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
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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
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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
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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
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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.
Theodore Roosevelt.
The White
House, February 15,
1905.
[Untitled]
The President:
The undersigned, Secretary of State, has the honor to lay before the
President, with a view to its transmission to the Senate to receive
the advice and consent of that body to its ratification, should his
judgment approve thereof, a protocol of an agreement between the
United States and the Dominican Republic, signed by their respective
plenipotentiaries at Santo Domingo City on February 4, 1905,
providing for the collection and disbursement by the United States
of the customs revenues of the Dominican Republic.
Respectfully submitted.
John Hay.
Department of
State,
Washington, February 15,
1905.
[Untitled]
Whereas the Dominican Government in view of the debts which burden
the Republic, the imminent peril and urgent menace of intervention
on the part of nations whose citizens have claims already
established or to be established, finding itself, as it does, unable
peremptorily to fulfill its obligations on account of the condition
to which political disturbances and other causes have brought the
Treasury, the result being that these obligations are falling due
without its having been possible to pay them, or even the interest
thereon, desires to reach an arrangement with all its creditors and
the government itself succeed in assuring the regular receipt of
revenues sufficient for the payment of its internal administration
and the maintenance of its administrative autonomy without any
interruption by the exigencies of foreign creditors or by internal
political disturbances, and,
Whereas the Government of the United States of America, viewing any
attempt on the part of the governments outside of this hemisphere to
oppress or control the destiny of the Dominican Republic as a
manifestation of an unfriendly disposition toward the United States
is, in compliance with the request of the Dominican Government,
disposed to lend its assistance toward effecting a satisfactory
arrangement with all the creditors of the
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Dominican Government, agreeing to respect the
complete territorial integrity of the Dominican Republic.
The Dominican Government represented by the secretary of state of
foreign relations, Citizen Juan Francisco Sanchez, and the secretary
of state of finance and commerce, Citizen Federico Velasquez, and
the United States Government represented by its minister resident,
Thomas C. Dawson, have agreed and covenanted as follows:
Article First. The United States Government agrees to attempt the
adjustment of all the obligations of the Dominican Government,
foreign as well as domestic; the adjustment of the payment and of
the conditions of amortization; the consideration of conflicting and
unreasonable claims, and the determination of the validity and
amount of all pending claims.
If, in order to reach such adjustment, it shall be considered
necessary to name one or more commissions, the Dominican Government
shall be represented on said commissions.
Article Second. In order to enable the United States Government to
render the assistance above mentioned, it shall take charge of the
existing custom-houses and those which may hereafter be created,
shall name the employees necessary to their management, and shall
collect and take charge of all custom-house receipts.
These employees shall be subject to the civil and criminal
jurisdiction of the Dominican Republic.
The Dominican Government may appoint in each of the custom-houses an
officer for the purpose of making an inspection on behalf of
Dominican interests.
Article Third. Out of the revenues which shall be collected in all
the custom-houses of the Republic, the Government of the United
States shall deliver to the Dominican Government a sum, which shall
not be less than 45 per cent of the total amount collected, for the
purpose of meeting the needs of the public service, and which the
Dominican Government shall receive in monthly payments from the date
of the taking possession of the customhouses by the officials of the
United States, divided into four installments in the following
manner:
Forty-five per cent of the total sum collected monthly in periods
ending on the 8th, 15th, 22d, and the last day of each month.
Article Fourth. The Government of the United States will apply the 55
per cent which it retains toward the payment of—
- A.
- The employees of all the custom-houses.
- B.
- The interest, amortization, and installments of the
Dominican debt, foreign and domestic, in accordance with
what is hereinbefore provided, according as it shall be
fixed and liquidated.
- C.
- The whole surplus which may remain at the end of each
fiscal year shall be delivered to the Government of the
Dominican Republic, or shall be devoted to the payment of
its debts, if it shall so determine.
Article Fifth. The collectors in the custom houses shall send monthly
to the contaduria general and the Department of the Treasury
statements of the corresponding income and outgo, and annually a
general statement which shall embrace the total of what has been
collected and paid out.
Article Sixth. Any reform of the system of duties and taxes shall be
made in agreement with the President of the United States, and
therefore the present tariff and port dues may not be reduced except
with his consent, as long as the whole of the debt which the
Government of the United States takes charge of shall not have been
completely paid, with the exception of the export duties upon
national products which the Dominican Government remains authorized
to abolish or reduce immediately, but not to increase said export
duties or its public debt without the consent of the President of
the United States.
Article Seventh. The Government of the United States, at the request
of the Dominican Republic, shall grant the latter such other
assistance as the former may deem proper to restore the credit,
preserve the order, increase the efficiency of the civil
administration, and advance the material progress and welfare of the
Dominican Republic.
Article Eighth. This agreement shall continue in force during the
time required for the amortization of the debt of which the
Government of the United States takes charge.
Article Ninth. This agreement shall take effect after its approval by
the United States Senate and the Congress of the Dominican
Republic.
Done in four originals, two being in the
Spanish language, and two in the English and the representatives
of the high contracting parties signing them in the city of
Santo Domingo, February the seventh,
nineteen hundred and five.
- Thomas C. Dawson.
- Juan Fco. Sanchez.
[Page 344]
[Inclosure 1.]
New
York, February 10,
1905.
The President:
In compliance with your request, I have the honor to submit a
statement in relation to the award rendered on the 14th of July last
in the case of the San Domingo Improvement Company of New York and
its allied companies, the San Domingo Finance Company of New York,
and the company of the Central Dominican Railway, all three being
New Jersey corporations, and the National Bank of San Domingo, a
company originally organized under a French charter, but owned and
controlled by the San Domingo Finance Company.
In 1888 the firm of Westendorp & Co., bankers of Amsterdam,
Holland, underwrote and issued, at 83½, for the Government of San
Domingo 6 per cent gold bonds of that government to the amount of
£770,000. The proceeds of these bonds were to be used for the
payment of the interior debt of the Republic, which bore very high
rates of interest, and also for the conversion of certain bonds
issued in 1869 which were held in England.
As security for the new loan the Dominican Government created a first
lien on all its customs revenues, and in order to make the lien
effective the government authorized the Westendorps to collect and
receive at the custom-houses all the customs revenues of the
Republic, the Westendorps to retain for interest and sinking fund
£55,645 annually, and to deliver the remainder to the government. As
machinery for this purpose, the Westendorps were to create an
establishment in Santo Domingo known as the Caisse Générale de la
Regia (Caja de Recaudación), generally called the “Regie,” to which
the collection of the revenues was to be intrusted till the loan was
cleared off. Moreover, in case of default, the Westendorps were
empowered to create for the purpose of collection a European
commission, which it was understood was to be international in
character.
The Westendorps duly established the “Regie,” sending out from Europe
the necessary agents and employees, and they continued in the
collection and disbursement of the revenues till the transfer of
their rights to the San Domingo Improvement Company in May, 1892,
which transfer was accepted and confirmed by the Dominican Congress
in March, 1893.
Meanwhile the Westendorps had, in 1890, contracted to take a further
amount of £615,000 6 per cent bonds, which were issued for the
payment of additional interior debt and also for the partial
construction of a railway from Puerto Plata, the principal seaport
on the north coast, across and through the mountains to Santiago,
the principal city of the interior. Security similar to that of 1888
was given for the new bonds, and the “Regie” was to pay the interest
and the sinking fund out of the customs revenues. The Westendorps
offered the new bonds at 77 to the public in Holland and Belgium in
November, 1890, but, as the Baring failure took place within a week,
the offer was unsuccessful, and they were obliged to take
practically the entire issue themselves. The Westendorps began the
construction of the railway and had finished about 11 miles up the
mountain and had supplied some rolling stock when the improvement
company, which had acquired the bonds belonging to the Westendorps
(about $1,500,000) and all their rights and obligations under their
contracts with the Dominican Government, took possession. At the
same time the improvement company contracted to complete the
railway, which was subsequently done, to guarantee the conversion of
the outstanding 6 per cent bonds, including bonds to be issued for
the completion of the railway, into new 4 per cent consolidated
bonds, amounting to £1,610,000, and to pay off and discharge certain
large interior debts, aggregating $659,000 silver or $440,000
gold.
The Dominican Government also created a new class of bonds, called
debentures, at 4 per cent, amounting to $1,250,000. Both classes of
new bonds were declared, in the law by which they were authorized,
to “be guaranteed by the total amount of the customs receipts, which
shall be collected by the San Domingo Improvement Company,” and all
the stipulations of the Westendorp contracts for the guaranty and
validity of the bonds were declared to continue in full force and
effect; and it was further expressly provided that, in order to
strengthen the credit of the budget, the improvement company should,
in case of default of interest or sinking fund, or in case of other
manifest necessity, request the Governments of Holland, Belgium,
England, France, and the United States, in which the bonds were
held, each to appoint a member of a financial commission, which was
to possess all the “Regie’s” rights of collection. It was
stipulated, however, that the power of appointment should not be
exercised by a country in which less than £100,000 bonds were
held.
The improvement company successfully carried out the conversion in
Europe of 6 per cent bonds into 4 per cent bonds, but in 1894 the
Dominican Government, having become further indebted locally,
increased the debentures by $1,250,000 additional, for which the
company paid $540,000 gold, besides disbursements, and incurred
certain other oblations provided in the law.
Up to this time the fiscal operations of the Dominican Government,
the purchase and sale of bonds, and the work upon the railway had
all been conducted by the improvement company, but it was then
thought best to separate these operations so that the sole office of
the improvement company might be that of trustee in the collection
and disbursement of the
[Page 345]
revenues. The San Domingo Finance Company of New York, was therefore
created, under the laws of New Jersey, in 1894, by the same
Americans who organized and controlled the improvement company (of
which the Hon. Smith M. Weed, of New York, was, and still is,
president), for the purpose of carrying on the financial operations
requisite for the purchase of bonds, as well as the construction of
the railway. For the construction and equipment of the latter the
Dominican Government agreed to pay the company in consols (6 per
cent reduced to 4 per cent), and the road was to be operated through
the medium of a company to be created for that purpose for a period
of fifty years upon a fixed basis of distribution of profits between
the Dominican Government and the operating company. The construction
and equipment of the road cost the American companies more than
$650,000 gold in excess of the sums realized from the £425,000
Dominican bonds which were sold from time to time in the Brussels
market. But the work was completed and the company of the Central
Dominican Railway was organized under the laws of New Jersey as the
operating company. This company took possession of the railway and
still holds and operates it.
In 1895 the Dominican Government became embarrassed by the hostile
action of a French fleet which appeared with peremptory demands. In
1889 a company called the Banque Nationale de Saint Domingue was
created in France to exercise an exclusive franchise for a State
bank in Santo Domingo. The bank was duly established and was in
operation when, in 1892, a personal difference arose with President
Heureaux, and upon his obtaining a judgment against the bank for a
large sum execution was issued and a levy made upon its property.
The French consul intervened, sealed the safe of the bank, and
reported to his government. Diplomatic relations were severed, and a
French fleet appeared before the Dominican capital. The dispute was
submitted to the arbitration of Spain, but was not decided, and
strained relations still continued when in January, 1895, a
naturalized Frenchman was murdered near Samana Bay.
The French Government demanded redress in both matters and threatened
to seize the custom-houses of the country and collect a large
indemnity. President Heureaux appealed to the improvement company to
help him, and upon the presentation of the matter to the President
and Secretary of State of the United States, the American minister
in Paris was directed to interpose, and in the end the French
Government agreed to adjust the matter if the improvement company
would guarantee the necessary payments. This the company eventually
did, and the finance company agreed to purchase some additional
debentures, which by law were called “French-American reclamation
consols,” and to buy control of the bank. Such control was purchased
in June–October, 1895, the finance company acquiring, at something
over par, more than three-quarters of all the shares, costing, with
some extraordinary expenses and commissions, about $750,000 in gold.
The assets of the bank at that time, besides about 100,000 francs in
cash, consisted chiefly of loans to the Dominican Government and the
claim for damages resulting from the action of President Heureaux
under his judgment. As the loans produced from 12 to 20 per cent,
the bank, after it had passed into the control of the finance
company, agreed to fund them and to accept payment in
French-American reclamation consols (4 per cent), bringing the
entire issue of that class of bonds up to $4,250,000, which received
as further security certain separate revenues previously pledged to
the bank.
In 1897 the improvement company, at the urgent solicitation of the
Dominican Government, brought about a consolidation of all the debts
of the Republic, including both the exterior debts, and particularly
the consolidated gold 4 per cent bonds of 1893, and the
French-American reclamation consols of 1895, as well as the interior
floating debts, so as to reduce the annual interest charges. This
consolidation was effected through the finance company, to which the
Dominican Government, under an act of its Congress of August 8,
1897, delivered for the purpose of consolidation two classes of new
bonds, respectively denominated “Dominican unified debt 4 per cent
bonds” and “obligations or de Saint Domingue 2¾ per cent,” the
former to amount to £1,500,000 (of which upward of £350,000 were
afterwards canceled, leaving £1,148,600) and the latter to the
amount of £2,736,750. By this operation the total bonded debt of the
country became £3,885,350, or about $19,000,000. The “obligations
or” or “gold obligations” are held chiefly in Holland and Belgium,
though some of them are held in France and Germany, and a few in
England [and] the United States. The unified bonds are held chiefly
in the United States and the remainder in England and France; but
those in England, and a large part of those held in France, belong
to allies of the American companies.
The law of August 9, 1897, reaffirmed all previous guaranties,
expressly declaring that the new 4 per cent and 2¾ per cent bonds
should be “conjointly” guaranteed by a first mortgage on the total
amount of the general customs receipts and of the “special revenues”
and “apartados” which had been appropriated to the debts which were
about to be funded; that the revenues should be “collected directly
by the ‘Caisse de la Regie,’” and that “all the stipulations of the
contracts of 1888 and 1890 with Messrs. Westendorp & Co. in
force, and of the laws and contracts of 1893, 1894, and 1895,
entered into with the ‘San Domingo Improvement Company of New York’
for the security and validity of the Republic’s bonds,
[Page 346]
shall remain in force,
except such parts as may have been modified by the present law and
by the contracts derived from it.”
In carrying out the conversion under the law of 1897 the finance
company was embarrassed by finding that certain representations made
by the Dominican Government as to the amount of its floating
indebtedness were erroneous. This discovery led to the withdrawal of
certain English capitalists, with the result that the finance
company was obliged itself to raise additional sums of money in
order to carry the operation to completion.
In April, 1899, in spite of the fact that under the administration of
the improvement company the amount of the revenues collected had
steadily increased, the payment of the coupons was suspended,
chiefly because the revenues had, under a governmental decree,
become payable partly in depreciated paper currency, the market
value of which fell from $3 paper to $1 of gold in September, 1898,
to $20 paper to $1 of gold in August, 1899. It was impossible with
this money, even with the help of such duties as were payable in
gold coin, to meet the government budget and buy sufficient gold to
pay the coupons. The causes of this unfortunate depreciation of the
currency are a matter of public notoriety. Revolutionary movements,
which had for some time been repressed, had become flagrant. On July
26, 1899, President Heureaux was assassinated, and as the result of
the prevailing disturbances the interior or floating debt of the
Republic rose by the latter part of 1899 to more than $2,500,000,
bearing interest in some cases at the ruinous rate of 2 per cent a
month, compounded.
Efforts were made by the improvement company to relieve the
government’s situation, and to that end a new contract, which was
ratified by the Dominican Congress on April 18, 1900, and duly
promulgated as a law, was entered into. By this contract all duties
were payable in gold; the amount of the interior debt was
ascertained, and the interest on it was reduced to 6 per cent or
less; and provision was made for the payment of all the government’s
floating debts. The contract was duly put into operation, but its
performance was soon interrupted. After the assassination of
Heureaux the government naturally fell into the hands of the men who
had been his enemies and who were disposed to question and condemn
all the acts of his long administration. Moreover, the great
majority of those who came into temporary possession of public power
were unfamiliar with administrative duties and were confessedly
unacquainted with the contracts of the government and the rights,
duties, and powers of the American companies thereunder, and the
press began to urge the withdrawal of the American companies from
the country. Some advocated a withdrawal as the result of friendly
negotiation and some through forcible expulsion.
Late in 1899 Señor Juan Isidro Jimenez, who had become President on
November 20 of that year, inquired of the American companies,
through an agent in New York, whether they would be willing to sell
all their interests to the government and withdraw from the country.
The companies indicated their willingness to negotiate in that
sense, and, upon further request, submitted a plan as a basis for
negotiation. Subsequently the companies concluded with the
government a contract of April 18, 1900, which was duly ratified by
the Dominican Congress; but while it was before the Congress
President Jimenez renewed the discussion as to the purchase of the
companies’ interests. Subsequently the companies submitted detailed
propositions, but President Jimenez meanwhile changed his mind, and
after a preliminary discussion he declined to proceed further in the
negotiations. He then adopted the view which had been advanced in
the Dominican press, that the contract of 1900, if not absolutely
void, could not be legally put into execution, except as to those
parts which increased the government’s annual budget. In this
position he derived encouragement from the attitude of certain
Belgian and French interests, who were dissatisfied with the
contract. The improvement company insisted on carrying out the
contract as approved by the Congress, and, being in control of the
“Regie,” continued to disburse the moneys accordingly, including
payments to the government itself.
About this time the Dominican Government instituted a proceeding in
the local courts against the bank, alleging its bankruptcy on the
ground of nonpayment of a small amount of bank notes, for which the
government itself was in writing pledged as primary debtor under a
contract by which the bank was released. These proceedings were
decided nineteen months later in favor of the bank, but they had
made any hope of rehabilitation under existing conditions
impossible, since during all that time the bank was closed and in
the possession of official liquidators.
Proceeding in a similar spirit, President Jimenez on January 10,
1901, by a mere executive order, peremptorily excluded the
improvement company from the discharge of its functions in the
collection of the revenues under the laws. To appreciate the
far-reaching effect of this decree it is necessary to recall the
fact that every bond of the Republic was issued, bought, and sold on
the strength of the laws which provided that the security for their
payment should be the customs revenues of the Republic, collected
and administered by the San Domingo Improvement Company, and this
assurance was printed in the bonds themselves.
The Jimenez decree, in ejecting the improvement company from the
custom-houses, destroyed practically the only substantial security
for the payment of the bonds, £825,000 of which were owned by the
finance company and its allies. By the same decree by which
[Page 347]
the company was ejected
there was constituted a “commission of honorables,” consisting of
three members, to whom it was declared that the sums due to the
company’s creditors would be paid, to be kept on deposit pending the
settlement. This professed security of course proved to be wholly
specious. No moneys were kept on deposit with the commission. On the
contrary, it became known late in 1901 that out of the large
revenues of that year, amounting to more than $2,100,000, the
percentages for the foreign and domestic debt had not been set
aside, that no payments had been made on the interior floating debt,
but that the Jimenez “revolutionary” claims had been paid without
warrant of law, and that there was besides a deficit.
The American companies applied to their government for relief against
the decree of January, 1901, and almost immediately thereafter the
Dominican Government sent its minister of foreign affairs, Dr.
Henriquez y Carvajal, to the United States and Europe on a special
mission. Doctor Henriquez laid his case before the Department of
State, where he was advised to seek a direct arrangement with the
American companies. He immediately opened negotiations with them,
and on March 25, 1901, concluded with them a contract which was
considered by him, as well as by the American companies, to be
advantageous to his government. This contract, which embraced the
purchase by the Dominican Government of the interests of the
American companies, provided for the deposit with a trust company in
New York of a fixed monthly sum pending the amicable settlement of
all questions, which, so far as they could not be adjusted directly,
were to be determined by arbitration. Each of the parties was to
appoint an arbitrator; and an umpire, in case they could not agree,
was to be designated by the King of Sweden, at the request of the
American and Dominican Governments. The gross sum to be paid and the
method of its payment, together with the security therefor, were
also to be determined by the arbitrators.
After completing this negotiation Doctor Henriquez went to Europe,
where, as the result of the contract made with the improvement
company, he was able to effect, on June 3, 1901, a contract with the
Belgian and French bondholders. Both contracts were submitted to the
Dominican Congress in September, 1901. The Belgian contract was
promptly ratified, but the American contract was rejected. The
principal ground of its rejection seems to have been the objection
to leaving it to the arbitrators to fix the sum to be paid.
The American companies then invoked the intervention of their
government and filed with the Department of State, on January 6,
1902, their printed case. The Department gave suitable instructions
to the American chargé d’affaires to Santo Domingo, with whose
assistance another effort was made by the companies to effect a
direct settlement. Negotiations had, however, scarcely begun when
the existing government was overthrown and a new one set up.
In May, 1902, negotiations were resumed, the American companies being
represented by Mr. John T. Abbott and the Dominican Government by
its minister of finance. Mr. Abbott presented a statement as to the
properties and claims of the American companies, with a view to
arbitration. The government, however, adhering to the principle on
which the contract of 1901 was rejected, proposed a settlement by
the purchase of all the rights, claims, properties, and interests of
the company for a round sum of money, thus disposing at a stroke of
all accounts, claims, and differences between the parties, and
leaving only the annual or monthly payments and the security
therefor, together with the mode of collection, as subjects for
discussion. This proposal was accepted by Mr. Abbott, and the sum of
$4,500,000 was agreed upon as the price to be paid by the government
and received by the companies for the purposes stated. The aggregate
of the claims originally presented by the companies amounted to over
$11,000,000; but, as Mr. Abbott pointed out to the government, some
of the claims were partly duplicated, and the £850,000 of bonds were
set down at par, while loss of profits on contracts which the
government had violated was also included.
The companies expressed to the government their belief that upon a
strictly equitable settlement they were entitled to $6,000,000, but
they eventually agreed upon the sum above named, throwing in their
bonds at 50 cents on the dollar and compromising or relinquishing
other claims. The amount allowed for their bonds (at 50 cents on the
dollar) was $2,076,635; their interests in the railroad were
included at $1,500,000, a sum to which the Dominican Government did
not object, and their bank shares and various “accounts, claims, and
differences” were embraced for $923,365. This compromise having been
reached, only the question of the annual or monthly payments and the
time of the delivery of the railroad remained to be determined. The
government eventually insisted upon the delivery of the railroad
within a few months after the contract should be signed and before
any substantial part of its value had been paid. The companies, on
the other hand, insisted that they should be permitted to hold and
operate the railroad till it had been paid for, since it would
constitute their only tangible security apart from the offer of the
government to set aside a portion of the revenues of Puerto Plata
for the monthly payments.
On the question of the railway a deadlock ensued, and negotiations
were broken off. The companies subsequently offered to deliver the
road after five annual payments of principal
[Page 348]
and interests had been made; but this proposal
was curtly rejected, and all negotiations between the government and
the companies ceased. The companies were again obliged to have
recourse to the Government of the United States. The Department of
State shared the view of the companies, that the demand of the
Dominican cabinet for the immediate handing over of the railway was
unjust. The American chargé d’affaires to San Domingo was therefore,
in the autumn of 1902, instructed to ask for an arbitration by means
of a mixed commission of all questions at issue, including the
amount to be paid to the American companies, and a form of protocol
appropriate to the case was presented to the Dominican Government.
The draft protocol contained no suggestion of the amount to be paid
to the American companies, but left the whole case to the
arbitrators, including price, accounts, and claims.
A long discussion ensued, and in the end the Dominican Government,
adhering to its previous position, proposed to liquidate in the
protocol itself the accounts, claims, and purchase money for the
round sum of $4,500,000, leaving it to the arbitrators to determine
the conditions under which the companies’ property should be
delivered, the terms and times of payment, including security, and
the amount of the monthly installments and the manner of their
collection, as well as the rate of interest to be paid on the award.
This proposal was accepted, and a protocol in conformity with it was
signed at San Domingo City on January 31, 1903. Under this agreement
payments at the rate of $18,750 a month were to be made pending
arbitration. The first payment was made in February, 1903, but none
subsequently.
The arbitrators met in Washington in December, 1903, their
appointment having been delayed by the various revolutions which had
taken place in San Domingo during the year, some of which were still
in progress when the arbitrators assembled. The arbitrator on the
part of the United States was the Hon. John G. Carlisle; on the part
of San Domingo Señor don Manuel de J. Galvan; the third arbitrator
was Judge George Gray. The Dominican Government was represented
before the board by Messrs. Curtis, Mallet-Prevost & Colt; the
Government of the United States by the undersigned. Cases,
countercases, and arguments were duly submitted, and on July 14,
1904, the arbitrators rendered their award. The award provided that
the principal sum, bearing interest at the rate of 4 per cent per
annum, shall be paid in monthly installments of $37,500 during the
first two years, and $41,666.66 thereafter.
Provision is made for the appointment by the United States of a
financial agent who is to receive the amount due on the 1st of each
month, beginning with September 1, 1904; and the revenues of Puerto
Plata, Samana, Sanchez, and Monte Christi, and of any other
customhouses opened within a designated zone are assigned and
designated security. In case of failure to receive during any month
the sum then due the financial agent of the United States is
empowered to enter into possession of the custom-house at Puerto
Plata in the first instance and collect the revenues; and in case
the sums there collected shall be at any time insufficient for the
payment of the amounts due, or in case of any other manifest
necessity, or if the Dominican Government shall so request, the
financial agent is authorized to exercise at Sanchez, Samana, and
Monte Christi any or all of the rights and powers vested in him in
respect of the port of Puerto Plata. A copy of the award is hereto
annexed.
The agent of the United States laid before the arbitrators all
recorded liquidated debts of the Dominican Republic, which, as set
forth in the case of the United States, then amounted approximately
to $24,643,387. This sum embraced the bonded debt, but did not
include, except to a slight extent, a mass of unliquidated claims
which probably may exist and which may be brought forward at greatly
exaggerated figures when opportunity is afforded for their
adjustment.
It was shown before the arbitrators that the causes of the Dominican
Government’s financial difficulties were revolutions, inefficient
and corrupt administration of the revenues, and wasteful and illegal
expenditures, including those for the payment of “revolutionary”
claims and “asignaciones.” The first duty of a new president is
conceived to be the payment of the expenses incurred by him and his
leading supporters in securing the presidential office. These are
commonly called “revolutionary” claims, and for their payment all
moneys in sight are considered to be available. By “asignaciones” is
meant unauthorized and unlawful gratuities paid by the existing
government to its actual or potential enemies in order to induce
them to refrain from raising revolutions.
It is upon such things that the public revenues, so far as they are
actually collected by the government and not by its enemies, are
dissipated, while ordinary expenses are paid by emergency loans or
left unpaid, and the public creditor receives nothing. If the
arbitrators had accepted this condition of things as normal and
permanent their proceedings would necessarily have been a farce, and
they could have rendered no award; but they deemed themselves
precluded from acting on such a theory. Acting on the only principle
on which they could discharge their functions, they entered fully
into the consideration of the Dominican resources and revenues. They
examined the country’s debts and the rights of the various
creditors, as shown in public laws and contracts, and they framed
their award
[Page 349]
upon the
assumption that the revenues were properly to be devoted to the
payment of legitimate expenses of government and the satisfaction of
creditors instead of being worse than thrown away in harmful and
illegal ways.
If the award, as the tribunal evidently desired and intended, should
by reason of the mode of collection which it establishes enable the
American creditors to obtain, even in revolutionary times, something
in, discharge of what is due them, this result would be equally
advantageous to them and to San Domingo; for except by such a mode
of collection no creditor could obtain anything, while the revenues
would be dissipated by the chiefs of contending factions in the
prosecution of their destructive and ruinous contests.
In reality the provisions of the award, while they are admirably
adjusted to the fundamental equities of the case, disclose an
evident wish on the part of the arbitrators to be liberal toward the
Dominican Republic.
The mode of collection established for certain ports was obviously a
substitute for the right which the San Domingo Improvement Company
possessed under Dominican laws that have never been repealed, though
their execution has been violently prevented, to collect the
revenues at all the ports of the Republic. In taking from the
company this larger right the tribunal merely endeavored to give the
lesser and substituted right in such form as to be as far as
possible self-executing and effective. Moreover, the evidence before
the tribunal demonstrated the expansion of which the revenues are
capable under a proper mode of collection. Under the administration
of the San Domingo Improvement Company they amounted in 1894 to
$1,228,113.68; in 1895 to $1,364,238.16; in 1896 to $1,473,310.42;
in 1897 to $1,600,294.39; in 1898 to $1,633,557.61; in 1899 (a year
of revolution) to $1,458,173.44, and in 1900, the last year in which
the improvement company collected them, to $2,424,684.05.
In fixing the amount of the annual payment at $450,000 for the first
two years, instead of $500,000, as decreed for subsequent years, the
tribunal considered in a liberal spirit the demands of other
creditors, although the Dominican Republic was, at the time of the
award, in arrears in its stipulated payments to the United States
under the protocol of January 31, 1903, to the amount of
$337,500.
Again, the protocol provided that interest should begin to run from
the date of the award, but it also stipulated that the award should
be rendered within a year from the signature of the protocol. It was
therefore submitted to the tribunal that interest should begin to
run, especially as the principal amount of the debt was fixed in the
protocol, from the expiration of a year after the date of the
signature of that instrument. The tribunal, however, gave the
Dominican Government the benefit of the doubt and allowed interest
only from the actual date of the award.
Finally, interest at the rate of 6 per cent was claimed on behalf of
the United States, that being the legal rate in San Domingo, while
the actual rate on loans lately made by that government is far
higher. The claim as to interest was supported by precedents, but
the tribunal, evidently desirous of acting toward the Dominican
Government in a spirit of the utmost consideration, allowed only 4
per cent. The result is that the Dominican Republic is required to
pay less than the legal, to say nothing of the actual, rate of
interest in that country, and the proportion of the annual payments
devoted to the discharge of the principal of the debt is
correspondingly increased.
Respectfully submitted.
[Inclosure 2.]
Inclosure 2 being award of the commission of arbitration under the
provisions of the protocol of January 31, 1903, between the United
States of America and the Domincan Republic, for the settlement of
the claims of the San Domingo Improvement Company of New York, and
its allied companies, printed Foreign
Relations, 1904, p. 274.
[Inclosure 3.]
Inclosure 3 being protocol of an agreement between the United States
of America and the Dominican Republic for the submission to
arbitration of certain questions as to the payment of the sum
hereinafter agreed to be paid by the Dominican Government to the
Government of the United States on account of the claims of the San
Domingo Improvement Company, of New York, a corporation under the
laws of the State of New Jersey and a citizen of the United States,
and its allied companies, printed in Foreign Relations, 1904, p. 270.