1938: Haiti

The war on totalitarian expansion in the Western Hemisphere, waged partly because of the signal success that expansion has had in commercial terms, was carried into the Caribbean area when, during the summer of 1938, the Export-Import Bank, a United States Government agency created to supply credits for foreign trade transactions, discounted at par a $5,000,000 note of the Haitian Government, issued to finance a public works program. This step, taken after the United States bankers had indicated a total lack of interest in further Haitian bonds, was considered essential to forestall a German deal which might have led to a substantial economic control over the Republic of Haiti. The J. G. White Engineering Company was induced to take the public works contract. This credit transaction, which is tantamount to a loan by the United States Treasury, was made on condition that only American materials would be used. It has political significance as a definite measure to meet the keen competition in Latin America of the trade-barter, totalitarian countries. Germany, Italy and Japan. Warren Lee Pierson, President of the Bank, recently toured Latin America presumably with an eye to further transactions. Two, in particular, are strongly rumored, one with Brazil, the other with Cuba.

On Feb. 28 the initial payment of indemnities, to total $750,000, was received from the Dominican Republic, as compensation for the killing of Haitians in the 'massacre' of October 1937. Formal ratification on Feb. 27 of an agreement signed at Washington Jan. 31, settled Haiti's grievances through the promise of payment of a lump sum of $250,000 at once and of the balance in five annual instalments. The Dominican Republic, in accepting the agreement, denied the responsibility of the state for the incident.

Persistence of low prices for Haiti's export products and adverse weather conditions, lowering the average yield, led to a technical default on the 1922 dollar loan, when a one-year extension was granted, dating from Oct. 1, of the partial moratorium provided in the Accord of Jan. 13, 1938. Full interest payment will be continued on all outstanding bonds, totalling about $8,000,000. The financial difficulties of the country are indicated in a reduction of national revenues below budget estimates, leading to a deficit of 5,333,000 gourdes.