Minister Dawson to the Secretary of State.

No. 298.]

Sir: In transmitting to you the usual review of Dominican legislation I have the honor to report that the 1906 Congress enacted few measures of importance besides the regular budget or appropriation law.

The budget estimates of revenue for 1906–7, being based on the favorable results of the preceding year, show large increases. Classifying the different sources of revenue the comparative estimates of the current and past year were as follows:

1905–6. 1906–7.
Import duties $1,700,000 $2,100,000
Export duties 262,500 370,000
Port dues 40,000 110,000
Alcohol tax 200,000 200,000
Consumption taxes 50,000 75,000
Post-office receipts 12,000 15,000
Revenue from government telegraphs 10,000 10,000
Consular fees 13,300 16,000
Stamp duties 20,000 50,000
Port-lighting dues 1,000 1,400
Public sales 1,000 600
Register fees 1,200 2,000

[Page 565]

A new source of revenue for the National Government was added in the form of a 10 per cent tax on foreign lottery tickets sold in the Republic. It is estimated to produce $4,000. An additional income will be derived from the installments which are to be paid on the back sugar tax of the last two seasons. Between $30,000 and $40,000 annually is expected from this source, but these installments have already been hypothecated to S. Michelena for advances made to meet the extraordinary military expenses incurred during last winter’s revolutionary troubles. This matter of the back sugar tax and the loan do not figure in the budget law nor in the proceedings of Congress.

The 5 per cent tax on home lotteries, included last year in the national revenue, this year goes to the municipalities. Thirty per cent of the export duties, counting from May 1, 1906, are to go to companies or individuals who are under contract to build certain railroads on Government account. Thirty per cent of the alcohol tax goes to the municipalities in aid of local schools. The sugar production tax has been abolished, but the municipalities where the sugar is raised are to receive one-half a cent on each hundred pounds. The total derived from this source by all the municipalities will not exceed $6,000.

Leaving out the sums specifically devoted to railroads, schools, etc., the net revenue of the National Government is estimated at $2,823,000, of which $1,357,950 will go to the creditors and for expenses of collection. This leaves $1,465,050 for the ordinary running expenses of the Central Government. Judging by the receipts of last year it seems likely that these estimates of receipts are justified, or nearly so. There is hardly any doubt that the custom-house revenues—viz, import, export, and port duties collected by the general receiver—will come to the estimates if peace continues and the receivership is backed up in its efforts to stop contraband over the Haitian frontier. Under Dominican collection and accounting the internal revenues will hardly come up to the estimates, but I believe that if the same system should be applied to it as to the customs revenues the above congressional estimates would be exceeded.

Note should be taken of the fact that in addition to the $1,465,050 which the Government will receive for its ordinary expenses, $111,000 goes to railways out of the export duties and $60,000 to the municipalities for local schools out of the alcohol tax. Each municipality also exercises its right to impose a tax on imported goods consumed within its territory and to receive $6,000 sugar tax, as well as the licenses, market taxes, and other customary municipal revenues.

That appropriation part of the budget law provides as follows:

Rural guard, police, army, navy, and extraordinary $600,000.00
Deficit and unforeseen expenses of interior and war 94,316.50
Public buildings, etc 20,750.00
Extension and repairs telegraph lines 20,000.00
Salaries and all other civil expenses, including $30,000 for railroads and wagon roads, in addition to the $111,000 above referred to 690,051.00

Congress ratified the contract made with ex-President Vasquez by which the latter agrees to take charge of the construction of a railroad from Moca to Monte Christi and spend that portion of the export duties devoted thereto. A similar contract was entered into with Pedro Marin, a wealthy citizen of this town, for a railroad [Page 566] from Romana to Seybo. Provision was likewise made for railroads from Barahona to the interior and from this city to San Cristobal, the latter by a concession granted E. A. Blanton, an American citizen, under which he is to receive $600 annually for each kilometer constructed. I doubt whether any practical good will result from these projects, with the possible exception that a real start may be made toward the construction of a line from Moca to Santiago, being the first section of the through line projected to Monte Christi. This line is only 18 miles long; the route offers no special engineering difficulties; the territory is already densely populated and highly productive, and the contractor expects to have at his disposal about $5,000 of government funds each month. Under these favorable circumstances it would seem probable that he will make a start at once and will soon be in a position to induce capitalists to make the advances necessary promptly to complete the line to a connection with the. Puerto Plata road at Santiago.

Congress passed a law opening Roman a as a port of entry from and after January 1, 1907. Romana is 70 miles east of this city and is a convenient port for the most easterly province of the Republic, that of Seybo. There are rich sugar lands and pasturage in its immediate vicinity and a few miles back from the coast are excellent cacao lands where planting and production has reached respectable proportions in the last few years. The railroad which the Government proposes to build under the contract with Pedro Marin is intended to reach this region and Romana will be its sea terminus. Several years ago a concession was granted to a Norwegian gentleman under which Romana was to be made a port of entry and he was to make improvements on the water front and build a railroad. To remunerate him he was to be allowed to collect a percentage—I think 30 per cent—of the customs duties at the new port, and other sums from sources I am not able to specify, not having seen a copy of the concesison. The Norwegian gentleman afterwards sold to or associated himself with certain American citizens—among them a Mr. Baum, a well-known merchant of Omaha, Nebr. Some tens of thousands of dollars were spent on the project, but for the last several years nothing has been done. A little more than a year ago I was informed by Mr. Baum and his American associates that they were ready to go on with the project as soon as financial and political conditions seemed to justify it. But since that part of the concession which refers to a payment of customs duties directly to a concessionaire could hardly be made effective while the modus vivendi was in force, they rightly came to the conclusion that beyond taking care that their concession was not allowed legally to lapse no immediate action was wise.

Congress revised the laws relating to medical practice, consumption taxes, municipal licenses, and wagon roads; abolished the 10-cent tax on sugar; places vaccine, water-closets, and burners for alcohol lamps on the free list, and made some minor changes in the criminal statutes. However, nothing practical was done in regard to the most important of the subjects upon which it is universally recognized that Dominican legislation is in need of reform.

A draft on an amended constitution was formally submitted and discussed. The present one makes no provision for the selection of a Vice-President in case of a vacancy in that office either by death or [Page 567] resignation or by promotion of the incumbent to Presidency, and according to the letter of the constitution the President is a mere figurehead, all executive power belonging to the council of ministers. The proposed constitution provides for the succession to Presidency, and gives the President substantially the same authority as is possessed by the President of the United States. But after a little half-hearted discussion it was laid aside and the country continues without any legal provision for electing a successor to President Caceres. If he should die, the cabinet council would doubtless legally continue to conduct the Government, and would probably summon Congress, and probably the electoral college, for the purpose of selecting a President. But the constitutional right of either body to do so is not clear and grave consequences might ensue. Other important projects of reform submitted but not acted upon were those for a patent law, for the reorganization of the postal service, for a game law, and for a revised customs tariff. Of the latter there is urgent need, the present tariff schedules and system being antiquated. They have come down from the early days of the Republic without substantial changes except repeated horizontal increases in duties. As a whole the rates are so high as to limit consumption and even to reduce the revenue in the case of many articles. Since most duties are based upon valuations fixed by the schedules themselves, the great changes in prices since the schedules were enacted have brought about the most astonishing inequalities. The proposed new tariff offered informally by the minister of finance for the consideration of Congress is framed upon that now in force in Venezuela. It does not meet the approval of the general receiver, whose wide experience in customs matters was not utilized by the minister of finance and the informal commission of merchants who assisted him in framing it.

Congress seems to have given no attention whatever to the matters of providing for the organization of the army, the introduction of a scientific system of accounting for expenditures and collections of internal revenue, the appointing of a commission to prepare the way for a modern system of taxation, or the protection of small farmers against the depredations of live stock running at large.

The expenses incurred in the raising and paying of troops to meet the attacks made by Demetrio Rodriguez and his fellow-revolutionists on Puerto Plata, Santiago, and Sanchez in December last were the subject of acrimonious discussion. The minister of finance and the cabinet council had taken it upon themselves to authorize and pay these accounts, submitting a detailed statement thereof to Congress immediately on its assembling. The debate ended with a vote of ratification, the members dividing on party lines.

On May 29 Congress ratified the extradition treaty with Cuba. I suppose that the department has already received a copy and translation from the legation at Habana. The text of the treaty has not yet been published here. If the department desires, I shall be glad to send a copy and translation when it appears in the official organ. Congress also ratified the convention about patents, signed ad referendum in Mexico on January 27, 1902, by the representatives of Chile, Bolivia, Argentina, Colombia, Costa Rica, Ecuador, Guatemala, Haiti, Salvador, Honduras, Mexico, Nicaragua, Paraguay, Peru, and Uruguay. Its text has not yet appeared in the official organ. The sanitary convention of October 14, 1905, and various other [Page 568] treaties, among them the Dominican-American convention of February 7, 1905, are still pending for ratification. On two important subjects Congress expressed an opinion in the form of a resolution, but took no definite action. It urged the Executive to settle the boundary difficulty with Haiti, and protested against any action tending to enforce the improvement award of July 14, 1904, unless such action had been previously authorized by Congress.

I have, sir, etc.,

T. C. Dawson.