Minister Dawson to the Secretary of State.
Santo Domingo, January 23, 1905.
Sir: Continuing the subject of my No. 100, of the 2d instant, the arrangement in regard to the Dominican debt and custom-houses, I have the honor to report that on the 6th instant the minister of finance [Page 302] submitted to me his unofficial project providing for a joint system of collection. A copy and translation are inclosed.
Though offering better guaranties than I had dared to expect would come from him, the project did not seem sufficiently sweeping in view of the custom-house abuses which have so long prevailed here, and it did not contemplate an adjustment of all the debts. Therefore I determined to reject it. But instead of seeing the minister of finance I sought the minister of foreign affairs and told him my objections, believing that a few days of reflection would at that time do more to bring Señor Velasquez around than a discussion with me.
On the 7th came your cablegram of instructions, which I confirm, as follows:
Washington, January 6.
Dawson, Minister, Santo Domingo:
Answering your cablegram January 2, it appears from your dispatch No. 36, September 12 last, that the debt of Santo Domingo then was $32,280,000, that estimated revenues under Dominican management of custom-houses are $1,850,000, and that the proposed budget for current administration is $1,300,000, leaving only $550,000 to pay foreign and liquidated obligations, and that the payments due 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. These last charges would have to be met, but it appears to be impossible, under present conditions and with the estimated revenues from the custom-houses constituting substantially all the revenues of the Republic, to defray the ordinary expenses of the government and to meet its (obligations).
Various American claimants are appealing to the United States Government to enforce the concessions and obligations which the Dominican Government has granted and undertaken toward them and urging energetic measures for their protection.
Your No. 87, December last, and other communications to the Department show the unrest of claimants of other governments with regard to conditions in Santo Domingo, and the serious danger to the Republic to be apprehended from the conflicting claims of creditor states of the Dominican revenues and from the continuance of existing conditions, which are constantly becoming more threatening. These conditions constitute a menace to the Republic itself and they may only be improved by the maintenance of peace, order, and a scrupulous collection and appropriation of the revenues to pay the necessary current expenses of the government and to meet its creditors on a foundation which would inspire confidence and assure the ultimate payment and extinction of the debt.
This would make it necessary to fix a limit to the expenditure of the government until its debt should be extinguished or greatly reduced.
The United States Government could only assume responsibiltiy for accomplishing these objects on conditions which would make it possible and assure the success of its undertaking. It is, therefore, desirable and even indispensable to fix a limit to the expenditures of the government; to maintain existing tariff laws which should be modified only with the consent of the United States in order to facilitate the discharge of the obligations of the government. The United States would have to collect all the customs revenues. A sum necessary to meet the expenditures for the operation of the government and not to exceed 40 per cent of the total of said revenues would be turned over by the United States to the Dominican treasury. The remaining revenues would have to be applied by the United States on the Dominican debt and interest charges due and to become due and to meet the expenses of the United States in carrying out the arrangement.
The United States would also have to undertake the adjustment of the amount and terms of payment and amortization of all existing obligations, and also to reconcile conflicting claims and to consider and determine the validity and amount of any unsettled claims. At the end of each fiscal year any surplus remaining in the hands of the United States after payment of all matured obligations and interest and amortization charges and its own expenses for the current year would be handed over to the Dominican Government. You will present these considerations in your own way to the Dominican Government.
Loomis.
In view of the latitude given me by the last sentence, I determined not to treat directly with the President until after getting, or failing to get, from Velasquez a concession as to the sole management of the custom-houses. So, after careful consideration, I went to the minister of foreign affairs, whom I knew to be unwaveringly in favor of American [Page 303] intervention on any reasonable terms, and informed him of all the material parts of your instructions, leaving him free to withhold them for the present from the President and Señor Velasquez if he deemed best.
Mr. Sanchez vigorously protested against the proposed division, saying that with only 40 per cent the government could not hold itself together, and that if we insisted the President and cabinet would have to resign and leave the country. But I doubted whether he would adhere to this opinion after reflection, and left him without entering on any discussion.
When I saw him the next day he said nothing of this subject, but told me that he had informed the minister of finance, but not the President, of the substance of my instructions. Velasquez had received the news surprisingly well, and was willing to continue his negotiations with me.
Accordingly, Señor Velasquez and I had several interviews. In the first he told me he was engaged in preparing a new and rigidly economical budget and would soon indicate the minimum the government could get along with. Information of this I sent you oil the 13th in the following telegram:
Santo Domingo, January 13, 1905.
Secstate, Washington:
Dominican minister for foreign affairs has submitted your bases to the minister of finance. The latter is now preparing a new budget with a view to reasonable expenditure limit. Joubert starts Washington, D. C., 18th.
Dawson.
In the evening of the same day Mr. Velasquez, Mr. Joubert, and myself had a long and amicable discussion of the manner of collection. I explained the practical reasons which I believed had induced my government to insist upon taking charge of the collection of all customs revenues and the naming of all collecting officers. Doubtless most of the subordinates would be Dominicans, and in selecting them we would be glad to receive suggestions from the Dominican Government, but we must have the power of employing and discharging, unhampered by any formal limitation. We then discussed his project, article by article, and it became apparent that an entirely new one would have to be prepared. This I undertook, at Mr. Velasquez’s request. He did not, however, definitely indicate his acceptance of my views.
On the following morning (the 14th) Captain Dillingham arrived, bearing instructions from you to cooperate with me. His acquaintance with Dominican character, politics, and public men is so complete that within a few hours he understood the situation perfectly. His views and mine coincided exactly, and we have acted in concert in every particular. To both of us it seemed that prompt action was essential, because we could not rely on the situation remaining the same two days together; that a journey to the northern part of the island would probably not be necessary if we found that Morales could count on the adherence of Velasquez and the other controlling members of the Horacista party, and that we could hope to do nothing with the Jiminestas at present.
I called on the minister of foreign affairs and assured myself that the President had by this time been informed of our rejection of his proposal of 60 per cent for expenditures. I then arranged for a nonofficial [Page 304] and confidential interview between the President and Captain Dillingham, at which I was present. It took place on the morning of the 15th, in the President’s residence.
Captain Dillingham placed the requirements of the American Government clearly and positively before the President, dwelling especially on the necessity for a sweeping reform in administrative expenditure and on the fact that the United States was solely actuated by a desire to ameliorate the conditions of the Dominican Republic, and that the conditions suggested had nothing in view except the latter’s welfare.
The latter replied that he was convinced of the truth of all that Captain Dillingham said; that he was now prepared to turn over the adjustment of the debt and the management of the custom-houses to the United States; that he could rely on all the members of his cabinet except Velasquez, who, himself, was wavering; that if the latter would sign the proposed agreement it would be peaceably accepted by Caceres, etc.; that if Velasquez refused he (the President) would go ahead anyway, provided the American Government would stand by him.
We then entered upon a frank discussion of the administrative reforms and economies which would be required. The President said he proposed to do away with the army and the system of payments to military chiefs, to reduce the number of provinces and officials, to devote especial attention to roads and schools, and to making more efficient judicial administration. His proposals did not differ sensibly from those contained in inclosure 1 with my No. 41 of September 24, 1904.
The President then said he would like the agreement to contain clauses by which the United States would promise not only to aid him in restoring financial credit and preserving order, but also in ameliorating the industrial condition of the island. He wanted especially to remove the export duties which were crushing the life out of cacao, tobacco, and coffee culture. This would have a tremendous influence in securing a peaceful acceptance of American intervention. Captain Dillingham and I promised that we would recommend this to our government.
The President then spoke of the importance of closing up the whole matter without any delay. The longer it was discussed the more probability there would be of disagreements even among his own Horacista supporters, to say nothing of the people at large who might be excited by the misrepresentations of the opposition. He also said that a favorable moral effect would be produced on all parties and classes if Captain Dillingham should be received formally with military honors.
The next day (16th) I introduced Captain Dillingham to the minister of foreign affairs, and the formal presentation to the President was fixed for the 17th at 10 o’clock.
At that hour we presented ourselves at the palace, accompanied by two of the President’s aids-de-camp, and found an imposing array of troops in the square and the President surrounded by his whole cabinet. I inclose a copy of Captain Dillingham’s address and of the reply of the President. When the usual toasts were drank, I proposed, in Spanish, the health of the President and the “Independence of the Dominican Republic.”
In the meantime I had said to Señor Velasquez clearly, but in the most friendly spirit, that I was obliged to reject his plan of joint collection, [Page 305] and handed him a draft of an agreement. This document was merely an amplification of your instructions to Captain Dillingham and myself, except that the right to abolish export duties was reserved. This concession was made under the authority asked for and granted by the following telegram:
Santo Domingo, January 15, 1905.
Secretary of State, Washington:
Personal interview with the President to-day was satisfactory. We recommend and request permission to include in arrangement abolition of export duties. Net receipts from same very little. The abolition is intended to satisfy agriculturists, thereby averting possible outbreak.
Dillingham, Dawson.
Washington, January 16, 1905.
Dillingham, American Legation, Santo Domingo:
It may not be well to make requests complicated in the beginning. But we rely upon the judgment of the minister and yourself.
Loomis.
After the reception on the 17th Captain Dillingham exchanged calls with all the members of the cabinet, and we were informed that the minister of foreign affairs and the minister of finance had been appointed a commission on the part of the Dominican Government with full power to deal with us.
The next evening we met and exchanged views. It appeared that we agreed as to essentials, and the Dominican commissioners undertook to prepare a draft of an agreement.
From the 18th it was apparent that the uneasiness and curiosity of the public was fast rising to a height that might prove dangerous. The press and people clamored to know what was going on, and were not satisfied with the generalities uttered by Captain Dillingham and the President in their addresses. It was currently believed that Santo Domingo was to be annexed, or at least that Samana Bay was to be ceded, and incendiary articles were published charging the members of the present government with selling out their country without consulting the people. The news of the resignation of Governor Cespedes added to the alarm, and unfounded rumors of pronunciamentos by Caceres were circulated and believed. But quiet continued to prevail in the streets, and the government was sure that the excitement would die down as soon as the real nature of the proposals should be made public.
Under these circumstances it seemed wisest to waste no time in coming to a conclusion. We met the Dominican commissioners again the next evening (the 19th) and discussed article by article a draft which they had prepared based upon my former short draft. We found it necessary to insist upon many modifications in verbiage and detail, but succeeded in reaching an agreement as to every point before separating.
The next morning Captain Dillingham telegraphed you as follows:
Santo Domingo, January 20, 1905.
Secretary of State, Washington:
Arrangement completed. Will be signed to-day and published to-morrow. Need war vessel at once at Monte Christi and at capital. I will shortly leave for the United States, by way of Cuba, aboard Castine. I do not anticipate uprising or any great opposition, but I consider take every precaution advisable. If the telegraphic communication should be interrupted the United States minister should have the means of communicating. Quiet prevails.
Dillingham.
But though we had such explicit and satisfactory assurances from the President and the commissioners the public and political situation was so strained that we could not feel safe until Mr. Velasquez had affixed his signature to the completed document. He and I spent the day of the 20th in making grammatical changes necessary to secure an exact correspondence in the Spanish and English texts, but it was impossible to complete the copying that night. This seemed unfortunate, as President Morales was exceedingly anxious to publish the document as soon as possible. As a matter or fact, its terms were confidentially communicated to many people, and the fact that it had been agreed upon was communicated to the newspapers from official Dominican sources and by them published on the evening of the 20th.
That same evening Captain Dillingham received the following telegram from you:
Washington, January 20, 1905.
Dillingham, American Legation, Santo Domingo:
Please cable immediately substance of the proposed decree. Navy Department desires you to remain at capital to confer with Sigsbee.
Loomis.
To this he immediately replied:
Santo Domingo, January 21 (filed 10 a.m.), 1905.
Secretary of State, Washington:
United States Government, guaranteeing territorial integrity of the Santo Domingo Republic, undertakes adjustment all obligations, including amounts, conditions of payment, interest, validity, sinking fund; reconciling; Santo Domingo may be represented on tribunals; United States Government is to take charge all custom-houses existing or hereafter to be created, naming all employees; Santo Domingo Government allowed inspector accounts in each custom-house; statements monthly, general statement annually; Santo Domingo receives 45 per cent receipts, agreeing to limit administrative expenditures to indispensable necessities; payments to treasury weekly; collection expenses chargeable to 55 per cent; any reform of tariffs to be made in agreement with the United States Government; no change of duties without consent of the United States Government, except export duties, which may be abolished or reduced immediately; United States Government, at the request of Santo Domingo Government, will grant every assistance in its power to restore credit, to preserve order, to advance welfare; agreement takes effect February 1.
Referring to organization, recommend no appointment anyone formerly connected with Improvement Company. Such appointments objectionable.
Dillingham.
On the same day I received the following telegram:
Washington, January 20, 1905.
Dawson, Minister, Santo Domingo:
Twentieth. Is it proposed to have us take immediate charge of all custom-houses? What plan of administration is suggested?
Loomis.
Saturday morning, on going into the city, we found that the copies of the agreement were ready, and they were immediately signed, two being in Spanish and two in English.
I then answered your telegram of the night before as follows:
Santo Domingo, January 21, 1905.
Secretary of State, Washington, D. C.:
Agreement signed. Terms as telegraphed by Dillingham. No limitation on our power to make reorganization customs service and appointment collectors. Present Dominican authorities responsible to us from February 1 until American employees arrive. For the present I have to suggest sending of an expert with at least two assistants to begin reorganization and to take charge as soon as possible most important ports. Abbot and I can advise. There is some excitement and criticism. Wish to disarm same by a friendly attitude as to details. Firm attitude as to essentials and presence of force advisable for moral effect upon malcontents.
Dawson.
The reorganization ought to be undertaken carefully and deliberately by an experienced man, who should come as soon as possible. The situation at Monte Christi is such that an American collector should be installed there on February 1. Puerto Plata, being now administered by the financial agents, is all right. As to the other ports, there will be little harm in letting them remain for a short time in the hands of Minister Velasquez. He has already prepared orders that all outstanding drawback contracts be canceled, and I am hopeful that the desire of getting places under the American management will tend to make the present collectors strictly enforce duties. In the interval until our expert comes I will have them make accounts to me. Judge Abbott, who had started to the United States on account of ill health, turned around at San Juan and will be here to-morrow. If he is now recovered, his advice and assistance will be of great assistance until the Department determines on its course of action. The reason I suggested a chief with two assistants was that I thought the former could take charge of the custom-house here, one assistant go to Sanchez and the other to Puerto Plata to take Mr. Strickland’s place, if, as I hope, the latter goes to Monte Christi. Macoris, Samana, and Azua can be left for later.
On the evening of the 21st Captain Dillingham received the following telegram:
Washington, January 21, 1905.
Captain Dillingham,
Care American
Legation, Santo Domingo:
We are not sufficiently informed upon situation. Please cable fully.
Loomis.
To this he replied, after consultation with me:
Santo Domingo, January 21 (filed 10 a.m. 22d).
Secretary of State, Washington:
Twenty-first. Until this afternoon no unfavorable news was received from anywhere in the Republic. Then was informed that Arias and Rodriguez are under arms and prepared to take the field at Monte Christi. I at once telegraphed Detroit proceed there, maintain status quo until February 1, and compel, if possible, Arias and Rodriguez to keep their contract of last June. Telegraphed Scott substance of present agreement. Do not know if Detroit has sailed. Had I a destroyer I would now be en route to Monte Christi, leaving Castine here. Rest Republic apparently quiet. Caceres at Puerto Plata prepared to meet trouble in Monte Christi. Sentiment in capital is growing better. Most people seem to appreciate generous attitude of the Government of the United States.
Sunday morning. No changes. With Santiago quiet other trouble will amount to little. If Rodriguez can be controlled situation will be simplified. I believe Santiago will be kept in line by the Vice-President and minister of finance. At this moment quiet prevails, but the situation is acute but encouraging.
Dillingham.
I also confirm your telegram as follows:
Washington, January 21, 1905.
Dawson,
Dillingham,
American Legation,
Santo Domingo:
We are embarrassed by having newspapers get substance of agreement before it reached Department.
Loomis.
and our reply thereto:
Santo Domingo, January 21, 1905.
Secretary of State, Washington:
Twenty-first. Substance agreement was known here generally last night. The information came from the Dominican authorities, who dreaded immediate bad effect from current misconceptions.
Dawson, Dillingham.
We regret exceedingly the embarrassment caused to the Department by the premature making public of the matter here, but there was no way for us to prevent it. The Dominican Government, to appease the popular clamor, gave out confidentially certain provisions of the agreement before its commissioners had agreed on the rest. In fact this semi publicity was the first definite assurance upon which we felt we could rely that the arrangement was really going through. We telegraphed you just as soon as we were ourselves sure that there would be no modifications or backing out.
I herewith inclose copies of both the English and Spanish versions of the agreement, which you will observe is dated the 20th, although in fact it was not signed until the morning of the 21st. We believe that in all essentials it either coincides exactly with the instructions given us, or corresponds as closely as was practicable.
The first paragraph of the preamble needs no comment.
In the second paragraph of the preamble we were obliged to insert the recitation “guaranteeing the complete integrity of the territory of the Dominican Republic.” This was insisted upon at the last moment by the Dominican commissioners in a way that left no doubt that a refusal on our part would have been regarded as a virtual declaration of intention to annex and led to a breaking off of the negotiations. Vice-President Caceres had made such a clause a condition precedent to his adhesion, and Dominican opinion, so far as we have been able to ascertain it, is unanimous on the subject. In view of the declarations made by our President in his recent message to Congress and the general tenor of the Department’s dispatches to this legation, we deemed it best to consent to the insertion of the clause without hesitation or discussion.
Paragraph “a” of Article I also seemed reasonable and we made no objections to its insertion.
The clause of Article II reading “the said employees being, so far as the fulfillment of their duties and the exercise of their rights is concerned, considered as Dominicans and therefore subject to the laws of the Republic,” was the subject of much discussion between us and the Dominican commissioners. We agreed to its final form after assuring ourselves that its practical effect would be confined to securing from custom-house employees a faithful execution of Dominican customs laws and regulations. For example, if an employee connives at smuggling he can be punished according to Dominican law, and we can easily prevent any misuse of the power or persecution of employees if such should be attempted.
The last sentence of Article II—in regard to a Dominican inspector of accounts in each custom-house—was also the subject of much discussion, and it was difficult to arrive at an agreement as to its form. We admitted the right of the Dominican Government to inspect our administration, but insisted that there be no power to interfere in any way in the collection.
Paragraph “a” of Article II was inserted for the purpose of avoiding the necessity of putting off the date when the arrangement is to go into effect to a remote period. Not only would there have been great stealings in the custom-houses in the interval, but the present uproar of opposition would have continued probably with increasing violence. From every point of view it seems best to take at least [Page 309] colorable possession of the custom-houses at the earliest date possible, and make the arrangement an irrevocable fait accompli.
Our reasons for consenting to 45 per cent for administrative expenditures will be explained in person by Captain Dillingham. I have given the subject of what would be a safe and reasonable minimum most careful consideration ever since my arrival, and while I have not yet been able to gather all the data necessary for a sound estimate, I think that $75,000 a month for the first few months is as little as they can get along with. Later, when the President has been able to dismiss the army and reduce the number of provinces, it may be that $800,000 will be safe. Necessarily all the reductions can not be enforced immediately. The reform will take time and at best the position of President Morales and his government is bound to be exceedingly difficult for the next year. If he fails the alternative is likely to be very expensive to the creditors and the United States as well as to the property owners on this island. The Department will note the last clause of Article III by which the “Dominican Government undertakes to keep its administrative expenditures within the limits of the indispensable necessities of administration.” This clause, I believe, not only gives us the power to insist on a reduction of expenditures whenever we may deem it advisable, but it opens the door to a real superintendence of all administrative matters, which in wise hands can be used to great advantage. Its practical effect can be made like that of similar clauses in the financial agreements to which the Government of Egypt is a party.
Paragraph “a” of Article III was inserted as an assurance that the expenses of blockading, etc., should be charged against the 55 per cent and not against the 45 per cent.
Articles IV and V need no comment.
Article VI corresponds exactly with the instructions sent to me but does not include the provision as to the United States having the right to suggest a revision of the tariff which was mentioned in Captain Dillingham’s instructions. The Dominican commissioners objected strenuously to obligating their government to change their tariff on lines to be indicated by the American Government, although they had inserted in their own draft a promise to undertake a thorough reform. It finally developed that they were afraid we would force them to revise their tariff in the interest of Americans shipping goods which compete with their protected industries. We think the clause as finally agreed upon covers the real intention of the Department.
Article VII needs no comment, and the reasons why Article VIII fixes such an early date for the arrangements to go into effect have already been adverted to.
This dispatch, as indeed the whole negotiation, has been prepared under great pressure, and I must ask the Department’s indulgence as to its form.
I wish to express to the Department my gratitude for the sending of Captain Dillingham. He has not only been a most agreeable colleague, but he has by his energy, tact, frankness, and decision done more than any other American could in so short a time with the members of the Dominican Government, and quick action was essential to success.
I have, etc.