Historical Sketch

Christopher Columbus discovered the island for the Europeans on his first voyage in 1492. It was named Hispaniola (Little Spain) and taken into Spanish possession immediately, and subsequently administered out of New Spain (Mexico). In the 17th century, French settlement began on Tortuga (La Tortue) island offshore to the west and soon extended to the main island. In 1697, Hispaniola was partitioned between France and Spain, which called their possessions Saint-Domingue and Santo Domingo. In 1791, the Haitian Revolution began in the west led to the overthrow of the French colonial rule in 1804. The leader of the rebellion and President Dessalines rose to become Emperor of Haiti after a few months, but the empire lasted only until 1806. After the expulsion of the emperor, the state disintegrated, and two governments were subsequently formed. The northern and southern Haitian states were reunited in 1820. Two years later, Haiti annexed the Spanish-speaking western part, and for two decades the island of Hispaniola was politically united. Already in 1844, the eastern part broke away again and became the independent Dominican Republic. In 1868 and 1888, there were other periods of rival short-lived governments in northern and southern Haiti. Political instability continued until the 20th century leading to interventions by the United States and even the establishment of a 21 years' US protectorate in 1914.

Monetary History Overview

The French colonization of the Caribbean began in the 17th century. French accounting was applied in all possessions in America, and French coins were current. The scarcity of specie quickly led to an overvaluation, and as a consequence, the 1672 currency law created the French Colonial Livre as a distinct unit of account at 75% of the metropolitan French Livre (of Tours). In 1726, the ratio was lowered to 67%. The scarcity, even absence, of French coinage led to a dominance of the Spanish Dollar and other trade coins that flew in from the Spanish possessions. Commodities like timber (Guyana) or rum, as well as money substitutes made of paper, even playing cards, were also accepted in payment transactions. Occasional subsidiary coins were issued for several colonies. In Haiti (Saint Domingue), Spanish and Portuguese trade coins were used in payment transactions. However, the full-valued silver coins were confiscated and exported to France, such that debased and low-quality currency was the only one around. As a consequence, a barter economy was widespread. Local currency was not issued. The French Colonial Livre remained a pure accounting currency throughout the entire period. In 1781, the need for subsidiary coinage led to authorizing the weight reduction of Spanish silver coins, which were then counterstamped to distinguish them from private issues. In 1802, the colonial administration produced a few emergency coins to overcome the money shortage during the war of independence. They did not enter circulation in notable amounts.

In 1804, Haiti declared independence. The step was not recognized by France which undertook steps to reconquer its colony and incited other European powers and the United States into an embargo of the new state. In addition, political divisions within Haiti led to rapidly changing governments and a division into a Northern and Southern state until 1820. The monetary order could not be regulated. The Northern state produced a few subsidiary coins denominated in Livre in 1807. The Southern stated decreed the counterstamping and mutilation of Spanish Dollar coins in 1811 to prevent the continuous outflow of silver. Due to massive counterfeiting the thus created pieces had to be withdrawn already in 1813. The ordinances that were passed on this occasion, as well as for the creation of subsidiary coinage, referred to the 1st Haitian Gourde as unit of account equal to the Spanish Dollar (which was locally called "gourde" or "gordo"), but no formal currency law was issued. The circulating medium consisted of foreign trade coins and national subsidiary coinage but was dominated by unbacked state paper money. In the 1842, all the circulating paper money was recalled and exchanged with a 50% confiscation. Massive counterfeiting resulted in one third more paper money recalled than originally issued, such that the operation again caused a loss to the state. In the 1870s, the paper money had depreciated to such an extent that a restructuring became unavoidable. All the circulating money, the state notes and the subsidiary coins issued since independence, was recalled and partly invalidated. In August 1872, a currency law was passed introducing the 2nd Haitian Gourde at par with the US Dollar in silver. US silver coins were made current, and a US-citizen obtained the concession for operating the National Bank of Haiti. The bank, however, never opened as the licensee was unable to raise sufficient funds. A new concession was given to a French commercial bank in 1880. As a consequence, the currency law was changed in 1881, and the Gourde became a bimetallic currency in the French standard. For a short period, the monetary situation stabilized as both paper money and coinage could be produced in sufficient amounts. However, the gold coinage referred to in the currency law was never produced. In the late 19th century, the political instability increased, and the economic conditions deteriorated again such that the government returned to issuing unbacked paper money. At the same time, the United States increasingly displaced France as the dominant foreign power, which culminated in the establishment of a de facto protectorate in 1914. The concession for the National Bank of Haiti changed hands once more in 1919 when it went to a US bank. Consequently, the Gourde was re-pegged to the US Dollar, and US currency regained legal tender status. The US protectorate was lifted in 1935, and the National Bank finally went into state ownership. The Dollar peg of the Gourde remained unchanged until 1991, when the exchange rate got floated. The Gourde quickly lost about 60% of its value and stabilized throughout the 1990s. Since then, the rate has settled into a steady decline.

Haiti joined the International Monetary Fund (IMF) on 08.09.1953.

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