Full Text Archive logoFull Text Archive — Books, poems, drama…

Santo Domingo by Otto Schoenrich

Part 6 out of 7

Adobe PDF icon
Download this document as a .pdf
File size: 0.7 MB
What's this? light bulb idea Many people prefer to read off-line or to print out text and read from the real printed page. Others want to carry documents around with them on their mobile phones and read while they are on the move. We have created .pdf files of all out documents to accommodate all these groups of people. We recommend that you download .pdfs onto your mobile phone when it is connected to a WiFi connection for reading off-line.

started with her own troubles. "Two revolutions ago," she said--and
her mode of measuring time struck me as peculiar--"my eldest son took
a gun and went into politics." "Coji un fusil y se meti en la
politica"--"took a gun and went into politics," the phrase is sadly
expressive.

Such campaigns were only too easily begun. When a new president
entered upon office on the crest of a successful revolution,
apparently with the whole country behind him and his adversaries
silenced or scattered, his popularity generally lasted until the
spoils were distributed. ("To the victors belong the spoils" was the
policy of the past; the American military authorities are making an
important innovation by the introduction of civil service principles
for selecting public employees.) The disappointed spirits immediately
entered into the plots which the vanquished opponents were not slow in
fomenting. The leader of the adverse party or one of his trusted
lieutenants raised the standard of revolt and issued manifestoes which
echoed with patriotic sentiments and decried the faults of the
administration. He was joined by a number of disgruntled "generals"
and their followers. The telegraph wires were cut and the revolution
had begun.

Before 1905 the seizure of a custom-house was invariably the next
step, which would at the same time provide the insurgents with the
sinews of war and make it impossible for the government to pay its
employees in that province. The custom-houses were eliminated as pawns
in the revolutionary game by the fiscal treaty with the United States,
according to which the customs receipts were paid over to an American
receiver-general. Revolutions for a short time became more difficult,
but where there's a will there's a way, and under a new routine the
necessary funds were derived from the government's internal revenues
and from levies on private citizens.

The first two or three weeks of a revolt constituted its critical
period, for the government at once poured troops into the district in
order to suppress the insurrection, while the rebels sought to obtain
as many strategical points as possible. Both sides lived on the
country while roaming about in pursuit of each other. If the
government was victorious the leaders of the revolt would usually
scramble across the border into Haitian territory, or leave the
country by boat, or otherwise make themselves inconspicuous until the
time was ripe for another rebellion. When the government was unready
or unsuccessful, the insurrection spread with great rapidity from town
to town until it arrived before the walls of Santo Domingo City.
There was more or less of a siege and when the president capitulated
he was permitted to board a vessel and go into exile. The head of the
new revolution then assumed charge of the government and had himself
elected president and the game began all over again.

The personal property of the fallen adversaries was respected and
there was no confiscation, such as has occasionally been witnessed in
certain other Latin republics. When Baez was overthrown in 1858 there
was an exception to the rule, his properties being seized by the
Santana government on the ground that he was a traitor ready to
deliver the country over to the Haitians and was guilty of other high
crimes and misdemeanors. But when the wheel of fortune again brought
Baez to the top he promptly reentered upon his lands.

During the uprisings there has rarely been wanton destruction of
property, the property of foreigners being especially respected. The
owner of a plantation near Macoris told me that on one occasion the
general of an insurgent force even halted at his gates and sent him a
polite request for permission to cross the property. Such
consideration was not universal, however, and large sums have been
paid to foreigners for damages inflicted during revolutions. A serious
inconvenience was caused farmers by revolutions as many laborers were
enrolled in one army or the other, either voluntarily or by
impressment.

In the course of the insurrection there were numerous encounters
between the rebels and the government troops, most of them being mere
skirmishes. There is hardly a town where there are not houses which
show the marks of bullets. The walls and gates of Santo Domingo City
and the houses in the vicinity are full of such marks, though
generally painted over now. In 1904 and 1905 one of the sights of the
city was a beautiful villa opposite the Puerta del Conde, which had
served as target for the government forces while occupied by the
insurgents and was so peppered by shot and shell as to look like a
sieve. The sieges of Santo Domingo City sometimes lasted for many
months. At such times almost every citizen took part in the
excitement, barricades were erected at every street opening and the
rattle of musketry was heard at all hours.

The proportion of shots fired to casualties inflicted is known to be
enormous in all wars and in Santo Domingo it is almost incredible.
Battles have been fought lasting for hours with thousands of shots
fired, yet with not one man lost. There have been revolutionary
uprisings lasting for months with not a man wounded. In Puerto Plata
it is said that when the government troops attacked the city in 1904 a
fierce battle ensued which continued from morning till the town was
taken by storm in the evening; yet only one man was killed and his
death was due to his own carelessness, for he appeared not far from
where soldiers of the other side were training a cannon and refused to
obey their warning to get out of the way, whereupon the cannon was
discharged and his arm shot off, causing a mortal wound.

At other times, however, the results have been far more serious, as
many a maimed soldier and bereaved family can testify. The graves of
victims of the revolutions are scattered all over the Republic. How
many have fallen in the disturbances of the past fifteen years it is
impossible to determine; I have heard estimates ranging from 1000 up
to 15,000. Nor is revolutionizing a pleasant business when continued
for any length of time. When the men entered a town contributions
could be levied on the merchants, but when they were harassed and
forced to retreat to the mountains they roamed for weeks half nude,
bare-headed, barefooted, exposed to the weather, living on what
bananas and wild fruits they could find or occasional wild hogs they
were able to kill, undermining their constitutions and brutalizing
their natures. The landlady whose son sought political distinction
with a gun told me amid sobs that her boys were dutiful, industrious
lads before being caught in the revolutionary torrent, but that in the
woods they lost all inclination for work and returned home completely
demoralized. From grieving relatives of victims I have heard many
another story of ruined lives and early deaths. It is saddening to
reflect on the tears which have been shed and the misery which has
been caused by this long continued civil strife.

While women have been heavy sufferers from the revolutions they have
not hesitated to take sides and contribute their mite. Many are the
stories current in Santo Domingo of women who smilingly passed through
the enemy's ranks and carried ammunition and supplies concealed
beneath their garments to their friends in the woods.

Excluding the revolution by which the Haitian yoke was thrown off in
1844 and that of 1863-65, which expelled the Spaniards, there have
occurred in the seventy years of Dominican independence no less than
twenty-three successful revolutions. One occurred in each of the years
1848, 1844, 1849, 1857 and 1864, three in 1865, one each in 1866, 1867
and 1873, three in 1876, one each in 1877, 1878, 1879, 1899 and 1902,
two in 1903 and one each in 1912 and 1914. At times hardly had a
revolution proved successful when a counter-revolution broke out and
secured the victory. The longest intermissions were from 1879 to
1899 when the party of the dictator Heureaux was in power, and from
1903 to 1912, when the indirect protection of the United States was
sufficient to sustain the government.

These were the successful revolutions; the unsuccessful insurrections
are innumerable. It has been unfortunate for the credit of Santo
Domingo that almost every little shooting affray is classed as an
insurrection or revolution. Most of these unsuccessful uprisings have
been unimportant excursions into the country by some disaffected local
chief and a handful of followers, the band being promptly rounded up
or scattered by government forces or induced to come in by promise of
a job or some other consideration.

The circumstance that the provincial governors found it to their
advantage to have disturbances in their district explains many of the
smaller commotions. Upon the outbreak of an insurrection or before the
threat of an outbreak the authorities in the capital would authorize
the provincial governor to recruit troops and draw funds for their
payment. The governor would do so, but if two or three thousand men
had been authorized he would raise only two or three hundred and
forget to account for the balance of the money. The suppression of the
"revolution" would thus benefit both his military reputation and his
pocketbook. Governors were therefore prone to exaggerate rumors of
insurrection and sometimes themselves sent out men to fire a few shots
in the woods and create alarm.

Other insurrections have been fierce and formidable and some
administrations were obliged to engage in constant warfare in order to
maintain themselves. A serious unsuccessful insurrection was that led
by Gen. Casimiro de Moya against Heureaux in 1886, which lasted six
months. The most widespread was that of Jimenez against the Morales
government, lasting from December, 1903, to May, 1904, and during
which the insurgents gained possession of practically the entire
Republic. Other serious outbreaks occurred in 1904, 1905, 1906, 1909,
1911, 1913 and 1916. The fires smouldered constantly, especially in
the Cibao, which raises the largest crops of everything, including
revolutions.

The effect of such continuous commotion has been most disastrous to
the country and the people at large. This is all the more saddening
when it is considered that, less than ten per cent of the people took
part in the disturbances. Revolutions, successful and unsuccessful,
have been fought to a finish with less than a thousand men on either
side. Ninety per cent of the population are law-abiding citizens who
would like nothing better than to be let alone and permitted to pursue
their vocations in peace. The other ten per cent were not entirely to
blame: they have been the victims of their environment.

Not only have the revolutionary disturbances caused enormous indirect
loss to the country through paralyzation of agriculture, arrest of
development and loss of credit, but they have also been a large direct
expense. A considerable portion of every budget was devoted to
appropriations for the purchase of war material and the maintenance of
the military and naval establishment. When uprisings occurred the
additional amounts necessary for their suppression have been taken
from other appropriations, those for public works usually being the
first to be cancelled. If the uprisings became serious the other
appropriations of the budget were reduced by fifty or even
seventy-five per cent until all the available cash was devoted to war
purposes. In 1903 military and naval expenditures absorbed 71.7 per
cent of the Republic's disbursements, and in 1904 72.6 per cent. At
such times the government was reduced to a desperate struggle for
existence; the loss of the custom-houses in power of the insurgents
made its position still more precarious; it contracted loans on
ruinous terms; it neglected its foreign obligations and paid its
employees in promissory notes and even in postage stamps, which they
would then peddle about the streets. Under such conditions it is
natural that nothing was left for public improvements. Even under the
peaceful administration of Heureaux a disproportionate part of the
national funds was expended for military purposes and three gunboats
were acquired and maintained, but not a single mile of improved road
was laid out.

With the American military occupation political conditions in the
Dominican Republic have radically changed. The system of waging
political campaigns by force of arms has stopped abruptly and
absolutely. Revolutions have become a matter of history. Ballots will
hereafter take the place of bullets, and politics will be conducted in
the same manner as in other orderly countries. Evolution, not
revolution, will be the characteristic of the future.

CHAPTER XX

LAW AND JUSTICE

Audiencia of Santo Domingo.--Legal system.--Judicial
organization.--Observance of laws.--Prisons.--Character of offenses.

In the year 1510 the Spanish government established in Santo Domingo
the first of the famous colonial audiencias, or royal high courts, the
list of which appears like a roll call of Spain's former glories.
Others were added later in Mexico, Guatemala, Guadalajara, Panama,
Lima, Santa F de Bogot, Quito, Manila, Santiago de Chile, Charcas
(now Sucr), and Buenos Aires. The audiencia of Santo Domingo at first
had jurisdiction over all the territory under Spanish dominion in the
new world, but upon the establishment, of the audiencia of Mexico and
others its jurisdiction was confined to the West India Islands, and
the north coast of South America. Its functions were both judicial and
administrative, including the power to hear appeals from the judges of
the district and from certain administrative authorities, and to
intervene in certain matters of government, in the finances of the
territory and in behalf of the public peace. The governor and
captain-general of Santo Domingo was president of the royal audiencia,
though not acting when it sat as a law court, and at times the
audiencia alone temporarily carried on the government of one or more
of the territories under its jurisdiction. It applied the law as
expressed in the codification of the "Laws of the Indies," and the
Spanish "Partidas." It sat in the building still called the old palace
of government. During the dark days which fell upon the island in the
seventeenth century, the presence of the audiencia helped to save the
colony from being completely forgotten. It continued in its functions
until the country was ceded to France, whereupon in 1799, it was
removed to the city of Puerto Principe, in Cuba. Could its records but
have been preserved a great many gaps in the history of Santo Domingo,
Cuba, Porto Rico and Venezuela would be filled. It seems that the
first records were destroyed by Drake in 1583, and almost all the
later ones succumbed to the negligence of man and the voracity of the
tropical insects. When the government of Cuba in 1906 honored the
request of the government of the Dominican Republic for the return of
such of the records of the audiencia of Santo Domingo as were still
extant, it could find in its national archives and turn over but a
score of bundles of documents, mostly records of suits regarding land
boundaries in the eighteenth century, of little historic value. These
and several small mahogany bookcases still preserved in the present
audiencia of Havana, are the only tangible remains of this
noted court.

When Santo Domingo again came under Spanish rule in 1809, the colony
was included in the territorial jurisdiction of the audiencia of
Caracas. Upon the beginning of Haitian rule in 1822, when most of the
distinguished citizens, including judges and lawyers, left the
country, they took with them the ancient legal system. The Haitians
imposed their laws, namely, the Code Napoleon and other French codes.
These took such deep root that on the expulsion of the Haitians no
attempt was made to return to the Spanish laws, which also at that
time were still under the disadvantage of not having been revised and
codified in accordance with modern needs. In 1845 the laws of France
were expressly adopted by the Dominican Republic. During the troublous
times following little attention was given to the legal system, and
there was not even a Spanish translation of the codes. After
annexation to Spain in 1861 the Spanish authorities attempted to
clarify the situation by introducing the Spanish penal code and law of
criminal procedure and by appointing a commission to translate the
civil code, in which they made several changes, but upon the
reestablishment of the Republic in 1865 everything done in this
respect by the Spaniards was annulled. Several efforts were later made
to secure a translation of the codes, though laws were not often
invoked amid so much civil unrest. As late as 1871 the American
commission which visited the island reported that the administration
of justice had practically fallen into disuse. The local military
chiefs and the parish priests decided the questions that arose.

As the country progressed in spite of itself, and there were periods
of peace, the need of an official Spanish text of the laws became more
pressing, and at length in 1882 a commission was appointed to
translate and adapt the French codes. On the report of the commission
a civil code, a code of civil procedure, a code of commerce, a penal
code, a code of criminal procedure and a military code were approved
in the year 1884. They are literal translations of the French codes
with a few modifications to adapt them to local conditions. The penal
codes are such close translations that several paragraphs relating to
juries were retained, although the institution does not exist in Santo
Domingo. It was tried in 1857, but discontinued in the following year.
The Dominican Congress made but few changes in these important laws,
which have therefore been more permanent than the constitution. The
need for a further revision of the Dominican codes became urgent,
however, and such revision has very recently been concluded by a
commission which sat for that purpose; it is now being considered with
a view to an early promulgation of the codes in amended form.

Santo Domingo, the first Spanish colony, thus has no Spanish laws. It
is the only Spanish country which has adopted French legislation so
completely, and which looks so largely to France for its
jurisprudence.

The laws of Congress, and the decrees of the Executive relating to
concessions, naturalization, pardons, and other matters, and, at
present, the "executive orders" and decrees of the military
government, are published in the Official Gazette, a government
newspaper appearing almost daily. In addition to the calendar date,
official papers are dated from the declaration of independence in 1844
and the restoration of the Republic in 1863, somewhat as follows:
"Given in the National Palace of Santo Domingo, Capital of the
Republic, on the 3rd day of March, 1916, the 73rd year of Independence
and the 53rd of the Restoration." In Haiti it was formerly the custom,
after a successful revolution, to count dates not only from the
declaration of independence but also from the proclamation of the
latest revolution, the latter period being denominated the
"regeneration," thus: In the 40th year of independence and the 3rd of
the regeneration. In the Dominican Republic Baez introduced this rule
in his presidency of 1868-1873, during which period decrees were dated
in the following manner: "On the 3rd day of March, 1871, the 28th year
of Independence, the 8th of the Restoration, and the 3rd of the
Regeneration." The revolution of December, 1873, ended this
regeneration, and the official references thereto.

At the present time the judicial power is vested in a supreme court,
sitting in the capital of the Republic, three courts of appeals, one
in Santo Domingo, one in Santiago and one in La Vega; twelve courts of
first instance, one in each province; and 70 alcaldias or justice of
the peace courts, in the several communes and cantons. The supreme
court is constituted by a presiding justice and six associate
justices, who are elected by the Senate for terms of four years. It
exercises original jurisdiction in cases against diplomatic
functionaries and judges of courts of appeals, sits as a court of
cassation in appeals from, the courts of appeals, finally decides
admiralty cases and has certain other functions assigned to it by law.

The three courts of appeals each have a presiding justice and four
associate justices, all elected by the Senate for four year terms.
They exercise appellate jurisdiction over cases adjudged by courts of
first instance and courts-martial, and original jurisdiction in
admiralty cases and in the prosecution of certain judicial and
administrative officials. Prior to 1908 there was one supreme court,
with five members, and no court of appeals. When the income of the
country grew, the new constitution provided that the supreme court
have at least seven members, and that at least two courts of appeals
be established, with their necessary judges and clerks. The system is
now costly and topheavy.

The twelve district courts each have a judge of first instance and a
judge of instruction, elected by the Senate for terms of four years.
The judge of instruction is not, strictly speaking, a part of the
court, his duty being to investigate the more serious criminal
offenses, commit the offenders for the action of the court and report
the result of his investigation to the prosecuting attorney. The
courts of first instance have original jurisdiction in all criminal
matters except the minor police offenses and in all civil matters
except those expressly assigned to the justices of the peace. They
hear appeals from the justices of the peace in civil and
criminal cases.

The local justices of the peace are called "alcaldes." The alcalde, in
Spanish times, was an officer exercising both administrative and
judicial functions, the name being derived from the Arabic "al cadi,"
the judge, and whereas in Spain and most of the former Spanish
colonies the alcalde has now only administrative duties and his office
is equivalent to that of mayor, in Santo Domingo he now exercises
solely judicial authority. (The office of "alcalde pedaneo," which may
be roughly translated as deputy mayor, exists in Santo Domingo,
however, this title being given to the municipal executive's agent in
each section.) The alcalde's jurisdiction comprises the smaller police
offenses and, in civil cases, matters involving less than $100, as
well as certain cases, such as suits between innkeepers and guests,
where the limit of his authority is raised to $300, and other cases,
such as ejectment suits, where his jurisdiction attaches on account of
the subject-matter. The alcaldes are appointed by the president of
the Republic.

In general the system works smoothly. The alcaldes are often ignorant
men, but even in the United States the country magistrates are not
always founts of wisdom. The judges of first instance and district
attorneys are almost without exception respected in the community, and
the present judges of the supreme court and of the courts of appeals
enjoy a good reputation. Not infrequently political considerations
have given rise to poor appointments, such as occurred in Barahona
some years ago when the judge-elect telegraphed an indignant protest
to the capital to the effect that he was unacquainted even with the
rudiments of the law. The administration had not taken the trouble to
ascertain whether he was a lawyer, but knowing he sought a position,
had given him the first one at hand. This was rather an oversight, as
the law requires such appointees to be members of the bar. On another
occasion the legal requisite was filled by first declaring the
aspirant a lawyer and then designating him for the post. These cases
are exceptions, however. The integrity of the judges is not often
questioned, but the alcaldes do not enjoy so good a reputation.

At the present time there are also American provost courts which take
cognizance of "offenses against the military government." This
designation is broad enough to include anything the military
authorities choose to include. Apart from a few cases of regrettable
harshness these courts have done fairly well.

While the various constitutions have expressly declared the
independence of the judicial power, the authority of the courts has
heretofore been rather relative, and they have studiously avoided
conflicts with the other branches of the government. There is no case
on record where they have declared a law unconstitutional. The supreme
court when driven into a corner in 1904 even declared that it had not
the authority to make such a declaration. The constitution of 1908
modified the decision by expressly providing that the supreme court
may decide as to the constitutionality of laws.

This decision of the supreme court made little impression in the
country, due probably in part to the ease with which the various
administrations have disregarded the constitution when it suited their
convenience. The little value of the constitution between friends has
constantly been demonstrated. Certain provisions have been
systematically violated, even by the best of administrations.
Principal among them is the provision that no one be arrested without
a warrant setting forth the offense, unless caught _in flagranti_, and
the provision that every person imprisoned be informed of the cause of
his imprisonment and submitted to examination within forty-eight hours
after arrest, and not be detained for a longer time than permitted by
law. These provisions have been dead letters as far as political
prisoners are concerned. When a person was suspected of being involved
in a conspiracy against the government he was liable at any moment to
be seized and conducted to prison, where he might be detained
indefinitely, until the danger was over, or he was considered
innocuous. The ancient fortress at the river mouth in Santo Domingo,
known as La Torre del Homenaje, bears over its entrance the sign,
"Political Prison," and rarely has it been without tenants, even when
the country was at peace and the constitutional guarantees were
supposed to be in force. On one occasion when I heard a Dominican
lawyer lament that a friend of his had thus been incarcerated for
several months without a hearing, I inquired why he did not apply to a
court and invoke the constitutional provision. The reply was, "The
judge who signed an order to set the prisoner free would probably join
him in jail before many hours had passed."

Such ignoring of the written law was a relic of the days when the will
of the military was the only law respected. Reminders of the old state
of affairs continued to crop out, though the people and government
were rapidly adopting other customs. An instance occurred in Sanchez
during the presidency of Morales. A younger brother of the president
was customs collector at that port and was accused by public rumor of
irregularities in office. A customs employee having been discharged
for spreading the rumor, called on the collector and invited him to a
meeting outside; and the two adjourned to the bush, where shots were
exchanged and young Morales was wounded in the leg. The aggressor was
immediately seized by the general commanding the military forces in
Sanchez and carried to the town cemetery, a grave was dug, and the
general prepared to have him summarily shot. The town authorities
interceded, but in vain, and the execution was about to take place
when the ladies of the town succeeded in moving the commandant by
their pleadings. The prisoner was remanded to the jail in Samana and
was later tried by the court of first instance and acquitted. Much
more recently the leader of the band that assassinated President
Caceres was killed without trial.

Some of the surviving military leaders of the old school find
difficulty in adjusting themselves to the new conditions. Among them
was General Cirilo de los Santos, better known by his nickname
"Guayubin" (the name of the town where he was born) who took an active
part in the political disturbances of the Republic for many years.
When I traveled through the country with Prof. Hollander on his
financial investigation we were guests of this hero of a hundred
revolutions, who was then Governor of La Vega. In the course of
conversation Prof. Hollander expressed gratification at the cessation
of the custom of shooting political prisoners. The governor was at
that time engaged in the persecution of one Perico Lasala, a perpetual
revolutionist who was infesting the nearby hills and who has since
done his country a favor by being killed in an incursion on the coast.
The idea of not shooting this notorious character as soon as he was
apprehended seemed grotesque to Guayubin--and perhaps not without
reason. He cried, "If you were in my place and caught Perico Lasala,
wouldn't you shoot even him?" "Why, no," was the answer. Guayubin's
face fell and he became thoughtful. For the rest of the day he was
strangely silent and he continued so on the morrow, when he
accompanied us for several miles out of town. When bidding goodbye, he
broke out: "I wish to ask your advice. If I should catch Perico
Lasala, what would you advise me to do with him?" Dr. Hollander asked:
"What do you do with persons who steal or commit similar violations of
the law?" "We put them in jail." "Why, then, put Perico Lasala in
jail." A look of inexpressible relief came over the face of the old
warrior. "Of course!" he said, "I never thought of that."

Not long after this incident General Guayubin met a political opponent
against whom he harbored resentment. He immediately drew his revolver
and began to shoot, and the object of his wrath escaped only by
dexterous sprinting. At a session of Congress there was some criticism
of his action and Guayubin resigned his office in disgust. The death
of this fighter was as stern as his life. He attended a christening
party at a house where there was a forgotten powder-cask; a spark fell
into the powder and in the ensuing explosion Guayubin's eyesight was
destroyed. Grimly refusing to take food or drink, he pined away.

Prior to the American occupation, the Dominican penal establishments
were as a rule in very bad condition. There is no penitentiary and
portions of the forts or government houses are used as jails. The
prisoners were herded together with little thought of cleanliness. The
stench in some of the jail yards was at times almost unbearable. In
justice it should be stated that the Dominican authorities frequently
called the attention of their Congress to this condition of affairs.
The prisons at Santo Domingo City and Santiago were exceptions to the
rule; they were improved even to the extent of being endowed with a
prison school.

The political prisoners were generally given better accommodations, if
there were any at hand, and had the privilege of securing their meals
from the outside instead of being limited to the scant and repugnant
prison food. During revolutions, however, when the prisons were
overcrowded, the political prisoners were kept in irons and
supervision was rigid. According to law the functionaries of each
court of first instance were supposed to visit and examine the jails
once a month, but as the date of their visit was known beforehand the
inspection was little more than perfunctory. Not very long ago it was
whispered in the Cibao that a judge in inspecting a jail accidentally
passed through a door to a room he was evidently not expected to
enter, and there to his own embarrassment and that of the warden found
a score of prisoners whose names were not on the prison rolls.

The more serious offenders were kept in irons. The Dominican
authorities, realizing that they had no reason to be proud of their
prisons, were loath to permit foreigners to visit the jails. When I
called at the government building at Sanchez on one occasion, however,
the commandant was absent and an indiscreet sergeant offered to show
me the two rooms used for prison purposes. The building was a wooden
one and one of the rooms, though heavily barred, did not seem unfitted
except in case of overcrowding, which I was told sometimes occurred.
The other room was extremely repulsive. It was dark and a foul odor
rising from a hole in the wooden floor demonstrated the truth of the
guide's remark that there was no outhouse for the use of the
prisoners. Along one side of this room lay two long square-cut beams,
one on the other, scalloped out so as to form a number of round holes
along their juncture. It was evident they were used as stocks and my
guide stated that he had seen a whole row of men sitting along the log
with their feet thus confined. One or two of the holes were a little
larger and it was explained that they were for the purpose of
confining not the feet but the neck of the delinquent, and that this
punishment was much worse, producing especial pain in the case of
short-necked persons. The severest pain was produced, so the guide
stated, when the delinquent was seated on the beam and his feet placed
crosswise through the holes: he could bear the agony of this position
for only a short time.

The American authorities have made great improvements in the prisons
and prison discipline. The jails are now so clean that they are almost
show places.

The revolutionary disturbances have seriously interfered with the
proper execution of the sentences of the courts. It was a usual
procedure for revolutionary forces, upon entering a town, to free the
prisoners--either as a slap at the government or in order thereby to
augment their own strength. In Puerto Plata, a few years ago, a
merchant was convicted of fraudulent bankruptcy and sentenced to three
years in jail; soon afterwards a revolutionary force took possession
of the town and freed the prisoners; and a few hours later the
townspeople were amused to see the lawyer who had been instrumental in
securing the conviction himself led to prison at the instigation of
the culprit.

In March, 1903, when the political prisoners in the Santo Domingo
prison broke out, they released the convicts, some of whom retained
their gyves during the fighting which followed, until the revolution
was successful several days later.

The undeveloped state of the country has offered difficulties to the
apprehension of criminals, and the proper enforcement of the law.
Could a criminal but reach the mountains of the interior, which are
almost entirely uninhabited, he would be safe from pursuit and might
either wait to join the next uprising or proceed to a different part
of the country, where he was unknown and where, owing to the
difficulty of intercourse, detection would be unlikely. Instances have
occurred more than once where an escaped malefactor has become a
"general" of other outlaws and by threatening to raise an insurrection
has induced the government to pardon him and his associates.

In several regions there were up to the time of the American
occupation local caciques who were almost absolute monarchs in their
district. They and their followers considered themselves above the law
and their power and influence were such that the government in the
capital preferred to let them alone so long as they kept within
bounds. Such gentlemen can hardly be expected to favor the American
administration for they have been made to understand that their rights
and remedies are no more than those of other citizens.

In view of such conditions so favorable to wrongdoers, the low
criminal record of Santo Domingo is all the more remarkable and speaks
highly for the character of the population. Crimes evincing malice and
a depraved disposition are exceedingly rare. The Dominican boasts that
it is possible to travel without fear from one end of the Republic to
the other, though unarmed and carrying large sums of money. The few
attacks on travelers which are on record have generally been due to
revenge or some other personal motive. There is petty thievery, but no
more than anywhere else. A friend of mine used to remark that he had
never seen so many chickens in a community where there were so many
negroes. No criminal is so greatly despised as a thief, and to accuse
a person of being "mean enough to steal a pig" is a mortal insult. A
distinction is made, however, between public honesty and private
honesty, and the impression has been only too general that stealing
from the state is not stealing.

The most common serious offenses are homicide and assaults committed
in sudden quarrel or due to jealousy. Not a little mischief was caused
by the unfortunate habit of going armed.

The attractions of the fair sex give rise not only to crimes of
jealous passion, but also to other missteps, such as seduction and
similar offenses. The average of these is not greater, however, than
in other southern countries.

CHAPTER XXI

THE DOMINICAN DEBT AND THE FISCAL TREATY WITH THE UNITED STATES

Financial situation in 1905.--Causes of debt.--Amount of debt.--Bonded
debt.--Liquidated debt.--Floating debt.--Declared claims.--Undeclared
claims.--Surrender of Puerto Plata custom-house.--Fiscal convention of
1905.--Modus vivendi.--Negotiations for adjustment of debt.--New bond
issue.--Fiscal treaty of 1907.--Adjustment with creditors.--1912
loan.--Present financial situation.

Rarely have the fiscal affairs of a country experienced so rapid and
radical a change for the better as those of Santo Domingo since 1904,
and rarely has a financial measure so quickly proved its efficacy as
the fiscal convention between the United States and Santo Domingo. In
the beginning of the year 1905 Santo Domingo had fallen to the lowest
depths of bankruptcy and financial discredit. After decades of civil
disturbance, misrule and reckless debt contraction, the deluge had
come. The substance of the country had been wasted in military
expenditures; agriculture and commerce were stagnant; a debt of over
$30,000,000 had been contracted with nothing to show for it but
forty-two miles of narrow-gauge railroad and two small gunboats; the
government obligations were chronically in default and interest
charges were piling up at ruinous rates; every port of the Republic
was pledged to foreign creditors who were clamoring for payment; one
port had already been seized and the occupation of the others by
foreign powers was imminent. At this juncture the Dominican government
applied to the United States for assistance and the custom-houses of
the Republic were placed in charge of an American general receiver,
with the obligation of reserving a specified portion of the customs
income for the creditors and turning the remainder over to the
Dominican government. The situation immediately changed as if by
magic. The imports and exports, and with them the income of the
government, quickly reached higher figures than the country had ever
seen, the national debt was scaled down by almost one-half and the new
Dominican bonds issued in 1907 to convert the old debt went nearly to
par in the markets of the world.

(a) Periodic accumulation of floating debt, owing to:
1. Political instability, requiring large outlays for soldiery,
for bribery of potential revolutionists, and for suppression
of actual revolutions.
2. Corruption of officials.
3. "Asignaciones" or pensions to mollify enemies and to reward
friends of the existing rgime.
(b) Usurious interest computations, on account of:
1. "Bonus" in principal,
2. Extravagant interest rates.
(c) Interest default and compounding accumulations.
(d) Recognition and liquidation of excessive or illegal claims as a
condition of further advances.

In order to obtain more positive information with reference to
outstanding Dominican indebtedness, for use in connection with the
pending fiscal treaty, the American government in the early part of
1905 commissioned a financial expert, Prof. Jacob H. Hollander, of
Johns Hopkins University, to proceed to Santo Domingo and make an
investigation of financial conditions. Prof. Hollander, in an
elaborate report, found the amount of the claims pending against the
Dominican Republic on June I, 1905, to be $40,269,404.38, distributed
as follows:

Bonded debt........................ $17,670,312.75
Liquidated debt...................... 9,595,530.40
Floating debt........................ 1,553,507.79
Declared claims...................... 7,450,053.89
Undeclared claims.................... 4,000,000.00
--------------
Total indebtedness................. $40,269,404.38

The bonded debt, as above designated, comprised the public
indebtedness represented by outstanding bonds; the liquidated debt
consisted of items secured by international protocols or by formal
contracts; the floating debt consisted of admitted indebtedness,
neither funded nor secured, but evidenced by public obligations; the
declared claims were claims presented for reimbursement or indemnity
but not expressly recognized by the government; and the undeclared
claims were claims of the same nature not yet formally presented. A
brief description of each of these items will afford an idea of the
general character, of Dominican financiering and a better
understanding of Dominican history.

_Bonded Debt_. The bonded debt held by Belgians and
French and amounting to $17,670,312.75, was the final
outcome of eight consecutive bond issues floated by the
Republic, as follows:

Interest
per Term
Date Amount cent years Name_

1869 757,700 6 25 Hartmont loan
1888 770,000 6 30 Westendorp loan
1890 900,000 6 56 Railway loan
1893 2,035,000 4 66 4 per cent consolidated gold bonds
1893 $1,250,000 4 66 4 per cent gold debentures
1894 $1,250,000 4 66 French-American reclamation
consols
1895 $1,750,000 4 66
1897 1,736,750 2-3/4 102 Obligations or de Saint Domingue
1,500,000 4 83 Dominican unified debt 4 per cent
bonds

In making its very first loan, in 1869, the Dominican government fell
into the hands of sharpers and was mercilessly fleeced. The bargain,
even if it had been honestly carried out, was improvident enough.
Reduced to American money the nominal amount of the loan was
$3,788,500; of this amount the Republic was to receive but $1,600,000;
yet it contracted to pay as interest and sinking fund in twenty-five
years a sum amounting to $7,362,500. The contractors for the loan,
Hartmont & Co., of London, were authorized to retain $500,000 as their
commission. In fact, however, no more than $190,455 was ever paid to
the Dominican government. The brokers claimed that they tendered a
further sum of $1,055,500, though after the expiration of the time
limited in their contract, and that the tender was refused because of
negotiations then under way for the annexation of the Republic to the
United States, but such tender is denied on the Dominican side. At all
events, the loan contract was cancelled by the Dominican senate in
1870 on the ground of non-compliance of the brokers with its
conditions and the government made no payments for interest or sinking
fund. The brokers nevertheless continued to sell bonds in London and
pay the current interest with the proceeds. Incidentally in addition
to collecting their commission, they turned a penny for themselves by
taking the bonds with their friends at 50 and selling them to the
public at 70. When the Dominican repudiation of the bond issue was
published in England in 1872 a cash balance of $466,500 still remained
to the credit of the Dominican government, but it was coolly pocketed
by the principal agent, who claimed it as a set-off against alleged
damages in connection with a concession he had near Samana. In the ten
years of anarchy that followed in Santo Domingo no attempt was made to
straighten out the matter. The bonds having gone into default in 1872
dropped lower and lower until they reached 3 per cent in 1878.

The setback received by the credit of the Republic by reason of the
defaulted Hartmont bonds made further bond issues impossible for a
number of years. Finally an Amsterdam banking house, Westendorp & Co.,
was interested and in 1888 and 1890 floated the second and third bond
issues for 770,000 and 900,000 respectively. The object of the
second issue was to retire the Hartmont bonds at 20 per cent, to pay a
number of floating interior debts the owners of which were harassing
the government, and to provide cash for the treasury, principally for
military and naval expenditures, while the third issue was designed to
secure funds for the construction of a railroad between Puerto Plata
and Santiago. For the purpose of providing for the service of the loan
a collection office known as the "caisse de la regie," or simply
"regie," under the management of Westendorp, took charge of the
customhouses with the obligation of paying a certain amount to the
government monthly and devoting the remainder to payment of interest
and sinking fund of the loans. The arrangement was thus similar to the
later receivership plan, but its vulnerable point was that it was
operated by a private concern.

The first instalments of interest and sinking fund on these two bond
issues were paid from the proceeds of the bonds, then for several
months the "regie" supplied funds, and then came the first crash. The
government was ever in need of money and to secure the same violated
its agreements by seizing certain revenues to pledge them to local
merchants for advances, and by conniving at customs irregularities. As
a result, after paying the sums for the budget, the "regie" had
nothing left for the service of the bonds and they went into
default in 1892.

Westendorp was almost ruined by this occurrence and became anxious to
draw out of his Dominican entanglements. He applied to Smith M. Weed
and Brown and Wells, New York attorneys, to negotiate a sale of his
bonds to the United States government, transferring also his right to
collect the Dominican customs. The United States government declined,
whereupon Weed, Wells and Brown organized the famous San Domingo
Improvement Company under the laws of New Jersey, the claim of which
was later the prime factor in bringing about American intervention in
Santo Domingo. Subsequently two other companies, the San Domingo
Finance Company and the Company of the Central Dominican Railway, were
incorporated, also under the laws of New Jersey, as auxiliaries of the
Improvement Company, but they were all managed by the same persons.
The San Domingo Improvement Company took over Westendorp's holdings
and was placed in control of the "regie." A fourth bond issue, of
2,035,000 was floated through the agency of the Improvement Company
in 1893 for the conversion of the outstanding government bonds. The
Improvement Company also completed the railroad from Puerto Plata to
Santiago, which was the only improvement it ever effected in the
Republic and this it did with Dominican money. It further took from
the Republic at rates very favorable to the Company a fifth, sixth and
seventh bond issue, in 1893, 1894 and 1895 respectively, aggregating
$4,250,000, for the payment of government indebtedness. The
obligations paid by the first two of these issues were in considerable
part inflated claims against the government, capitalized at excessive
interest rates, those satisfied by the 1895 issue arose principally
out of indemnity claims made by France for mistreatment of French
citizens and for debts due them.

The Dominican government took no warning from previous disasters but
continued in its course of reckless debt contraction. In order to
equip warships and arsenals it borrowed money right and left at rates
of interest which ranged anywhere from 18 to 30 per cent per annum.
The loans were guaranteed by customs revenues which the creditors were
authorized to collect direct from the importer. Thus the amount
collected by the "regie" was not sufficient to provide for the service
of the ever increasing bonded debt and in 1897 there was
another default.

The old remedy of a new bond issue was to be tried again. The San
Domingo Improvement Company undertook to float the eighth bond issue
of 2,736,750 in bonds at 2-3/4 per cent and 1,500,000 in bonds at
four per cent. With these bonds it contracted to convert all previous
bonds then outstanding, to pay overdue interest and to secure for the
government over $1,000,000 in cash. President Heureaux issued drafts
on this presumption, but it soon became evident that it would be
impossible for the Improvement Company to carry out the contract. The
company blamed the government and the government the company. The
situation quickly became chaotic. Eventually the conversion of the
older bond issues was completed, though at enormous cost. Bonds to the
value of 600,000 were absorbed during the transaction with at most a
cash payment of $250,000 to the Dominican fiscal agent in Europe. In
the meantime the government tried the experiment of a large emission
of paper money in which the customs dues were partly payable. The
paper depreciated as fast as it was issued, the revenues were again
insufficient and the new bond issue suffered default in April, 1899.

While plans for further action were under consideration, President
Heureaux was shot in July, 1899, and the revolution which followed his
death made Jimenez president. The new administration in 1900 entered
into a contract with the San Domingo Improvement Company for a
different distribution of the customs revenues, but a condition was
introduced that the consent of the majority of bondholders be obtained
for the funding of interest up to 1903. A large number of Belgian and
French bondholders had become dissatisfied with the Improvement
Company, however, and repudiated the contract and all connection with
the Company. In Santo Domingo, too, there was general hostility
towards the Improvement Company which was regarded as an associate of
President Heureaux and an incubus on the development of the country.
The Company claimed it had secured the consent of a majority of
bondholders but the government decided it had not and in January,
1901, President Jimenez issued a decree excluding the Improvement
Company from the custom-houses.

The government now made a new contract with the Franco-Belgian
bondholders, and for the payment of its obligations pledged its
customs revenues, and specifically the income of the ports of Santo
Domingo City and San Pedro de Macoris. But if there had been default
before, in time of peace, with the "regie" in charge of the
custom-houses, there was still less money available for the creditors
now, with no control by creditors over collections and the government
harassed by constant revolutionary uprisings. Small partial payments
were made for two years and then ceased. As the Improvement Company's
bond holdings became the subject of a special arrangement, the bonded
debt of the Republic was considered to be that held by the French and
Belgian creditors. However unsavory the debts which gave origin to the
bond issues, and however imprudent most of the bond issues themselves,
the great majority of bonds had passed into the hands of small
holders, innocent third parties who sustained great loss by the
continued suspension of payments.

_Liquidated Debt_. The liquidated debt, secured by international
protocol or formal contract, Prof. Hollander found to be as follows on
June 1, 1905:

San Domingo Improvement Company
(American and British)................. $4,403,532.71
Consolidated internal debt
(chiefly Spanish, German and American).. 1,737.151.35
Internal debt held by Vicini heirs
(Italian)............................... 1,598,876.04
Old foreign debt
(chiefly Italian and Dutch)............... 365,183.20
Sala claim (American)....................... 356,314.20
Vicini heirs (Italian)...................... 242,716.32
Italian protocol............................ 186,750.36
Spanish-German protocol..................... 100,034.00
B. Bancalari (Italian)...................... 175,000.00
J. B. Vicini Burgos (Italian)................ 55,500.00
Ros claim (American)......................... 39,967.78
Two cacao contracts
(chiefly Dominican and German)............... 68,296.16
Bancalari, Lample & Co. (Italian)............ 16,733.19
Twenty-eight minor contracts
(chiefly Spanish, American)............... 249,475.19
------------
Total.................................... $9,595,530.40

The claim of the San Domingo Improvement Company was secured by a
protocol between the American and Dominican governments. When the San
Domingo Improvement Company was ousted from the custom-houses in 1901,
it immediately appealed to the State Department in Washington. The
State Department counselled a private settlement and negotiations with
the Dominican government dragged on for almost two years. The
Improvement Company claimed no less than $11,000,000 for the bonds it
held or controlled, for its interest in the railroad from Puerto Plata
to Santiago, for its shares of the extinct National Bank of Santo
Domingo which it had purchased at the government's request, and for
the settlement of a long list of minor claims. Arbitration was
suggested by the Company, but the Dominican government finally offered
a round sum of $4,500,000 and the offer was accepted. It is probable
that the Republic fared better under this compromise than if the case
had been submitted to arbitration, for though the Improvement
Company's demands were greatly exaggerated, its position toward the
government was that of a careful creditor who has kept minute account
of all transactions as against a spendthrift debtor who has squandered
his property with little or no record of his expenditures.

By a protocol signed January 31, 1903, the Dominican government
formally agreed to pay the sum of $4,500,000, leaving details to be
settled by a board of arbitrators to be designated by the American and
Dominican governments. The board met in Washington and rendered its
award under date of July 14, 1904. It fixed the interest on the debt
at four per cent per annum and designated the custom-houses of Puerto
Plata, Sanchez, Samana and Monte Cristi as security for the debt. In
the event of failure by the Dominican government to pay any of the
monthly instalments specified, a financial agent, appointed by the
United States, was authorized to enter into possession of the Puerto
Plata custom-house, and if its revenues proved insufficient to take
possession also of the other custom-houses designated. The Dominican
government never made any payments and the financial agent took
possession of the Puerto Plata custom-house in October, 1904. Most
of the other claims comprised in the liquidated debt had their origin
in advances made to the government--often bearing interest at two or
three per cent a month, or even more--and in indemnity claims for
revolutionary damages. In making the liquidations, musty credits and a
generous amount of compound interest were generally included and it
was usually provided that the sums so agreed upon were themselves to
bear interest. The greater portion of these claims was held by
foreigners, Italian, German, Spanish and American holdings
predominating. Payments, more or less feeble, were made in many cases
on account of principal or interest up to 1903, but in that year, when
the government was reduced to desperate straits in combatting
insurrections, practically every item of the debt went into
permanent default.

The principal Italian claimants were the heirs of an Italian merchant,
J.B. Vicini, and an Italian in business at Samana, Bartolo Bancalari
by name, who with other Italian subjects became loud in their
complaints at the non-payment of their claims. The Italian government
began to do a little sword-clanking, the Italian minister came from
Havana in a warship, and the upshot was the signing in 1904 of three
protocols admitting most of these claims and solemnly promising to pay
them. Payment of the internal debt held by the Vicini heirs and of the
Italian revolutionary claims was guaranteed by five per cent of all
the customs receipts of the Republic, the revenues of Santo Domingo
City, Macoris, Sanchez and Puerto Plata being specifically pledged.
The Bancalari debt was guaranteed by part of the customs revenues of
Samana. Notwithstanding the protocols, no payments were made by the
Dominican government.

_Floating Debt_. The floating debt, consisting of admitted
indebtedness, neither funded nor liquidated, but evidenced by some
kind of public obligation, was found to be as follows:

Registered deferred debt................... $587,710.24
Registered floating debt.................... 140,850.27
Privileged revolutionary debt................ 79,812.12
Certificates of comptroller's office........ 633,124.60
Certificates of treasury offices............. 31,771.07
Open unsecured accounts...................... 80,239.49
----------
Total.................................... $1,553.507.79

By the year 1902, a large number of small claims--many of them for
supplies furnished and services rendered--had accumulated, the justice
of which the government admitted but of which owing to the
deficiencies in its books it had no record. Notices were accordingly
published calling on holders of such lawful credits to present the
same for registration. This was the origin of the so-called registered
debts. The largest item was constituted by what was very aptly
denominated the "deferred" debt, created in 1888. Prior to that time
the government had covered its military deficits with money obtained
from loan associations known as "credit companies," which flourished
in the larger towns and which did business at an interest rate that
fluctuated between five and ten per cent a month. When a settlement
was finally made, part of the amount due these companies was paid in
certificates of indebtedness, the law directing with subtle humor that
they be paid from the annual surplus in the budget. There never was a
surplus, nothing was ever paid, and the market value of these
certificates fell to three per cent of their nominal value.

The revolutionary debt above referred to, consisting of claims arising
in the revolutions which brought Jimenez into power, was called
"privileged" because it was assigned interest. To some extent it was,
indeed, privileged, for partial payments were made until the middle of
1903. The government certificates forming part of the floating debt,
were acknowledgments of indebtedness issued by the government when it
was pressed for ready money. Many bore no interest, others bore
interest as high as two per cent a month. In view of the great
uncertainty of payment the amount of indebtedness was generally either
frankly or disguisedly inflated before being expressed in the
certificate. Such certificates were sometimes admitted in part payment
of customs dues.

_Declared Claims_ Besides the admitted indebtedness, there were many
claims for indemnity and reimbursement which had not been acknowledged
by the government in contract form. Some had been formally filed with
the government for the payment of specific amounts, while others were
still general demands. The declared claims were as follows:

Internal revolutionary claims................... $ 885,258.10
American revolutionary claims................... 71,000.00
Spanish revolutionary claims.................... 40,000.00
French revolutionary claims..................... 190,000.00
Italian revolutionary claims.................... 40,000.00
German revolutionary claims..................... 10,000.00
British revolutionary claims.................... 5,000.00
Cuban revolutionary claims...................... 35,000.00
Font claim (Spanish)............................ 186,643.00
Heureaux estate claim (Dominican)............... 3,100,000.00
National bank notes............................. 1,574,647.00
Lluberes contract (Dominican)................... 250,000.00
West India Public Works Company claim (British). 250,000.00
Vicini heirs claim (Italian).................... 812,505.00
______________
Total...........................................$7,450,053.89

Most of the older claims of indemnity for damages suffered during
revolutions crystallized into bonded indebtedness, were recognized in
government contracts or protocols, drifted into the old foreign debt,
or were represented by certificates of indebtedness. Some remained,
however, and their number was greatly increased by the disturbances
between 1899 and 1905. How exaggerated many such claims were, is
illustrated by a story told by the Danish consul in Santo Domingo. A
Danish subject came to him and complained that government soldiers had
invaded his store and carried off merchandise. He begged the consul to
present a damage claim of $10,000 gold, which was equivalent to
$50,000 silver. The consul listened to his story and said: "You are
asking for a large sum, I cannot get you that. I doubt whether I can
get you more than $40, silver." "Make it gold, consul," was the
immediate reply. Many other claims would not have suffered by a
similar scaling down. Most claims were for houses burned, cattle
killed, horses commandeered and fences and other property destroyed by
government forces or revolutionists.

The other declared claims arose principally out of alleged violations
of concessions or other contractual obligations. The Heureaux estate
claim, advanced by creditors of the Heureaux estate and based on the
practical identity of the accounts of Heureaux and those of the
government was later rejected by the Dominican courts. The outstanding
national bank notes were those issued by the defunct Banque Nationale
de Saint Domingue.

_Undeclared Claims_. The undeclared claims, such as
had not been formally presented, were estimated as
follows:--

American claims......................... 1,000,000
British claims.......................... 50,000
Italian claims.......................... 200,000
Spanish and German claims............... 200,000
Other foreign claims.................... 50,000
Dominican claims........................ 2,500,000
----------
Total............................ 4,000,000

The foreign claims were principally for damages during revolutions,
violations of contract, failure of justice, false imprisonment, etc.
The principal one was an American claim, that of Wm. P. Clyde & Co.,
of New York, of over $600,000 and was based on the failure of the
Dominican government regularly to enforce certain high port dues
against all vessels, save those of the Clyde line, as agreed in the
Clyde concession. The Dominican claims were mostly old claims for
unpaid salaries, revolutionary losses, merchandise furnished the
government, etc.

The situation towards the latter part of 1904 appeared hopeless. Every
item of the enormous debt had been in default for many months and
interest was accruing at such rate that the whole income of the
country would hardly have been sufficient for the payment of interest
alone. Commerce was handicapped by high wharf and harbor charges
collected by private individuals under their concessions from the
government, and by prohibitive port dues imposed on foreign vessels in
accordance with the concession of the Clyde line. More than
three-fourths of the debt was held by foreigners who were clamoring
for payment. The general revenues of the country and every important
custom-house had been mortgaged to these foreign creditors. In general
terms it may be said that the ports of the northern coast were pledged
primarily to Americans and secondarily to Italians, those of Samana
Bay primarily to Italians and secondarily to Americans, and those of
the southern coast primarily to French and Belgians and secondarily
to Italians.

Only one of the international protocols, however, specified when the
custom-houses to which it referred were to be turned over and the
manner in which the surrender was to be made. The others merely made
the pledge in general terms, further negotiations being necessary to
render it effective. The exception was the arbitral award of the San
Domingo Improvement Company, which determined that in case of the
nonpayment of any of the monthly instalments a financial agent, to be
named by the United States government, was to enter into possession of
the Puerto Plata custom-house. No payments of instalments were made by
the Dominican government and in September, 1904, compliance with the
terms of the award was demanded. On October 20, 1904, the
vice-president of the San Domingo Improvement Company, designated as
American financial agent, was placed in possession of the custom-house
at Puerto Plata.

A cry of dismay ran through the land and the leading newspaper of
Santo Domingo, the "Listin Diario," published an editorial under the
expressive heading "Consummatum est," It was, indeed, the beginning of
the end. The other foreign creditors now pressed their claims with
more vigor than ever, and the preparations for turning over the Monte
Cristi custom-house to the American financial agent, accomplished in
February, 1905, stimulated them to greater exertions. In December,
1904, the French representative in Santo Domingo, acting in behalf of
the French and Belgian interests, threatened to seize the custom-house
of Santo Domingo City, the mainstay of the government. The Italian
creditors also demanded compliance with their agreements. It was
obvious that the foreclosure of these foreign mortgages would mean
indefinite foreign occupation and the absolute destruction of the
Dominican government, as there would be no revenue left to sustain it.

In this difficulty, the Dominican government proposed that all the
ports of the Republic be taken over by the United States. The
negotiations were carried on through the capable American minister in
Santo Domingo, Thomas C. Dawson, and on February 7,1905, culminated in
the signing of a treaty convention which provided that all Dominican
customs duties be collected under the direction of the United States,
that 45 per cent of the collections be turned over to the Dominican
government for its expenses and the remaining 55 per cent be reserved
as a creditors' fund, and that a commission be appointed to ascertain
the true amount of Dominican indebtedness and the sums payable to
each claimant.

The treaty was laid before the United States Senate and met with a
cold reception. In the United States there was even less desire than
in Santo Domingo for American intervention in Dominican matters.
Further the treaty was strongly advocated by President Roosevelt and
the tension then existing between the Senate and the President
endangered many of his measures. The Senate accordingly adjourned in
March, 1905, without action on the Dominican treaty.

It was the darkest hour for Santo Domingo. The creditors, tired of
waiting, were in no mood to admit of further delay and the government,
totally without resources, was in no position to appease them.
Diplomacy was equal to the emergency and a modus vivendi was arranged,
under which the President of the United States was to designate a
person to receive the revenues of all the custom-houses of the
Republic and distribute the sums collected in a manner similar to that
determined by the pending treaty, namely, to turn over 45 per cent of
the receipts to the Dominican government and to deposit 55 per cent as
a creditors' fund in a New York bank. This temporary arrangement went
into effect on April 1, 1905. The new controller and general receiver
of Dominican customs arrived with several American assistants and soon
had the receivership service admirably organized. The effect was
immediate. The creditors ceased their pressure, confidence returned,
interior trade revived, smuggling was eliminated, the exports and
imports increased and the customs receipts took a leap upwards.

It was believed that the opposition in the United States Senate would
be diminished, if, instead of the United States both adjusting the
debt and collecting the money for its payment, the Dominican Republic
should make a direct settlement with the creditors, and the United
States merely undertake to administer the customs for the service of
the debt as adjusted. Accordingly the Dominican government appointed
the minister of finance, Federico Velazquez, as special commissioner
to adjust the Republic's financial difficulties. After long and
tedious negotiations, Minister Velazquez and his able adviser Dr.
Hollander evolved three conditional agreements:

(1) An agreement with the banking firm of Kuhn, Loeb & Co. of New
York, for the issue of fifty year 5 per cent bonds of the Dominican
Republic to the amount of $20,000,000.

(2) An agreement with the Morion Trust Company of New York to act as
fiscal agent of the Dominican Republic and as depository in the debt
adjustment.

(3) An offer of settlement to the holders of recognized debts and
claims, to adjust these in cash at rates varying from 10 to 90 per
cent of the nominal values specified in the offer. The nominal
aggregate, as recognized by the Republic, exclusive of accrued
interest, was $31,833,510, for which it was proposed to pay
$15,526,240, together with certain interest allowances.

The proposed scaling down of the debts provoked opposition and
remonstrance, but the creditors wisely reflected on the difference
between a bird in the hand and more in the bush, and by the beginning
of 1907 holders of credits had signified their assent in sufficient
amount to assure the success of the readjustment.

A new convention between the United States and the Dominican Republic
was accordingly prepared, being signed in Santo Domingo on February 8,
1907. It was ratified by the United States Senate on February 25, and
by the Dominican Congress on May 3, 1907. The Dominican Congress added
what it called explanatory articles to the law by which it approved
the convention but made no change therein.

This convention, a copy of which will be found in the appendix,
recited that disturbed political conditions in the Dominican Republic
had created debts and claims amounting to over $30,000,000; and that
such debts and claims were a burden to the country and a barrier to
progress; that the Dominican Republic had effected a conditional
adjustment under which the total sum payable would amount to not more
than $17,000,000; that part of the plan of settlement was the issue
and sale of bonds to the amount of $20,000,000; that the plan was
conditional upon the assistance of the United States in the collection
of custom revenues of the Dominican Republic; and that "the Dominican
Republic has requested the United States to give and the United
States is willing to give such assistance."

The two governments therefore agreed that the President of the United
States shall appoint a general receiver of Dominican customs, who
shall collect all the customs duties in the custom-houses of Santo
Domingo until the payment or redemption of the entire bond issue. From
the sums collected, after paying the expenses of the receivership the
general receiver is on the first of each month to pay $100,000 to the
Fiscal Agent of the loan and the remainder to the Dominican
government. Whenever the customs collections exceed $3,000,000 in any
year, one-half the excess shall be applied to the sinking fund for the
further redemption of bonds.

The Dominican government agrees to give the general receiver and his
assistants all needful aid and full protection to the extent of its
powers. The United States also undertakes to give the general receiver
and his assistants such protection as it, may find to be required for
the performance of their duties.

The convention further stipulates that until the payment of the full
amount of the bonds the Dominican Republic is not to increase its
public debt except by previous agreement with the United States, and
that a like agreement shall be necessary to modify the import duties.

Even with the approval of the convention difficulties lay in the way
of the debt adjustment. In Santo Domingo there was opposition to the
plan by interested parties and by persons not sufficiently mindful of
past errors and present dangers. The Dominican Congress mutilated the
contracts with the bankers, who not only refused to accept the
modifications, but declined to treat further with Minister Velazquez
unless he were first invested with plenary powers. The Dominican
Congress then extended the necessary authority, but it came late, for
the fall of 1907 witnessed a money panic in the United States and the
floating of a bond issue was impossible.

After months of negotiations and struggle with recalcitrant creditors
Minister Velazquez and Prof. Hollander finally perfected an
arrangement under which the creditors were paid the amounts specified
in the plan of adjustment, twenty per cent in cash and eighty per cent
in bonds guaranteed by the fiscal convention. For the purpose of the
cash payments the creditors' fund accumulated under the modus vivendi
was utilized. The bonds were delivered to the creditors at the rate of
98-1/2 per cent of their face value.

Under the plan of settlement the outstanding Franco-Belgian bonds and
most of the other debt items were redeemed at fifty per cent of their
face value, the Improvement Company's claim at ninety per cent, the
deferred debts and comptroller's certificates at ten per cent, and the
remaining claims at rates varying from ten to forty per cent.
Accumulated interest was remitted entirely by the creditors, except in
three cases, in which it was greatly reduced. These terms were much
better than the Republic could have expected from any commission of
investigation. The arbitral award of the San Domingo Improvement
Company was scaled down by only ten per cent, because the bonds
comprised in the award had been included therein at only one-half
their face value and the other credits had also been largely reduced;
even this small discount brought howls of protest from British
interests that had remained discreetly silent while the State
Department was pressing the claim thinking it completely American.
Payment under the plan of settlement was soon practically completed.
Only one important group of creditors, the Vicini heirs, still refuses
to assent to the plan and accept the amount set aside for them.

Upon payment to the San Domingo Improvement Company, the Company
turned over the Central Dominican Railway, from Puerto Plata to
Santiago, to the Dominican government. The right of the
Samana-Santiago Railroad to receive a percentage of the import duties
collected at the port of Sanchez was redeemed by the delivery of
$195,000 in bonds at par, an excellent bargain, made all the better by
the circumstance that the railroad invested the proceeds of these
bonds in the extension of its line in the interior. The restrictive
concession and heavy damage claim of the Clyde Steamship Line were
also cancelled, and the onerous wharf and harbor concessions at the
various ports of the Republic were among the other important
concessions acquired by the government by means of the bond issue.

Thus debts and claims aggregating nearly $40,000,000 have been and
will be discharged for about $17,000,000. The surplus remaining from
the bond issue and the modus vivendi collections must, under the
agreements made, be devoted to public improvements approved by the
United States government: a portion has been so expended, and a fund
of over $3,000,000 still remains available. In addition the Republic's
credit was established on a high plane; burdensome concessions were
redeemed and adequate revenues for the maintenance of the government
and the progress of the country were assured. As time goes on proper
appreciation will be given to the men who were the principal agents in
securing this financial and economic regeneration, especially to the
Minister of Finance, Federico Velazquez, and to Prof. Jacob H.
Hollander. While the fiscal convention largely increased the customs
revenues, the Dominican government made no attempt to accumulate a
reserve fund, but spent more even than authorized by its ever
increasing budgets. During the period of civil strife following the
assassination of President Caceres in 1911 the government, in order to
carry on its military campaigns, neglected to pay the salaries of its
civil employees, pledged its internal revenues, diverted and
misapplied amounts of the trust fund set aside for public works, and
incurred indebtedness for supplies and materials purchased and money
borrowed. It thus violated the spirit and letter of the convention in
which the Dominican Republic expressly agreed not to increase its
public debt except by previous agreement with the United States.

The American government, in its unwillingness to interfere in the
internal affairs of the Dominican Republic, had suffered the Victoria
administration to seize the government in Santo Domingo after the
death of Caceres, and it now also condoned the violation of the fiscal
convention. The American commission which went to Santo Domingo in
1912 to reconcile the warring factions, found that an essential
condition of the restoration of peace and the rehabilitation of the
government was the payment of pending salaries and certain other
debts. Accordingly the United States consented to an increase of the
Dominican public debt by $1,500,000, and the Dominican government
contracted a loan to that amount with the National City Bank of New
York, which took the bonds at 97-1/2 Per cent. The bonds bore 6 per
cent interest, and for the service of interest and sinking fund, it
was agreed that the general receiver of customs pay over to the Bank,
beginning in January, 1913, a monthly sum of $30,000. This bond issue
was finally liquidated in 1917. The amount so borrowed was not
sufficient to pay all the indebtedness of the Dominican government.
The manner of circumventing the debt increase prohibition of the
convention having been discovered, the interior debt was further
augmented after that time by failure to pay salaries, by hypothecating
stamps and stamped paper, and by contracting other obligations, either
to combat insurrections or because of less worthy motives. In
addition, claims for revolutionary damages were filed against the
government.

The foreign debt thus consists merely of the $20,000,000 customs
administration loan of 1907. The sums paid into the sinking fund of
this loan have been used to purchase bonds of this issue at their
market price, somewhat less than par, and the interest falling due on
such purchased bonds has also gone to swell the sinking fund. The
value of the assets in the sinking fund on December 31, 1917,
estimating the purchased customs administration bonds at par, was
$6,019,161.50, exclusive of interest accruals in 1917.

The interior debt, as a result of revolutionary confusion and
defective accounting, became as problematic as in days of yore and was
estimated at widely different figures. With a view to ascertaining the
exact amount and making provision therefor, the military government,
in July, 1917, constituted a commission consisting of three American
and two Dominican citizens, who were charged with the duty of
investigating and liquidating all claims against the government
arising since the settlement of 1907. The American members appointed
were J. H. Edwards, acting comptroller-general of Santo Domingo,
chairman, Lt.-Col. J. T. Bootes, of the United States Marine Corps,
and Martin Travieso, Jr., of the Porto Rican bar; the Dominicans were
two attorneys, M. de J. Troncoso de la Concha and Emilio Joubert.
Claimants were called upon to file their claims before January 1,
1918, or be deemed to have relinquished their rights. The nominal
amount of the claims so filed--comprising all outstanding internal
debts--is a little more than $14,000,000, some of the claims being for
indefinite sums. This figure is probably greatly exaggerated and will
doubtless be subjected to drastic revision by the claims commission.

The customs receivership has continued to render invaluable service.
In peace and war its officials have distinguished themselves by a
highly efficient, tactful and fearless discharge of their duties. Up
to 1913 appointments to the service were determined by the fitness and
experience of the appointee rather than by his political antecedents,
and the officials appointed possessed unusual qualifications: the
first general receiver, Col. George R. Colton, who held until 1907,
his successor W. E. Pulliam, who continued until 1913, their deputy J.
H. Edwards, and others, were experts trained in the Philippine
customs service.

CHAPTER XXII

FINANCES

Financial system.--National revenues.--Customs tariff.--National
budget.--Legal tender.--Municipal income.--Municipal budgets.

The financial system of Santo Domingo is characterized by an
inequitable mode of obtaining public revenue, whereby the burden of
supporting the state is thrown upon the poorest classes in the form of
indirect taxes upon articles of necessary consumption, and wherein
taxation of property or contribution according to economic capacity
plays little part. This is especially true with regard to
municipal taxation.

NATIONAL FINANCIAL SYSTEM

The revenues of the general government are derived chiefly from
customs duties and secondarily from miscellaneous minor sources. There
is no direct tax on land. Prior to 1904 the revenues fluctuated
according to the state of tranquillity of the country, being usually
something less than $2,000,000 per annum, but immediately upon the
establishment of the American receivership in April, 1905, they went
up rapidly. The increase has continued steadily and the government's
annual income now amounts to over $4,500,000.

The proportion of revenue calculated from the various sources has
fluctuated but little in the different budgets. The proportions
appearing from the budget of 1916 are here shown, as well as those of
the budget of 1910, at which period the interior revenues were
administered with less leakage.

Per cent of total
1910 1916
Customs duties........................ 77.2 81.7
Impost on alcohol..................... 6.8 4.4
State railroad........................ 6.4 ...
Revenue stamps........................ 3. 3.6
State wharves......................... 2.1 4.4
Port dues............................. 1.5 1.8
Stamped paper......................... 1.4 2.
Post offices.......................... .7 .8
Consular fees......................... .4 .9
National telegraph and telephones..... .3 .2
Miscellaneous......................... .2 .2
-----------
Total........................... 100. 100.

Almost 95 per cent of the customs receipts are obtained from import
duties. The present customs tariff, which took effect on January 1,
1910, made a radical change in the Dominican tariff system and was a
step in the country's financial regeneration. Theretofore the
Dominican tariff system was about as unscientific as could be
imagined. It had been a tariff for revenue only, in the sense that
the object was to obtain all the revenue possible and more;
accordingly the common necessities of life were most heavily taxed.
Originally, it appears, the tariff provided for the payment of an ad
valorem duty on goods imported; later the discretionary power involved
in the appraisement was taken away and a fixed, arbitrary value was
assigned by law to each article, and on this value, known as the
"aforo," a specified percentage was payable as customs duty.
Successive governments, in their efforts to raise money, gradually
increased this percentage until it reached 73.8 per cent. As the
"aforo" valuation was as a general rule higher than the real value the
imposition of so elevated a tax made all imported articles
inordinately expensive. With respect to many items the lawmakers
overreached themselves, for the duties were raised far beyond the
point of maximum return.

For years a desire prevailed to adjust the tariff on a rational and
equitable basis, but as there were no statistics and the government
feared its income might be reduced, nothing was accomplished. After
the establishment of the receivership, full statistics of imports and
exports became available. The general receiver's office and the
Dominican government accordingly drafted a new tariff, to which the
American government agreed under the terms of the fiscal convention.

The new tariff is based almost entirely on specific schedules; only in
exceptional instances, such as in the case of drugs, are ad valorem
duties imposed. There were many reductions from the former tariff,
especially on articles of prime necessity, but in some cases the rate
remained substantially the same, while in a few it was slightly
increased, a tendency being observed to protect home industries. On
the whole the revision made an average reduction of about 15 per cent
as compared with the former tariff, but the new duties are
scientifically distributed and after a year of commercial readjustment
the revenue reached higher figures than ever before.

Less than 6 per cent of the customs receipts are derived from export
duties. Such duties are imposed on cacao and a number of other
articles, but not on sugar or tobacco. The tax is not a large one, but
the imposition of any export tax is deplored.

Wars and crop conditions have had their influence on the customs
receipts, but the figures continue satisfactory, as appears from the
following table of collections since the establishment of the
receivership:

GROSS CUSTOMS COLLECTIONS

First Modus Vivendi year, April 1, 1905, to March 31, 1906
.................................................... $2,502,154.31
Second Modus Vivendi year, April 1,1906, to March 31, 1907
.................................................... $3,181,763.48
Four months' period, April 1, 1907, to July 31, 1907
(termination of Modus Vivendi)...................... $1,161,426.61
First convention year, Aug. 1, 1907 to July 31, 1908
.................................................... $3,469,110.69
Second convention year, Aug. 1, 1908 to July 1909
.................................................... $3,359,389.71
Third convention year, Aug. 1, 1909 to July 1910
.................................................... $2,876,976.17
Fourth convention year, Aug. 1, 1910 to July 1911
.................................................... $3,433,738.92
Fifth convention year, Aug. 1, 1911 to July 1912
.................................................... $3,645,974.79
Sixth convention year, Aug. 1, 1912 to July 1913
.................................................... $4,109,294.12
Seventh convention year, Aug. 1, 1913 to July 1914
.................................................... $3,462,163.66
Five months' period, Aug. 1, 1914 to Dec. 31, 1914
.................................................... $1,209,555.54
Ninth fiscal period, Jan. 1, 1915 to Dec. 31, 1915
.................................................... $3,882,048.40
Tenth fiscal period, Jan. 1, 1916 to Dec. 31, 1916
................................................... $4,035,355.43
Eleventh fiscal period, Jan. 1, 1917 to Dec. 31, 1917
................................................... $5,329,574.20

With regard to port dues, the Dominican government was long bound by a
concession made to the Clyde line in 1878. Upon the redemption of this
concession the port dues were in 1908 reduced to their present figure.

An impost on alcohols was established in 1905, and ought to become an
important source of revenue. The law is crude in that it taxes the
distillation rather than the sale of alcohol and does not sufficiently
guard against fraud. The receipts, which in the beginning were quite
promising, fell off strangely in late years.

The most recent sources of revenue are the Central Dominican Railway,
from Puerto Plata to Santiago, acquired from the San Domingo
Improvement Company under the debt settlement in 1908; the Moca
extension of the railroad, finished by the government in 1910; and the
wharves acquired by the redemption of the various port concessions.
These properties at first gave the government a handsome revenue,
which later diminished in a suspicious manner.

The budget of the Republic kept pace with the growth of income, but
the appropriations were practically all for personnel, while public
works continued to be neglected and no provision was made for future
contingencies or the establishment of a reserve fund. The annual
budget enacted to become effective July 1, 1916, may be summarized
as follows;

ESTIMATED RECEIPTS

Custom-houses:

Import duties $3,500,000
Port dues 80,000
Export duties 220,000

Subtotal: $3,800,000

Imposts:
Alcohol 200,000
Stamps 165,000

Subtotal: 365,000

Communications:

Postage stamps 36,000
Telegraph and telephone 5,000
Wireless telegraph 5,000

Subtotal: 46,000

Consular fees 40,000
Stamped paper 90,000

State properties:

Ozama lighting plant 4,500
State wharves 200,000
Rentals and post-office boxes 1,000

Subtotal: 205,500

Miscellaneous 6,200

Total estimated receipts $4,552,700

ESTIMATED DISBURSEMENTS

Service of public debt $1,966,746.86

Legislative power 132,400.00
Including salaries of 12 senators and
24 deputies at $200 per month.

Executive power...................................... $ 25,460.00
Expenses of president's office, including salary of
president at $800 per month.

Judicial power........................................ 316,160.00
Including salaries of supreme court (with a chief
justice at $250 per month, six associate justices at
$160, and a state's attorney at $200); 3 courts of
appeals (each having a chief justice at $180 per
month, 4 associate justices at $140 and a state's
attorney at $180); 12 courts of first instance (each
having a judge at $150 per month, a state's attorney
at $130-$150, and one or two judges of instruction
at $130); 3 courts-martial costing $2,916 each; 70
justices of the peace with salaries ranging from $25
to $55 per month; and jails in each province, the
jailers receiving from $35 to $69 per month.

Department of Interior and Police...................... 329,638.00
Including office of secretary of interior, who
receives $320 per month; 12 provincial governors with
salaries from $160 to $180 per month; 53 communal
chiefs, at $30 to $60; church salaries amounting to
$3,600; public celebrations $5,100; expenses of
sanitation service $15,000; and a long pension list
amounting to $188,240. Most of these pensions are of
$10, $12 or $15 per month, but 7 widows of former
presidents and other distinguished men receive $100
per month.

Department of Foreign Affairs.......................... 122,572.00
Including office of secretary, whose salary is $320
per month; ministers to the United States, France and
Haiti at $500 per month; charge's in Cuba and
Venezuela at $250; and 23 consuls in the United
States, Porto Rico, Cuba, Haiti, St. Thomas, Panama,
Turks Island, Jamaica, England, France, Italy,
Holland, Spain and Belgium.

Department of Finance and Commerce...................... 356,678.04
Including office of secretary, who receives $320 per
month; general comptroller's office; 10 treasury
agents with salaries from $80 to $112 monthly;
custom-houses (the collectors of the port receiving
from $80 to $200 per month); receiver-general's office
$43,152 (the salary of the general receiver is given
as $9,848.04 per annum and that of his deputy as $5,988);
coast guard service $6,000; wharf repairs $20,000.

Department of War and the Navy......................... 593,815.26
Including office of secretary; 12 military posts (the
commanders receiving from $60 to $150 per month); 10
armories $4,980; military instructors $4,380;
president's staff $12,380; one infantry regiment of
about 470 officers and men (the colonel receiving $95
monthly, the men $l5); a band of 33 men; a police
force, called "republican guard" of about 800 officers
and men (salaries ranging from $200 for the brigadier
general and $140 for the colonel, to $18 for the
private); 2 military hospitals $31,867; a machine shop
$4,440; port captains at $50-$90 per month, and
doctors at $25-$50; and the gunboat $26,444.

Department of Justice and Public Instruction........... 318,208.00
Including office of secretary; University of Santo
Domingo $23,700; Santiago professional institute $8,820;
2 jail schools; subventions to many municipal schools,
private and special schools, about $180,000;
33 scholarships, $23,870; pensions $23,988.

Department of Agriculture and Immigration.............. 18,740.00
Including office of secretary; experiment fields in
Santiago $3,000; weather bureau $3,980.

Department of Development and Public Works............. 332,596.00
Including office of secretary; lighthouses $13,282;
postal service; telegraph, telephone and wireless
service; upkeep of dredge "Ozama."

Chamber of Accounts.................................... 7,980.00

Miscellaneous.......................................... 61,872.00

Contingent expenses.................................... 25,000.00

Constitutional assembly................................ 10,000.00

Total estimated disbursements, besides debt service ... $2,651,119.30

The figures in the budgets were not, absolute but were subject to
modification by transfer of appropriation through presidential decree.
The contingent expense fund and the military appropriations were thus
frequently swelled at the expense of other services.

The budget above shown was the last one enacted under the old
conditions. It was never applied, but is given as a sample, because,
while differing only slightly from the old budget which continued in
force, it better illustrates conditions at the beginning of American
occupation. The military government made numerous changes in the
budget and rendered the appropriations for salaries of the president
and cabinet secretaries available for other purposes, as the American
naval and marine officers now performing the duties of these positions
receive no compensation from the Dominican treasury. A comprehensive
new budget, the first one of the period of transition and providing
for some of the innovations recently introduced, was expected to
become effective early in 1918.

For the purpose of bringing order and efficiency into the collection
and disbursement of the public revenues of Santo Domingo, the American
government in 1913 urged that it be permitted to designate an American
comptroller and financial adviser and the Bordas administration at
length consented, but as there was no legal authority for such action
and as the appointee was not characterized by unusual ability, the
Jimenez administration declined to continue the arrangement. During
the present military government and under the efficient direction of
the acting comptroller-general, J. H. Edwards, valuable work is being
done in revising the accounting system and generally placing the
country's finances in order.

All the accounts of the Republic are carried on in American money,
which is legal tender and is current in all parts of the country. For
about fifty years after the declaration of independence, coins of many
countries, principally Mexican silver and Spanish gold, were in
circulation, with the rate of exchange constantly fluctuating. In 1890
the Republic joined the Latin convention and in the following year
through the then existing Banque Nationale de Saint Domingue issued
silver and copper coin to the value of about $200,000. The fall in the
value of silver caused depreciation and a few of the silver coins of
this issue which are still in circulation are valued at forty cents
gold for five francs; the copper coins at a little less. In 1894 the
gold standard was adopted and though no actual coinage took place all
official financial transactions were thereafter based upon gold
values. In 1895 and 1897 President Heureaux issued more silver coins
or, rather, coins washed over with silver, to the nominal amount of
$2,250,000, but the seigniorage was so enormous that the issue was a
case of a government counterfeiting its own money. The rate of
exchange fell to five pesos for one dollar gold and this is the rate
legalized by the law of June 19, 1905, which made the American gold
dollar the standard of the Dominican Republic.

For a while the ordinary smaller business transactions continued to be
based on silver values. On a trip to Santo Domingo in 1904 a friend
and myself were driven from the wharf to the hotel and the coachman
asked for two dollars. It seemed an outrageous charge, but we
considered ourselves in the hands of the Philistines, and handed over
an American two-dollar bill. "Excuse me until I can get change," said
the coachman to our surprise, and ran into the hotel; in a moment he
reappeared with a double handful of coins: "Here is your change," he
said, "eight dollars." The charge had been only forty cents in gold.
At the present time American money is the basis and Dominican silver
and copper is regarded merely as fractional currency, one peso
Dominican being equivalent to twenty cents American.

At various times the Dominican Republic has had disastrous experiences
with paper money issued without sufficient guarantees. One service
rendered by the Spaniards during their occupation in the sixties was
the retirement of large amounts of such paper. The troubles
accompanying unsecured paper money had been forgotten when Heureaux in
his attempts to raise funds floated an issue of a nominal amount of
$3,600,000 in notes, of the Banque Nationale, in addition to a small
amount already emitted by the bank. Such demoralization resulted that
at one time it took twenty dollars in paper money to purchase one
dollar in gold. The national bank notes having been demonetized,
various amounts were purchased at auction by the administrations
succeeding Heureaux and destroyed, and almost all the remainder has
been redeemed at five to one under the 1907 debt settlement. The only
paper now seen is American paper money, which circulates at a par with
American silver and gold.

MUNICIPAL FINANCES

Like the national government, the municipalities or communes depend
almost entirely upon indirect taxation for their revenues. One of the
principal sources of income is the tax on the slaughter of cattle and
sale of meat. The communes may further, with the authority of
Congress, levy a "consumo" tax, a small duty on the imports and
exports of merchants within their jurisdiction, which tax has given
rise to much confusion and controversy. Business licenses also form an
important fount of revenue. By a law of Congress (soon to be
superseded by a decree of the military government) the municipalities
are divided into several classes, according to their importance, and
the licenses payable by the various kinds of business in the several
classes are designated. The national government turns over to the
various municipalities a portion of the impost on spirits and grants
educational subventions to several municipalities for their primary
schools. Minor sources of revenue are taxes on lotteries and raffles,
vehicle licenses, amusement permits, cockpits, etc. Two towns, Santo
Domingo and Santiago, have municipal lotteries. Under all these taxes
a man might own scores of houses and great expanses of land without
paying towards the maintenance of the state and municipality more than
the poorest peon on his property.

The sums collected for municipal purposes in all the communes of the
Republic may be calculated at about $600,000 per annum, derived from
the following sources:

MUNICIPAL RECEIPTS

Approximate percentage
of entire income

Municipal charges on imports and exports.............. 17.7
Business licenses..................................... 15.3
Markets............................................... 10.8
Lottery tax........................................... 10.5
Slaughter houses and meat transportation.............. 9.2
Alcohols.............................................. 7.3
Excises (alcabala).................................... 5.
Amusement permits..................................... 3.5
Public register....................................... 3.5
Lotteries............................................. 2.5
Lighting in private houses............................ 2.3
Ferryboats and bridges................................ 3.1
Municipal property and rentals........................ 1.8
Miscellaneous......................................... 8.5
-----
100.

The largest budget is that of the capital city, with Santiago second.
According to the latest figures available, in round numbers the
income of the thirteen more important cities and towns is annually
about as follows:

Santo Domingo........................ $160,000
Santiago de los Caballeros............. 90,000
San Pedro de Macoris................... 50,000
Puerto Plata........................... 40,000
La Vega................................ 30,000
Moca................................... 21,000
Azua................................... 20,000
San Francisco de Macoris............... 19,000
Samana................................. 10,000
Monte Cristi........................... 10,000
Sanchez................................ 10,000
Bani................................... 9,000
San Cristobal.......................... 8,000

In almost every town the largest item of expenditure is for education,
the maintenance of public primary schools. The more important cities,
especially the capital, make fair appropriations for street repair and
other municipal public works, but in the lesser communes such
appropriations are negligible. Very little, practically nothing, is
appropriated for roads. Some communes pay a small subvention to the
church and assist in the repair of church buildings. On the whole,
municipal services are only scantily looked after, but the fault is
due more to lack of revenue than to improper distribution.
Occasionally the national government renders assistance in the
construction of some work pertaining to a municipality.

The average distribution of municipal disbursements may be estimated
about as follows:

MUNICIPAL EXPENDITURES

Approximate percentage
of whole expenditure
Education.......................................... 27.1
Public works, street cleaning, etc................. 27.
Police............................................. 8.4
Administrative expenses (salaries of municipal
officials and cost of tax collection).............. 7.5
Public lighting.................................... 7.
Sanitation......................................... 4.
Charity............................................ 2.2
Municipal debts.................................... 1.9
Miscellaneous...................................... 14.2
------
100.

In view of the lack of resources or interest on the part of
municipalities and the central government, services of a public nature
have frequently been assumed by private initiative. Many clubs and
lodges maintain schools. Firemen's corps, where there are any, are
volunteer organizations. For charity work, hospitals, educational
work, etc., local committees are formed which raise funds by private
subscription or by lottery, and in a number of towns the embellishment
of the plazas is in charge of a "junta de ornato."

CHAPTER XXIII

THE FUTURE OF SANTO DOMINGO

Attraction by the United States.--Political future of Santo
Domingo.--Economic future of Santo Domingo.

The history of the Dominican Republic affords a striking illustration
of the rule that large bodies attract nearby smaller or weaker bodies
whether in the world of physics or in international politics. The
United States of America had scarcely become a nation when it began to
absorb contiguous territory and exert a strong attraction on Cuba.
With respect to Santo Domingo also, there was such attraction, as
became evident in proposals for annexation or the establishment of a
naval station. At times it appeared that the process was definitely
checked, as when Spain annexed Santo Domingo in 1861, and when the
United States Senate refused to annex the country in 1871, and when
the Dominican Government cancelled the Samana Bay Concession in 1874,
but these acts merely set back the clock of time which they could
not stop.

When Porto Rico and Cuba were occupied by the United States the
attraction exerted on Santo Domingo was powerfully increased. From
that time on the Dominican Republic was in fact a protectorate of the
United States, though neither American nor Dominican statesmen would
have admitted it. The modus vivendi of 1905 and the fiscal convention
of 1907 gave expression, in part, to relations actually existing.

A peculiar feature of the matter is that, except for a few very brief
intervals, neither the United States nor the Dominican Republic has
desired closer political relations and each country has done
everything in its power to avoid them. The 1907 convention was
approved in the United States Senate with only one vote to spare, and
many of its supporters favored it principally because it was expected
to obviate the necessity of further American intervention in Dominican
affairs. It was believed that with the custom-houses removed from the
political game the receipts and prosperity of the country would grow,
revolutionists would no longer be able to finance uprisings, and civil
wars would cease. The convention did indeed augment the country's
revenues and prosperity, but it could not prevent uprisings entirely
nor remove their causes. On the other hand it strengthened the bonds
between the United States and Santo Domingo and led to the military
occupation of 1916.

What will the future bring? There is every reason to believe that the
same attraction of Santo Domingo by the United States will continue
with greater strength than ever, despite all that may be said or done,
on either side, to oppose it. It is a force which cannot be overcome,
and had best, be recognized and reckoned with. It is unnecessary to
consider the sentimental objections to closer political relations
between the two countries. Conditions in Santo Domingo, in the United
States, and in the world at large are the causes of this force of
attraction, for which the government of neither country is
responsible.

What then will the future relations between Santo Domingo and the
United States be? It appears that at the present moment a plan similar
to that tried in Haiti is under advisement, namely, to restore the
Dominican government, but to leave the custom-houses under American
administration, place the finances under American control, appoint an
American supervisor of public works, and secure the peace by a police
force under American officers. The real relations between the two
countries would thus find further expression in the creation of a
disguised protectorate.

As a permanent solution it is not probable that this plan will prove
satisfactory. It tends to create two independent governments in the
same country; on the one side the Dominican government which will
consider itself supreme and sooner or later resent dictation or lack
of sympathy on the part of the American officials, and on the other
hand the police heads and other American officers who will brook no
interference with what they deem their duty. Friction is bound to
develop; it is impossible for two independent governments to work side
by side in the same territory; one authority must be paramount. At
first the plan may appear to operate successfully because the desires
of the American officials will be respected, but later when the new
Dominican government has outgrown the novelty of the situation there
are certain to be reciprocal demands which may lead to opposition.
Another possible source of difficulty is that even among the proposed
American officials there is no recognized superior and that here also
differences may arise. Rather than go so far and no further, it were
better to attempt less.

The ultimate expression, more or less deferred, of the relations
between the two countries, will most probably be a clearly defined
protectorate with an amply authorized resident, or outright
annexation. Which of these two courses is preferable? From a
standpoint of the interests of the Dominican people annexation would
appear better. A protected state has many obligations and few rights.
It must defer to the wishes of the protector, but the protector is
under no absolute duty to further its development or the happiness of
its inhabitants. On the other hand, when annexed to the stronger
state, it may expect and demand that interest be shown in its progress
and well-being. While annexation would probably entail a temporary
government by officials foreign to the country, American traditions
would not permit such a condition to continue for any length of time
and autonomy would eventually come.

From an American standpoint a protectorate would seem preferable. It
would carry the advantages of annexation without its responsibilities,
without the undesirable feature of bringing into our body politic a
people foreign in race, language and customs, and with less danger of

Book of the day: