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residual amount for the construction, under proper restrictions, of permanent public improvements. All of the foregoing was effected by the creation of a refunding loan of $20,000,000, of fifty-year, 5 per cent bonds, accepted by creditors upon the basis of the debts as readjusted, and secured as to interest and amortization service by a customs receivership on the part of the United States.
In detail the service of the debt was assured by the appointment, by the President of the United States, of a general receiver of Dominican customs, who, with the necessary assistants, likewise appointed, should collect all the customs duties of the Republic until the payment or redemption of the bonds so issued. From the sum so collected the general receiver, after discharging the expenses of the receivership, paid over to the fiscal agent of the loan on the first day of each calendar month the sum of $100,000, to be applied to the payment of the interest and the amortization of all the bonds issued. The remainder of the sums collected by the general receiver were paid monthly to the Dominican government.
The Dominican government might also apply any further sums to the amortization of the bonds, over and above the 1 per cent sinking fund provision stipulated; but, in any event, should the customs revenues collected by the general receiver in any year exceed the sum of $3,000,000, one-half of the surplus above such sum of $3,000,000 must be applied to the sinking fund for the further redemption of bonds.
The Dominican government agreed to provide by law for the payment of all customs dues to the general receiver and his assistants, and to give them all useful aid and assistance and full protection to the extent of its powers. The government of the United States in turn undertook to give to the general receiver and his assistants such protection as it should find to be requisite for the performance of their duties.
Provision was also made that, until the Dominican Republic paid the whole amount of the bonds so created, there was to be no increase of its public debt, except by previous
agreement between the Dominican government and the United States, and that the like agreement should be necessary for any modification of the Dominican import duties. The accounts of the general receiver were to be rendered monthly to the contaduria general of the Dominican Republic and to the state department of the United States for examination and approval by the appropriate officials of the two governments.
The Dominican convention has now been in operation for six years a period long enough to estimate its work and consequence with some reasonableness. In that time little short of a revolution, social, political and economic, has been wrought in the country. Not a revolution of the old type, involving waste and ruin, but a revolution in the arts of peace, industry and civilization. The people of the island, protected from rapine and bloodshed, free to devote themselves to earning a livelihood, are fairly on the way to becoming a decent peasantry, as industrious and stable as sub-tropical conditions are likely to evolve. Agriculture, the great economic mainstay of the Republic, has gone forward by leaps and bounds. The cultivation of cacao, tobacco, sugar and cotton are no longer the speculative possibilities of brief interludes of peace, but normal, lucrative occupations. All of this has been reflected in an incredible expansion of the commerce of the country, both exports and imports. The foreign trade of San Domingo for (1911-12) the latest fiscal year for which figures are available, aggregated nearly $20,600,000, as compared with some $5,000,000 for the year preceding the convention. The terms of the debt service have been maintained with perfect fidelity, not only in the matter of the interest charge, but in the amortization of the loan much beyond the anticipated provision.
The total customs collections for the ten months of the sixth convention year (1912-13) have aggregated $3,312,019.12, compared with $2,983,181.90 for the corresponding period of 1911-12. If the present rate has been maintained for the remainder of the fiscal year-and it is certain that such has been the case the total customs collections for
1912-13 will exceed $4,000,000, being practically double the collections realized at the time the receivership was inaugurated and insuring a supplementary payment of $500,000 toward the amortization of the loan, in addition to the $200,000 for which statutory provision is made. With the further rapid improvement in the fairly limitless economic development of the country, and with continued progress in the direction of reducing the high import duties and entirely abolishing all export duties-along which a wise initial step has already been taken-there is certain to be even more notable improvement in public revenues, thus not only making possible ampler expenditure, but ensuring earlier discharge of the national debt.
In political affairs there has from time to time been a reappearance of unwholesome tendencies, and the past year witnessed something of this kind—some part of which, at least, is to be charged to the policies of our own government. The immediate interest of the Dominican convention consists in its efficacy in rescuing an international derelict. But its collateral significance to the United States is even greater applicability of the essential provisions of the arrangement to other financially bankrupt, revolution-torn and internationally menaced republics of Central and South America. It accordingly becomes worth while to scrutinize minutely our experience with San Domingo in order to determine and hereafter avoid any possible errors in connection with our activities in that direction. There have been at least three such lapses: (1) the continuity of administrative oversight has been disturbed; (2) a political upheaval based upon violence has been countenanced, and (3) the incurring of so-called revolutionary debts has been validated.
1. The change in administration in Washington in March, 1909, effected serious disturbance in the conduct of Dominican affairs. At the very outset we severed all connection with those advisers whom circumstances had made intimately acquainted with the Dominican problem and whose counsel had up to that determined every step in connection therewith. Thereafter Dominican affairs
were directed in formal departmental routine by officials who were without any prior knowledge of the subject, who were unfamiliar with San Domingo and its people and who were compelled to rely for their equipment upon imperfect departmental records. The change was not merely from one group of advisers to another; but from persons who knew every detail of the Dominican problem to others who were unacquainted with any part of it.
The consequences of this abrupt transition were soon felt in San Domingo in the form of administrative difficulty and political agitation. The intimate personal note which had from the outset figured in the influence exerted by the United States and which was of such peculiar value in the formative period could not be replaced by departmental routine, handicapped as it was by insufficient knowledge. Certain things which it was desirable for San Domingo to do and which it had before been possible to accomplish by mere suggestion, were left undone because they could not be made the subject of formal instructions. On the other hand such communications as were sent tended to excite by their new formality and rigor a feeling of hurt and resentment.
Out of this new relation there developed in San Domingo a feeling that the convention administration enjoyed less cordial regard in Washington. Industriously circulated by the elements hostile to order and honesty, this rumor served as a pretext for political unrest. Premonitory symptoms, easy of recognition and simple of correction, were neglected in Washington and the train laid for revolutionary outbreak.
It is true that the orderly government and the honest administration of the convention government in San Domingo had excited some hostility and resentment in the circles that had profited by the old régime. The suppression of graft, the elimination of sinecures, the refusal of concessions, the drastic scaling down of semi-fradulent claims, the rigid administration of customs regulations and the impartial collection of taxes and dues were innovations so radical as to inevitably arouse the hatred of those to whom
such perquisites had come to be regarded as proprietary rights. It is likely that a certain personal brusqueness and occasional tactless conduct on the part of the Dominican executives may have occasioned some animus in more respectable quarters. But on the other hand, it is certain that there were few persons in San Domingo whose opinions were entitled to respect who did not believe that the government was being honestly and efficiently administered and that the country itself was entering upon a new political and economic era.
These were conditions as to policy and personnel which it was desirable for the United States to seek to maintain. The principal Dominican executives were unusually fine examples of the Latin-American publicist, men of high moral character, unblemished personal integrity and of real and tested patriotism. The President was probably the best loved man in San Domingo and the minister of finance, the brainiest. Both men understood the motives which had actuated the United States in entering into the convention, and believed in us and in our intentions. Upon the minister of finance had devolved the detailed conduct of the debt adjustment and in this he had displayed financial ability and political statesmanship of a high order.
2. The convention President was assassinated on November 20, 1911, and the minister of finance escaped the same fate only by flight to Jamaica. The assassination itself was the act of a political malcontent, unrelated save in the general way suggested above, to popular feeling and to political condition. Nothing that the United States could have done would have removed the possibility of such an act of individual violence. But for the consequences of the assassination-far-reaching and portentous—the United States was more responsible. Immediately after the assassination, the reigns of government were seized by a military leader; a kinsman figure-head of the same name was installed as provisional president and two months later elected president for a six-year term.
This procedure the United States should never have tolerated. Exercising the ample power vested in it by sec