Source: https://history.state.gov/historicaldocuments/frus1919v02/d314
Timestamp: 2019-04-24 09:21:55+00:00

Document:
Port au Prince, November 13, 1919.
Sir: Referring to the Department’s unnumbered instruction of June 23, 191954 regarding the currency reform in Haiti, I have the honor to forward herewith copy of the Haitian official Gazette Le Moniteur of May 7, 1919, containing the Convention of April 12, 1919, between the Haitian Government and the Banque Nationale de la République d’Haïti, regulating the monetary reform in Haiti, together with the Law of Sanction,55 and copy of the same Gazette of November 8, 1919 containing an additional act dated October 24, 1919, to the above Convention, and the Law of Sanction.55 Translations of these Laws,55 the Convention and the additional act are also enclosed.
Article 1. The Bank will cause to be brought to Haiti and will hold on deposit, to the credit of an account which will be designated and known under the name of “Retirement Fund” (Fonds du Retrait), the balance of the ten million francs of the loan of 1910, including the five hundred thousand dollars transported to New York in December 1914, increased by the interest at 2 per cent (two per cent) a year on this sum dating from December 1914 until December 31, 1918; it will also place to the credit of the said account all other balances or increases of balances belonging to or pertaining to the monetary reform or the guarantee of retirement on December 31, 1918.
$1,735,664.89, legal tender of the United States, the total to be placed to the credit of the “Retirement Fund “account.
Art. 2. It remains, however, understood that, with the consent of the Government of Haiti, the Bank may keep a sum not exceeding half of the amounts to the credit of the “Retirement Fund “account on deposit in a national bank of New York, at the selection of the Government of Haiti and to its credit, these funds remaining subject to the uses provided for in the present agreement. In this case the Government of Haiti will profit by the interest earned by the amounts deposited to its credit.
This retirement will be announced in the Moniteur and the Government will proceed with it as promptly as possible; it should complete it within one year counting from the date on which the announcement is made of the issuance of the Bank’s permanent notes hereinafter referred to.
Every holder of the aforesaid paper money shall have the right to require its exchange for the legal money of the United States of America at the rate of five gourdes for one dollar, or, if he so desires, to accept in exchange at par the new bank notes hereinafter mentioned.
The paper money which will not have been presented for exchange within the time indicated will be demonetized ipso facto and without the necessity of recourse to any other formality.
Art. 4—The Bank will be entrusted with the operations of the retirement mentioned in Article 3. It will debit the “Retirement Fund” account with the value of the paper money retired from circulation at the rate of five gourdes for one dollar plus the expenses of insurance and transportation from the provinces to Port-au-Prince on the notes redeemed in its branches and from Port-au-Prince to the provinces on funds sent in exchange. It can not claim any other expenses nor demand any commission whatsoever for the services rendered.
All paper money exchanged will forthwith be cancelled by perforation or otherwise by the Bank and turned over immediately to a commission instituted by a decree of the President of the Republic, composed of three members, of whom the first will be chosen from a list submitted by the Minister of Finance, the second from a list submitted by the Financial Adviser and the third from a list submitted by the Bank. The Commission after verifying the notes will immediately burn them.
Before redeeming doubtful notes, if any are presented, the Bank will submit them to this same commission which will pronounce upon their validity.
Art. 5. If the funds of the “Retirement Fund” account shall be insufficient for the redemption of the 8, 877, 972 gourdes of paper money in circulation or the part thereof presented for exchange within the period provided for in Article 3 above, the Bank will advance to the Government the amount necessary for the purpose without any charge for interest or commission, in consideration of the Government’s pledge not to reduce the taxes created for the retirement guarantee and not to change the appropriation thereof so long as the advances made by the Bank by virtue of the present article have not been fully reimbursed, either by means of the said taxes or by anticipation, whichever better suits the Government.
This note, issued by the Banque Nationale de la République d’Haiti, by virtue of its concession contract, and in conformity with the Convention of April 12, 1919, is payable to the bearer in legal money of the United States of America at the rate of five gourdes for one dollar when presented at the counter of the Bank at Port-au-Prince or with allowance for delay in transportation at its counters in the provinces.
Each type of banknote will be divided into series of one million gourdes, each series will bear a distinctive letter and each note will be numbered consecutively. The signatures prescribed by Article 10 of the concession contract will be engraved upon these bills.
Art. 7. The Bank will put in circulation fifteen million gourdes of its aforesaid notes or such part thereof as may be necessary to maintain the rate of exchange at five to one, simultaneously with the beginning of the operations of the retirement prescribed by Article 3 of the present convention. The balance of the issue of twenty million gourdes authorized by these presents will be put in circulation whenever the need is felt. This operation will be governed by Article 11 below and by all the other stipulations of the present convention; however, it can never be considered as the fulfillment of the obligation assumed by the Bank in Article 11 of these presents, to place in circulation from time to time the quantity of notes required for the needs of commerce. The notes of the Bank will have no value as money until after their issuance has been announced in the Moniteur. Once this announcement is made, the bills will be considered as lawful money throughout the Republic. They shall [Page 366]be legal tender without limitation and will be accepted by all offices of the Public Treasury in payment of sums due to the Government in gourdes.
Art. 8. The Bank obligates itself to redeem its notes in legal money of the United States at the rate of five gourdes for one dollar, at sight if they are presented at its establishment in Port-au-Prince, and with allowance for delay in transportation if they are presented at its principal branches in Haiti. In the latter case the Bank shall remit the necessary funds to the branch by the first regular means of transportation available.
This delay can not be invoked by the Bank until after the exhaustion of the daily reserve which each one of its branches should have on hand to meet the conversion. The list of the branches which should have a daily reserve and the schedule of the daily reserves which they should thus maintain will be determined by the Manager of the Bank at Port-au-Prince and approved by the Financial Adviser.
Art. 9. The Bank will at all times maintain in its vaults in Haiti cash reserves set apart exclusively for the redemption of its notes in circulation. This cash reserve will consist of legal money of the United States of America to an amount equivalent, at the rate of five to one, to at least one-third of the total amount of the notes of the Bank in circulation; howevor, it remains understood that a part of this cash reserve which should never exceed half may be deposited in a national bank of New York, as a sight deposit, this national bank being agreed to by the Government of Haiti.
The difference between the amount of this cash reserve and the total amount, at the rate of five gourdes to one dollar, of the notes of the Bank in circulation will at all times be represented by commercial paper bearing two good signatures and of a maximum maturity of one hundred and twenty days. By commercial paper is understood notes and bills of exchange resulting from commercial operations, that is to say, issued or drawn for industrial or commercial needs, but excluding all notes or bills having for object the carrying on margin of stocks, bonds, or other securities. One of the two signatures may be replaced by merchandise or by acceptances, warrants, receipts, or documents representing them. Commercial paper based on operations of interest to Haitian commerce shall be given preference in so far as may be deemed possible by the Bank, which remains the sole judge in the matter.
It remains understood that the Bank may increase the proportion of the said cash reserve beyond the prescribed minimum of one-third; in that case it may decrease proportionally the amount of the commercial paper mentioned above.
Art. 10. In case of the liquidation of the Bank, its notes in circulation will have a preferred lien on all its assets of whatsoever nature, with the exception of the assets representing the deposits made by the Government of Haiti or by the General Receiver of the Haitian Customs.
Art. 11. The Bank specifically agrees that the total amount of its notes in circulation will never exceed the figure equivalent, in legal money of the United States of America, to three times its paid in and unimpaired capital, with the exception noted below.
Whenever the needs of commerce require additional circulation of bank notes in gourdes, the Bank will put in circulation notes to the amount required, either against a proportional increase of its capital or against special security submitted to the approval of the Government.
Failing to do this, the Bank agrees not to oppose and not to place any obstacle in the way of such reasonable measures as the Government may see fit to take with a view to obtaining the quantity of money required.
Art. 12. The Bank will replace by new notes at its own expense such of its notes as may become unfit for circulation.
Any counterfeiting of the notes issued by the Bank will be punished by law. Likewise the issue, attempt to issue and the circulation of fiduciary money of all kinds: chips, coupons, scrip, etc., designed to replace money even for a limited use, will be prohibited and punished. It is well understood that this does not affect the right of the Government provided for in the last paragraph of Article 11.
Art. 13. The Bank agrees to pay to the Government an interest at the annual rate of one per cent on the sum by which the daily circulation of its notes may exceed ten million gourdes.
The profits resulting from the non-presentation of certain of the notes of the Bank for final redemption will be divided equally between the Government and the Bank, after the deduction of all the expenses occasioned by the said redemption.
Art. 14 If experience shows that the quantity of fractional nickel coin now in circulation is too great for the needs of the country, the Government will take the necessary measures to retire the excess in circulation beginning with the fifty centime coins.
Art. 15. In order to avoid the possibility of a monetary crisis during the period of the retirement of the paper money of the Government and as long as this retirement continues, the Government obligates itself to prohibit the importation or exportation of all non-Haitian money, excepting such as may be necessary for the needs of commerce in the opinion of the Financial Adviser.
Art. 16. The Bank renounces all rights and privileges resulting from its concession contract which may conflict with the present convention.
Art. 17. Pending the printing of the Bank’s permanent notes provided for in Article 6 above, the Bank may issue provisional notes to an amount not exceeding seven million gourdes, which will be subject in all respects to the same conditions provided for in the present convention for the permanent notes.
These provisional notes will be retired by the Bank at its own expense as soon as the engraved permanent notes may be obtained.
The two million gourdes of surcharged notes in circulation at the present time are included in the seven million gourdes of provisional notes and are subject to this same transitory provision.
It is well understood that the retirement of the seven million gourdes in provisional notes must be carried out within a period of two years at least and three years at most.
Art. 18. The Financial Adviser will have the right of inspection of all operations of the retirement as well as of the provisions established above for the maintenance of the reserves, cash and securities, applicable to the fiduciary circulation, and he may at any time inspect, either personally or through the intermediary of a competent representative, the accounts of the Bank having to do with the said circulation.
Done and signed in triplicate, at Port-au-Prince, April 12, 1919, in the 116th year of independence.
The Bank will credit the Government of the Republic of Haiti with the sum of twenty four thousand, five hundred sixty and 57/100 dollars in legal money of the United States of America by way of refund on that of 175.095.93 gourdes gold.
It will besides deduct from the debit of the Government to the Bank the balances of credit of the Government on the accounts, Receipts and Payments of the Fiscal Years 1914–1915, 1915–1916, 1916–1917, as these balances result from the accounts controlled and agreed upon between the Bank and the Commission named for this purpose by the Government.
All these balances being offset as provided in the preceding article, the sum of the credit of the Bank on December 31, 1916, resulting from the balancing of the accounts (Statutory Loan, Budgetary Conventions and others) is definitively agreed to as of the above said date at 1,733,154.87 (one million seven hundred thirty-three thousand one hundred fifty-four 87/100 dollars legal money of the United States).
The Government binds itself to deliver to the Bank an acknowledgment representing the credit balance above mentioned and payable within the periods which will be agreed upon, by common accord, between the parties and the Financial Adviser with interest at 6% (six per cent) per annum beginning January 1, 1917.
Done in triplicate at Port-au-Prince, April 12, 1919, in the 116th year of Independence.
The following additional clauses to the Convention of April 12, 1919, have been concluded.
Sole Article. For the purpose of meeting the new need of gourdes provided for in the 2nd paragraph of Article 11 of the Convention of April 12, 1919, and caused by the actual exigencies of the market, the Banque Nationale de la République d’Haiti is authorized to increase by 5,000,000 in provisional notes of 1 and 2 gourdes the 7,000,000 allowed in Article 17 of the aforesaid Convention.
In case of the demonstrated insufficiency of these further 5 millions a decree of the President of the Republic issued upon the proposal of the Secretary of State for Finance after agreement with the Financial Adviser and countersigned by all of the Secretaries of State, will authorize the Bank to issue a surplus of 3 millions.
This increase of provisional notes will be made in conformity with Articles 9 and 11 of the Convention of April 12, 1919.
The provisional notes shall be entirely retired within a space of three years beginning with the signing of this amendment to the Convention of April 12, 1919, or within the space of one year after the 10 million permanent notes will have been placed in circulation. It is understood that the Bank should do everything to obtain the engraved permanent notes as soon as possible and as soon as the issuance of the permanent notes has commenced, that of the provisional notes shall cease ipso facto.
The provisional notes of the Bank will be accepted in all commercial operations at the rate of five gourdes for one dollar and vice versa. The Bank guarantees at all times in an absolute manner and without any restriction to exchange these provisional notes for legal money of the United States and reciprocally in accordance with the needs of commerce and as provided for in Articles 7, 8 and 11 of the Convention of April 12, 1919. The reserves provided for in Article 9 of the Convention of April 12, 1919, guaranteeing the notes of the Bank, will be verified at any time by the Secretary of State for Finance and the Financial Adviser.
Done and signed in original triplicate at Port-au-Prince, October 24, 1919, in the 116th year of Independence.
The translation of the official French text forwarded by the Minister in Haiti has been revised to bring the language more nearly into accord with that of the English texts used as bases of discussion (File No. 838.51/817).

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Art. 7

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Art. 10

Art. 11

Art. 12

Art. 13

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Art. 16

Art. 17

Art. 18