by Peter James Hudson
Peter James Hudson is an assistant
professor of history at Vanderbilt University.
earlier version of this essay appeared on
the business history blog of Bloomberg.com edited by Stephen
timeline commemorating its
200th anniversary says little about the Republic of Haiti -- and
no wonder. While the anniversary campaign for the global
financial services giant presents a story of achievement,
progress, and world-uniting
vision, Citigroup’s first encounter with Haiti is
remembered as both among the most spectacular episodes of U.S.
dollar diplomacy in the Caribbean and as an egregious example of
Washington working at the behest of Wall Street. It is also
marked by military intervention, violations of national
sovereignty, and the deaths of thousands.
In the early 20th
century, the National City Bank of New York, as Citigroup was
then called, embarked on an ambitious and pioneering era of
Haiti emerged as one of National City's
first international projects. In 1909,
and Co. invited National City President
Frank A. Vanderlip
to join in the purchase of a moribund American-controlled
railway concession in Haiti.
Vanderlip agreed and the purchase turned out to be a
“small but profitable piece of business” for the bank. But
Vanderlip wasn't interested in the acquisition for its
short-term returns. He thought the stock would give National
City a “foothold” in the country that could lead to a risk-free
and profitable reorganization of the Haitian government's
The next year, Haiti’s government
cancelled the contract of the Banque Nationale d’Haiti, giving
Vanderlip the opportunity he sought. Chartered in 1880, the
Banque Nationale was owned by France's Banque de l’Union
Parisienne and was contracted by the
Haitian government to finance the national debt and handle the
fiscal operations of the state. It was continually dogged by
scandal. Haitian politicians accused its directors of graft and
fiscal malfeasance (at one point its foreign managers were
jailed) and local political aspirants saw the bank's currency
reserves as a bounty for winning political office.
When a new contract was drawn up, the
U.S. State Department intervened, claiming it placed an unfair
burden on the Haitian people while giving too much leeway to the
French to intervene in Haiti's internal affairs. They also
argued that the new contract didn't represent the American
interests then gunning for a share of Haiti.
As a result of State Department pressure, a new
institution, the Banque Nationale de la République d’Haïti, was
chartered. The Banque de l’Union remained the
but National City – alongside a number of other American banks
and a German one – was offered a minority interest.
The Banque Nationale’s executive
decisions were made by a committee split between the Banque de
la Union in Paris and the National City Bank in New York.
Chairing the New York committee was Roger Leslie Farnham.
Farnham had spent a decade working as a
for the corporate law firm
Sullivan and Cromwell
before Vanderlip recruited him to National City in 1911. Farnham
lobbied Washington on behalf of the bank, and eventually took
charge of all of its Caribbean operations, including in Haiti.
With the onset of World War I, French
interests in the Banque Nationale receded. Farnham assumed a
large role in its direction while National City slowly began
buying out its stock. At the same time, Farnham was becoming a
major influence on State Department policy in Haiti. In 1914,
Farnham, who once described the Haitian people as “nothing
but grown up children,”
drafted a memorandum for William Jennings Bryan, then U.S.
secretary of state arguing for military intervention as a way of
protecting American interests in Haiti. Sending troops, insisted
Farnham, would not only stabilize the country, but be welcomed
by most Haitians.
That summer, Bryan cabled the U.S.
Consul in Cap-Haïtien, Haiti's second city, stating that he
“earnestly desired the implementation of Farnham's plan.”
Meanwhile, Farnham and National City worked to
destabilize the Haitian government. They refused to pay
government salaries over the summer, and in December they
ordered the transfer of
of the Republic's gold reserves to National City's vaults at 55
Wall Street in Manhattan. The gold was packed up by U.S.
Marines, marched to Port-au-Prince's wharfs, and shipped aboard
the USS Machias to New York.
The bank argued that they owned the gold
contractually and were bound to protect it from possible theft.
The Haitians saw it as robbery, pure and simple, and indicative
of a growing threat to the Republic's sovereignty.
Threat turned to fact on July 28, 1915.
On that day, U.S. Marines landed in Haiti and initiated a period
of military rule that would last 19 years. The immediate
justifications for intervention included fears of encroaching
German influence and a desire to protect American life and
property – especially after a spate of factional violence that
included the dismemberment of the Haitian president in response
to a massacre of his political opponents.
Once the occupation began, it was rationalized as a
necessary measure to teach Haitians, citizens of a backward
Negro republic, the arts of self-government. Sanitation
reforms were enacted,
education was promised, public-works projects were planned, and
a national guard, later mobilized by François Duvalier to
maintain control of the country, was established. In the short
term, however, the most pronounced labor of the Marines was
counter-insurgency. They waged a “pacification” campaign through
the Haitian countryside to suppress an uprising against the
occupation led by the cacos, peasant guerillas. It left
thousands dead, and countless others tortured, maimed or
homeless, while caco leader
Charlemagne Peralte was
For National City,
the occupation provided ideal
conditions for business,
offering the bank the authority to reorganize Haitian finances
just as Vanderlip had envisioned in 1909. By 1922, National City
had secured complete control of the Banque Nationale and floated
a $16 million loan refinancing Haiti's internal and external
debts. Amortization payments were effectively guaranteed from
Haiti's customs revenue and the loan contract was backed up by
the U.S. State Department.
Haiti proved a lucrative piece of
business for National City during the twenties. Yet by the
beginning of the next decade, they began to reconsider their
ownership of the Banque Nationale. Following
that pressured the State Department to disentangle itself from
Haiti, the Marines
in 1934. National City soon followed. Fearful of losing the
State Department's protection, and wary of public criticism of
their activities, the bank's executives sold the Banque
Nationale de la République d'Haïti to the Haitian government in
1935 – reluctantly closing a profitable chapter of Citigroup's