Message from the President of the United States, transmitting a protocol of an agreement between the United States and the Dominican Republic, providing for the collection and disbursement by the United States of the customs revenues of the Dominican Republic, signed on February 7, 1905.
February 15, 1905.—Read; protocol of agreement read the first time and referred to the Committee on Foreign Relations, and, together with the accompanying papers, ordered to be printed in confidence for the use of the Senate.
February 16, 1905.—Injunction of secrecy removed.
To the Senate:
I submit herewith a protocol concluded between the Dominican Republic and the United States.
The conditions in the Republic of Santo Domingo have been growing steadily worse for many years. There have been many disturbances and revolutions, and debts have been contracted beyond the power of the Republic to pay. Some of these debts were properly contracted and are held by those who have a legitimate right to their money. Others are without question improper or exorbitant, constituting claims which should never be paid in full and perhaps only to the extent of a very small portion of their nominal value.
Certain foreign countries have long felt themselves aggrieved because of the nonpayment of debts due their citizens. The only way by which foreign creditors could ever obtain from the Republic itself any guaranty of payment would be either by the acquisition of territory outright or temporarily, or else by taking possession of the custom-houses, which would of course in itself, in effect, be taking possession of a certain amount of territory.
It has for some time been obvious that those who profit by the Monroe doctrine must accept certain responsibilities along with the rights which it confers; and that the same statement applies to those who uphold the doctrine. It can not be too often and too emphatically asserted that the United States has not the slightest desire for territorial aggrandizement at the expense of any of its southern neighbors, and will not treat the Monroe doctrine as an excuse for such aggrandizement on its part. We do not propose to take any part of Santo Domingo, or exercise any other control over the island save what is necessary to its financial rehabilitation in connection with the collection of revenue, part of which will be turned over to the government to meet the necessary expense of running it, and part of which will be distributed pro rata among the creditors of the Republic upon a basis of absolute equity. The justification for the United States taking this burden and incurring this responsibility is to be found in the fact that it is incompatible with international equity for the United States to refuse to allow other powers to take the only means at their disposal of satisfying the claims of their creditors and yet to refuse, itself, to take any such steps.
An aggrieved nation can without interfering with the Monroe doctrine take what action it sees fit in the adjustment of its disputes with American States, provided that action does not take the shape of interference with their form of government or of the despoilment of their territory under any disguise. But, short of this, when the question is one of a money claim, the only way which remains, finally, to collect it is a blockade, or bombardment, or the seizure of the custom-houses, [Page 335]and this means, as has been said above, what is in effect a possession, even though only a temporary possession, of territory. The United States then becomes a party in interest, because under the Monroe doctrine it can not see any European power seize and permanently occupy the territory of one of these republics; and yet such seizure of territory, disguised or undisguised, may eventually offer the only way in which the power in question can collect any debts, unless there is interference on the part of the United States.
One of the difficult and increasingly complicated problems, which often arise in Santo Domingo, grows out of the violations of contracts and concessions, sometimes improvidently granted, with valuable privileges and exemptions stipulated for upon grossly inadequate considerations which were burdensome to the State, and which are not infrequently disregarded and violated by the governing authorities. Citizens of the United States and of other governments holding these concessions and contracts appeal to their respective governments for active protection and intervention. Except for arbitrary wrong, done or sanctioned by superior authority, to persons or to vested property rights, the United States Government, following its traditional usage in such cases, aims to go no further than the mere use of its good offices, a measure which frequently proves ineffective. On the other hand, there are governments which do sometimes take energetic action for the protection of their subjects in the enforcement of merely contractual claims, and thereupon American concessionaries, supported by powerful influences, make loud appeal to the United States Government in similar cases for similar action. They complain that in the actual posture of affairs their valuable properties are practically, confiscated, that American enterprise is paralyzed, and that unless they are fully protected, even by the enforcement of their merely contractual rights, it means the abandonment to the subjects of other governments of the interests of American trade and commerce through the sacrifice of their investments by excessive taxes imposed in violation of contract, and by other devices, and the sacrifice of the output of their mines and other industries, and even of their railway and shipping interests, which they have established in connection with the exploitation of their concessions. Thus the attempted solution of the complex problem by the ordinary methods of diplomacy reacts injuriously upon the United States Government itself, and in a measure paralyzes the action of the Executive in the direction of a sound and consistent policy. The United States Government is embarrassed in its efforts to foster American enterprise and the growth of our commerce through the cultivation of friendly relations with Santo Domingo, by the irritating effects on those relations, and the consequent injurious influence upon that commerce, of frequent interventions. As a method of solution of the complicated problem arbitration has become nugatory, inasmuch as, in the condition of its finances, an award against the Republic is worthless unless its payment is secured by the pledge of at least some portion of the customs revenues. This pledge is ineffectual without actual delivery over of the custom-houses to secure the appropriation of the pledged revenues to the payment of the award. This situation again reacts injuriously upon the relations of the United States with other nations. For when an award and such security are thus obtained, as in the case of the Santo Domingo Improvement Company, some foreign government complains that the [Page 336]award conflicts with its rights, as a creditor, to some portion of these revenues under an alleged prior pledge; and still other governments complain that an award in any considerable sum, secured by pledges of the customs revenues, is prejudicial to the payment of their equally meritorious claims out of the ordinary revenues; and thus controversies are begotten between the United States and other creditor nations, because of the apparent sacrifice of some of their claims, which may be just or may be grossly exaggerated, but which the United States Government can not inquire into without giving grounds of offense to other friendly creditor nations. Still further illustrations might easily be furnished of the hopelessness of the present situation growing out of the social disorders and the bankrupt finances of the Dominican Republic, where for considerable periods during recent years the bonds of civil society have been practically dissolved.
Under the accepted law of nations foreign governments are within their right, if they choose to exercise it, when they actively intervene in support of the contractual claims of their subjects. They sometimes exercise this power, and on account of commercial rivalries there is a growing tendency on the part of other governments more and more to aid diplomatically in the enforcement of the claims of their subjects. In view of the dilemma in which the Government of the United States is thus placed, it must either adhere to its usual attitude of nonintervention in such cases—an attitude proper under normal conditions, but one which in this particular kind of case results to the disadvantage of its citizens in comparison with those of other States—or else it must, in order to be consistent in its policy, actively intervene to protect the contracts and concessions of its citizens engaged in agriculture, commerce, and transportation in competition with, the subjects and citizens of other States. This course would render the United States the insurer of all the speculative risks of its citizens in the public securities and franchises of Santo Domingo.
Under the plan in the protocol herewith submitted to the Senate, insuring a faithful collection and application of the revenues to the specified objects, we are well assured that this difficult task can be accomplished with the friendly cooperation and good will of all the parties concerned, and to the great relief of the Dominican Republic.
The conditions in the Dominican Republic not only constitute a menace to our relations with other foreign nations, but they also concern the prosperity of the people of the island, as well as the security of American interests, and they are intimately associated with the interests of the South Atlantic and Gulf States, the normal expansion of whose commerce lies in that direction. At one time, and that only a year ago, three revolutions were in progress in the island at the same time.
It is impossible to state with anything like approximate accuracy the present population of the Dominican Republic. In the report of the commission appointed by President Grant in 1871, the population was estimated at not over 150,000 souls, but according to the Statesman’s Yearbook for 1904 the estimated population in 1888 is given as 610,000. The Bureau of the American Republics considers this the best estimate of the present population of the Republic. As shown by the unanimous report of the Grant commission the public debt of the Dominican Republic, including claims, was $1,565,831,59¼. The total revenues were $772,684.75¼. The public indebtedness of the Dominican [Page 337]Republic, not including all claims, was on September 12 last, as the Department of State is advised, $32,280,000; the estimated revenues under Dominican management of custom-houses were $1,850,000; the proposed budget for current administration was $1,300,000, leaving only $550,000 to pay foreign and liquidated obligations, and payments on these latter will amount during the ensuing year to $1,700,000, besides $900,000 of arrearages of payments overdue, amounting in all to $2,600,000. It is therefore impossible under existing conditions, which are chronic, and with the estimated yearly revenues of the Republic, which during the last decade have averaged approximately $1,600,000, to defray the ordinary expenses of the government and to meet its obligations.
The Dominican debt owed to European creditors is about $22,000,000, and of this sum over $18,000,000 is more or less formally recognized. The representatives of European governments have several times approached the Secretary of State, setting forth the wrongs and intolerable delays to which they have been subjected at the hands of the successive governments of Santo Domingo in the collection of their just claims, and intimating that unless the Dominican Government should receive some assistance from the United States in the way of regulating its finances, the creditor governments in Europe would be forced to resort to more effective measures of compulsion to secure the satisfaction of their claims.
If the United States Government declines to take action and other foreign governments resort to action to secure payment of their claims, the latter would be entitled, according to the decision of the Hague tribunal in the Venezuelan cases, to the preferential payment of their claims; and this would absorb all the Dominican revenues and would be a virtual sacrifice of American claims and interests in the island. If, moreover, any such action should be taken by them, the only method to enable them to secure the payment of their claims would be to take possession of the custom-houses, and considering the state of the Dominican finances this would mean a definite and very possibly permanent occupation of Dominican territory, for no period could be set to the time which would be necessarily required for the payment of their obligations and unliquidated claims. The United States Government could not interfere to prevent such seizure and occupation of Dominican territory without either itself proposing some feasible alternative in the way of action, or else virtually saying to European governments that they would not be allowed to collect their claims. This would be an unfortunate attitude for the Government of the United States to be forced to maintain at present. It can not with propriety say that it will protect its own citizens and interests, on the one hand, and yet on the other hand refuse to allow other governments to protect their citizens and interests.
The actual situation in the Dominican Republic can not, perhaps, be more forcibly stated than by giving a brief account of the case of the San Domingo Improvement Company.
From 1869 to 1897 the Dominican Government issued successive series of bonds, the majority of which were in the hands of European holders. Successive issues bore interest at rates ranging from 2¾ to 6 per cent, and what with commissions and other deductions and the heavy discount in the market the government probably did not receive [Page 338]over 50 to 75 per cent of their nominal value. Other portions of the debt were created by loans, for which the government received only one-half of the amount it was nominally to repay, and these obligations bore interest at the rate of 1 to 2 per cent a month on their face, some of them compounded monthly.
The improvidence of the government in its financial management was due to its weakness, to its impaired credit, and to its pecuniary needs, occasioned by frequent insurrections and revolutionary changes and by its inability to collect its revenues.
In 1888 the government, in order to secure the payment of an issue of bonds, placed the custom-houses and the collection of its customs duties, which are substantially the only revenues of the Republic, in the hands of the Westendorps, bankers of Amsterdam, Holland. But the national debt continued to grow and the government finally intrusted the collection of its revenues to an American corporation, the San Domingo Improvement Company, which was to take over the bonds of the Westendorps. The Dominican Government finally became dissatisfied with this arrangement, and, in 1901, ousted the Improvement Company from its custom-houses and took into its own hands the collection of its revenues. The company thereupon appealed to the United States Government to maintain them in their position, but their request was refused. The Dominican Government then sent its minister of foreign affairs to Washington to negotiate a settlement. He admitted that the improvement company had equities which ought not to be disregarded, and the Department of State suggested that the Dominican Government and the improvement company should effect by private negotiation a satisfactory settlement between them. They accordingly entered into an arrangement for a settlement, which was mutually satisfactory to the parties. A similar arrangement was likewise made between the Dominican Government and the European bondholders. The latter arrangement was carried into execution by the Dominican Government and payments made toward the liquidation of the bonds held by the European holders. The Dominican Congress refused to ratify the similar arrangement made with the improvement company, and the government refused to provide for the payment of the American claimants. In this state of the case it was evident that a continuance of this treatment of the American creditors, and its repetition in other cases, would, if allowed to run its course, result in handing over the island to European creditors, and in time would ripen into serious controversies between the United States and other governments, unless the United States should deliberately and finally abandon its interests in the island.
The improvement company and its allied companies held, besides bonds, certain banking and railway interests in the island. The Dominican Government, desirous to own and possess these properties, agreed with the companies that the value of their bonds and properties was $4,500,000, and they submitted to arbitration the question as to the installments in which this sum should be paid and the security that should be given. The Hon. George Gray, judge of the United States circuit court of appeals, and the Hon. Manuel de J. Galvan, both named by the Dominican Republic, and the Hon. John G. Carlisle, named by the United States, were the arbitrators and rendered their award on July 14, 1904. By its terms the Dominican Government was to pay the above-mentioned sum of $4,500,000, with 4 per cent [Page 339]interest per annum, in monthly installments of $37,500 each during two years, and of $41,666.66 each month thereafter, beginning with the month of September, 1904, said award to be secured by the customs revenues and port dues of all the ports on the northern coast of Santo Domingo. The award further provides for the appointment of a financial agent of the United States, who was authorized in case of failure during any month to receive the sum then due to enter into possession of the custom-house at Puerto Plata in the first instance and assume charge of the collection of customs duties and port dues and to fix and determine these duties and dues and secure their payment; in case the sums collected at Puerto Plata should at any time be insufficient for the payment of the amounts due under the award, or in case of any other manifest necessity, or in case the Dominican Government should so request, the financial agent of the United States was authorized to have and exercise at any and all of the other ports above described all the rights and powers vested in him by the award in respect of Puerto Plata. Under the award the financial agent could only apply the revenues collected toward its payment after he had first paid the expenses of collection and certain other obligations styled “apardos,” which constituted prior charges on the revenues assigned. These prior charges are specified in the award. The Dominican Government defaulted in their payments; and in virtue of the award and the authority conferred by the Dominican Government, and at its request, possession was delivered of the custom-house of Puerto Plata to the fiscal agent appointed by the United States to collect the revenues assigned by the arbitrators for the payment of the award; and in virtue of the same authority possession of the custom-house of Monte Christi has also been handed over. I submit herewith a report of Mr. John B. Moore, agent of the United States in this case, and a copy of the award of the arbitrators.
During the past two years the European claimants, except the English, whose interests were embraced in those of the American companies, have, with the support of their respective governments, been growing more and more importunate in pressing their unsatisfied demands. The French and the Belgians in 1901 had entered into a contract with the Dominican Government, but after a few payments were made on account it fell into neglect. Other governments also obliged the Dominican Government to enter into arrangements of various kinds by which the revenues of the Republic were in large part sequestrated, and under one of the agreements, which was concluded with Italy in 1903, the minister of that government was empowered directly to collect from the importers and exporters that portion of the customs revenues assigned to him as security. As the result of chronic disorders, attendant with a constant increase of debt, the state of things in Santo Domingo has become hopeless, unless the United States or some other strong government shall interpose to bring order out of the chaos. The custom-houses, with the exception of the two in the possession of the financial agent appointed by the United States, have become unproductive for the discharge of indebtedness, except as to persons making emergency loans to the government or to its enemies for the purpose of carrying on political contests by force. They have, in fact, become the nuclei of the various revolutions. The first effort of revolutionists is to take possession [Page 340]of a custom-house so as to obtain funds, which are then disposed of at the absolute discretion of those who are collecting them. The chronic disorders prevailing in Santo Domingo have, moreover, become exceedingly dangerous to the interests of Americans holding property in that country. Constant complaints have been received of the injuries and inconveniences to which they have been subjected. As an evidence of the increasing aggravation of conditions the fact may be mentioned that about a year ago the American railway, which had previously been exempt from such attacks, was seized, its tracks torn up, and a station destroyed by revolutionary bands.
The ordinary resources of diplomacy and international arbitration are absolutely impotent to deal wisely and effectively with the situation in the Dominican Republic, which can only be met by organizing its finances on a sound basis and by placing the custom-houses beyond the temptation of insurgent chieftains. Either we must abandon our duty under our traditional policy toward the Dominican people, who aspire to a republican form of government while they are actually drifting into a condition of permanent anarchy, in which case we must permit some other government to adopt its own measures in order to safeguard its own interests, or else we must ourselves take seasonable and appropriate action.
Again and again has the Dominican Government invoked on its own behalf the aid of the United States. It has repeatedly done so of recent years. In 1899 it sought to enter into treaty relations by which it would be placed under the protection of the United States Government. The request was refused. Again, in January, 1904, its minister of foreign affairs visited Washington and besought the help of the United States Government to enable it to escape from its financial and social disorders. Compliance with this request was again declined, for this government has been most reluctant to interfere in anyway, and has finally concluded to take action only because it has become evident that failure to do so may result in a situation fraught with grave danger to the cause of international peace.
In 1903 a representative of a foreign government proposed to the United States the joint fiscal control of the Dominican Republic by certain creditor nations, and that the latter should take charge of the custom-houses and revenues and give to the Dominican Government a certain percentage and apply the residue to the payment ratably of claims of foreign creditors. The United States Government declined to approve or to enter into such an arrangement. But it has now become evident that decided action of some kind can not be much longer delayed. In view of our past experience and our knowledge of the actual situation of the Dominican Republic, a definite refusal of the United States Government to take any effective action looking to the relief of the Dominican Republic and to the discharge of its own duty under the Monroe doctrine can only be considered as an acquiescence in some such action by another government.
That most wise measure of international statesmanship, the Platt amendment, has provided a method for preventing such difficulties from arising in the new Republic of Cuba. In accordance with the terms of this amendment the Republic of Cuba can not issue any bonds which can be collected from Cuba, save as a matter of grace, unless with the consent of the United States, which is at liberty at all times to take measures to prevent the violation of the letter and spirit of the [Page 341]Platt amendment. If a similar plan could now be entered upon by the Dominican Republic, it would undoubtedly be of great advantage to them and to all other peoples, for under such an arrangement no larger debt would be incurred than could be honestly paid, and those who took debts not thus authorized would, by the mere fact of taking them, put themselves in the category of speculators or gamblers, who deserved no consideration and who would be permitted to receive none; so that the honest creditor would on the one hand be safe while on the other hand the Republic would be safeguarded against molestation in the interest of mere speculators.
But no such plan at present exists; and under existing circumstances, when the condition of affairs becomes such as it has become in Santo Domingo, either we must submit to the likelihood of infringement of the Monroe doctrine or we must ourselves agree to some such arrangement as that herewith submitted to the Senate. In this case, fortunately, the prudent and far-seeing statemanship of the Dominican Government has relieved us of all trouble. At their request we have entered into the agreement herewith submitted. Under it the customhouses will be administered peacefully, honestly, and economically, 45 per cent of the proceeds being turned over to the Dominican Government and the remainder being used by the United States to pay what proportion of the debts it is possible to pay on an equitable basis. The Republic will be secured against over-seas aggression. This in reality entails no new obligation upon us, for the Monroe doctrine means precisely such a guaranty on our part.
It is perhaps unnecessary to state that no step of any kind has been taken by the Administration under the terms of the protocol which is herewith submitted.
The Republic of Santo Domingo has by this protocol wisely and patriotically accepted the responsibilities as well as the privileges of liberty, and is showing with evident good faith its purpose to pay all that its resources will permit of its obligations. More than this it can not do, and when it has done this we should not permit it to be molested. We on our part are simply performing in peaceful manner, not only with the cordial acquiescence, but in accordance with the earnest request of the government concerned, part of that international duty which is necessarily involved in the assertion of the Monroe doctrine. We are bound to show that we perform this duty in good faith and without any intention of aggrandizing ourselves at the expense of our weaker neighbors or of conducting ourselves otherwise than so as to benefit both these weaker neighbors and those European powers which may be brought into contact with them. It is in the highest degree necessary that we should prove by our action that the world may trust in our good faith and may understand that this international duty will be performed by us within our own sphere, in the interest not merely of ourselves, but of all other nations, and with strict justice toward all. If this is done, a general acceptance of the Monroe doctrine will in the end surely follow; and this will mean an increase of the sphere in which peaceful measures for the settlement of international difficulties gradually displace those of a warlike character.
We can point with just pride to what we have done in Cuba as a guaranty of our good faith. We stayed in Cuba only so long as to start her aright on the road to self-government, which she has since [Page 342]trod with such marked and distinguished success; and upon leaving the island we exacted no conditions save such as would prevent her from ever becoming the prey of the stranger. Our purpose in Santo Domingo is as beneficent. The good that this country got from its action in Cuba was indirect rather than direct. So it is as regards Santo Domingo. The chief material advantage that will come from the action proposed to be taken will be to Santo Domingo itself and to Santo Domingo’s creditors. The advantages that will come to the United States will be indirect, but nevertheless great, for it is supremely to our interest that all the communities immediately south of us should be or become prosperous and stable, and therefore not merely in name, but in fact independent and self-governing.
I call attention to the urgent need of prompt action on this matter. We now have a great opportunity to secure peace and stability in the island, without friction or bloodshed, by acting in accordance with the cordial invitation of the governmental authorities themselves. It will be unfortunate from every standpoint if we fail to grasp this opportunity; for such failure will probably mean increasing revolutionary violence in Santo Domingo, and very possibly embarrassing foreign complications in addition. This protocol affords a practical test of the efficiency of the United States Government in maintaining the Monroe doctrine.