state-led banks in French colonies like Senegal and Martinique. He and his
colleagues were enthralled by the idea of “creating a bank in these rich but
distant countries,” as they described it in handwritten notes found in the
French National
Archives.
These banks “generally give brilliant results,” the founding
fathers of the National Bank of Haiti said.
Haiti — “a country new to credit markets, a country of
renowned wealth,” the national bank’s executives concluded — seemed a good bet.
“Wealth” might seem a peculiar word for a Parisien banker to
use to describe Haiti at the time. Its capital, Port-au-Prince, was overrun by
trash and human waste that washed into the harbor. Streets and infrastructure
were so neglected that Haitians had a saying: “Go ’round a bridge, but never
cross it.”
But while Haitians were poor, Haiti could make you rich. As
British diplomat Spenser St. John wrote in 1884, “No country possesses greater
capabilities, or a better geographical position, or more variety of soil, of
climate, or of production.”
Slaveholders had taken that wealth for themselves — first
with the whip, then with a flotilla of French warships, demanding compensation
for plantations, land and what France considered its other lost property: the
Haitian people. It was the first and only instance in which generations of free
people had to pay the descendants of their former slave masters.
A half-century later, Durrieu and CIC approached Haiti with
a different tactic: the outstretched hand of a business partner.
‘We Owe More Than Before’
Durrieu knew how to sell a dream.
Five years earlier, CIC and a now-defunct partner had issued
Haiti a loan of 36 million francs, or about $174 million today. The money was
supposed to build bridges, marketplaces, railroads and lighthouses.
It was a time of worldwide investment. England built new
schools and passed laws on mandatory education. Paris opened a 97-mile aqueduct
carrying clean drinking water to the capital. In New York, the iconic arches of
Brooklyn Bridge rose above the East River, an engineering marvel that would
forever transform the city’s economy.
Beyond bricks and steel, Haiti earmarked about 20% of the
French loan to pay off the last of the debt linked to France’s original ransom,
according to the loan contract. “The country will finally come out of its
malaise,” the Haitian government’s annual report predicted that year. “Our
finances will prosper.”
None of that happened. Right off the top, French bankers
took 40% of the loan in commissions and fees. The rest paid off old debts or
disappeared into the pockets of corrupt Haitian politicians.
The 1875 loan from CIC and its partner left two major
legacies. The first is what economist Thomas Piketty called the transition from
“brutal colonialism” to “neocolonialism through debt.”
Haiti took on millions in new interest, hoping to finally
shed the burden of paying its former slave masters. In that way, the loan
helped prolong the misery of Haiti’s financial indentureship to France. Long
after the former slaveholding families considered the debt settled, Haiti would
still be paying — only now to CIC.
Haitian leaders, of course, share the responsibility, and
some scholars have argued that this loan shows that politicians cared more
about lining their pockets than developing a nation.
The second legacy was felt more immediately. The loan
initially obligated the Haitian government to pay CIC and its partner nearly
half of all the taxes the government collected on exports such as coffee until
the debt was settled, effectively choking off the nation’s primary source of
income.
That was the first step, giving Durrieu and his French bank
a claim to much of Haiti’s financial future. He soon set his sights on even
more.
Haiti had tried to start a national bank for years. Salomon’s
predecessor had even bought bank vaults. But in 1880, Haiti’s longing for
financial independence aligned neatly with Durrieu’s plans.
The contract establishing Haiti’s national bank reads like a
series of giveaways. Durrieu and his colleagues took over the country’s
treasury operations — things like printing money, receiving taxes and paying
government salaries. Every time the Haitian government so much as deposited
money or paid a bill, the national bank took a commission.
Lest there be any doubt where that money was headed, the
contract said the National Bank of Haiti would be chartered in France and
exempted from Haitian taxes and laws. All power was put in the hands of the
board of directors in Paris. Haiti had no say in the operation of its own
national bank.
The national bank’s headquarters — which also happened to be
CIC’s headquarters — sat in the 9th Arrondissement of Paris, in the shadow of
the lavish Palais Garnier opera house.
Durrieu was the first chair of a board that included French bankers
and businessmen, including Édouard Delessert, a great-grandson of one of the
biggest slaveholders in Haiti’s colonial history, Jean-Joseph de Laborde.
Handwritten notes from the national bank show, from the
beginning, who was in charge. As the Paris Financial Association wrote in 1896,
“The National Bank of Haiti is a French financial institution whose
headquarters, which is open to bondholders, is in Paris. Its offices in Haiti
are only branches, placed under the authority and control of the head office.”
Durrieu’s gamble paid off. At a time when typical French investment returns hovered around 5%, board members and shareholders in the National Bank of Haiti earned an average of about 15% a year, according to a Times analysis of the bank’s financial statements. Some years, those returns approached 24%.
Durrieu made out handsomely. His contract with Haiti granted
him thousands of special shares in the national bank, worth millions in today’s
dollars.The year he christened Haiti’s national bank, he was named a commander
of the Légion d’Honneur, an order of merit awarded for service to France.
Dashed Hopes
Soon after the fireworks display at the national palace,
Haitians began realizing they had received a raw deal.
The national bank offered no savings accounts to Haitian
people or businesses. And although the contract allowed it to loan money to
businesses — and Haitians clearly hoped it would — bank ledgers from an archive
in Roubaix, France, showed that seldom, if ever, happened.
“It is not from the Bank of Haiti, as it functions, that
Haitians can expect their recovery,” Haiti’s finance secretary, Frédéric
Marcelin, wrote at the time.
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 CIC.
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, CIC 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.
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: Chartered in France, it considered such disputes beyond the reach of
Haitian courts.
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.
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, CIC was out.
Below, Related stories:
Haiti ‘Ransom’ Project: Reactions and Updates
The underlines are from HCN
©2019 New York Times News Service
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