Santo Domingo: A Country with a Future Part 19

While the various const.i.tutions have expressly declared the independence of the judicial power, the authority of the courts has heretofore been rather relative, and they have studiously avoided conflicts with the other branches of the government. There is no case on record where they have declared a law unconst.i.tutional. The supreme court when driven into a corner in 1904 even declared that it had not the authority to make such a declaration. The const.i.tution of 1908 modified the decision by expressly providing that the supreme court may decide as to the const.i.tutionality of laws.

This decision of the supreme court made little impression in the country, due probably in part to the ease with which the various administrations have disregarded the const.i.tution when it suited their convenience. The little value of the const.i.tution between friends has constantly been demonstrated. Certain provisions have been systematically violated, even by the best of administrations.

Princ.i.p.al among them is the provision that no one be arrested without a warrant setting forth the offense, unless caught _in flagranti_, and the provision that every person imprisoned be informed of the cause of his imprisonment and submitted to examination within forty-eight hours after arrest, and not be detained for a longer time than permitted by law. These provisions have been dead letters as far as political prisoners are concerned. When a person was suspected of being involved in a conspiracy against the government he was liable at any moment to be seized and conducted to prison, where he might be detained indefinitely, until the danger was over, or he was considered innocuous. The ancient fortress at the river mouth in Santo Domingo, known as La Torre del Homenaje, bears over its entrance the sign, "Political Prison," and rarely has it been without tenants, even when the country was at peace and the const.i.tutional guarantees were supposed to be in force. On one occasion when I heard a Dominican lawyer lament that a friend of his had thus been incarcerated for several months without a hearing, I inquired why he did not apply to a court and invoke the const.i.tutional provision. The reply was, "The judge who signed an order to set the prisoner free would probably join him in jail before many hours had pa.s.sed."

Such ignoring of the written law was a relic of the days when the will of the military was the only law respected. Reminders of the old state of affairs continued to crop out, though the people and government were rapidly adopting other customs. An instance occurred in Sanchez during the presidency of Morales. A younger brother of the president was customs collector at that port and was accused by public rumor of irregularities in office. A customs employee having been discharged for spreading the rumor, called on the collector and invited him to a meeting outside; and the two adjourned to the bush, where shots were exchanged and young Morales was wounded in the leg. The aggressor was immediately seized by the general commanding the military forces in Sanchez and carried to the town cemetery, a grave was dug, and the general prepared to have him summarily shot. The town authorities interceded, but in vain, and the execution was about to take place when the ladies of the town succeeded in moving the commandant by their pleadings. The prisoner was remanded to the jail in Samana and was later tried by the court of first instance and acquitted. Much more recently the leader of the band that a.s.sa.s.sinated President Caceres was killed without trial.

Some of the surviving military leaders of the old school find difficulty in adjusting themselves to the new conditions. Among them was General Cirilo de los Santos, better known by his nickname "Guayubin" (the name of the town where he was born) who took an active part in the political disturbances of the Republic for many years.

When I traveled through the country with Prof. Hollander on his financial investigation we were guests of this hero of a hundred revolutions, who was then Governor of La Vega. In the course of conversation Prof. Hollander expressed gratification at the cessation of the custom of shooting political prisoners. The governor was at that time engaged in the persecution of one Perico Lasala, a perpetual revolutionist who was infesting the nearby hills and who has since done his country a favor by being killed in an incursion on the coast.

The idea of not shooting this notorious character as soon as he was apprehended seemed grotesque to Guayubin--and perhaps not without reason. He cried, "If you were in my place and caught Perico Lasala, wouldn't you shoot even him?" "Why, no," was the answer. Guayubin's face fell and he became thoughtful. For the rest of the day he was strangely silent and he continued so on the morrow, when he accompanied us for several miles out of town. When bidding goodbye, he broke out: "I wish to ask your advice. If I should catch Perico Lasala, what would you advise me to do with him?" Dr. Hollander asked: "What do you do with persons who steal or commit similar violations of the law?" "We put them in jail." "Why, then, put Perico Lasala in jail." A look of inexpressible relief came over the face of the old warrior. "Of course!" he said, "I never thought of that."

Not long after this incident General Guayubin met a political opponent against whom he harbored resentment. He immediately drew his revolver and began to shoot, and the object of his wrath escaped only by dexterous sprinting. At a session of Congress there was some criticism of his action and Guayubin resigned his office in disgust. The death of this fighter was as stern as his life. He attended a christening party at a house where there was a forgotten powder-cask; a spark fell into the powder and in the ensuing explosion Guayubin's eyesight was destroyed. Grimly refusing to take food or drink, he pined away.

Prior to the American occupation, the Dominican penal establishments were as a rule in very bad condition. There is no penitentiary and portions of the forts or government houses are used as jails. The prisoners were herded together with little thought of cleanliness. The stench in some of the jail yards was at times almost unbearable. In justice it should be stated that the Dominican authorities frequently called the attention of their Congress to this condition of affairs.

The prisons at Santo Domingo City and Santiago were exceptions to the rule; they were improved even to the extent of being endowed with a prison school.

The political prisoners were generally given better accommodations, if there were any at hand, and had the privilege of securing their meals from the outside instead of being limited to the scant and repugnant prison food. During revolutions, however, when the prisons were overcrowded, the political prisoners were kept in irons and supervision was rigid. According to law the functionaries of each court of first instance were supposed to visit and examine the jails once a month, but as the date of their visit was known beforehand the inspection was little more than perfunctory. Not very long ago it was whispered in the Cibao that a judge in inspecting a jail accidentally pa.s.sed through a door to a room he was evidently not expected to enter, and there to his own embarra.s.sment and that of the warden found a score of prisoners whose names were not on the prison rolls.

The more serious offenders were kept in irons. The Dominican authorities, realizing that they had no reason to be proud of their prisons, were loath to permit foreigners to visit the jails. When I called at the government building at Sanchez on one occasion, however, the commandant was absent and an indiscreet sergeant offered to show me the two rooms used for prison purposes. The building was a wooden one and one of the rooms, though heavily barred, did not seem unfitted except in case of overcrowding, which I was told sometimes occurred.

The other room was extremely repulsive. It was dark and a foul odor rising from a hole in the wooden floor demonstrated the truth of the guide's remark that there was no outhouse for the use of the prisoners. Along one side of this room lay two long square-cut beams, one on the other, scalloped out so as to form a number of round holes along their juncture. It was evident they were used as stocks and my guide stated that he had seen a whole row of men sitting along the log with their feet thus confined. One or two of the holes were a little larger and it was explained that they were for the purpose of confining not the feet but the neck of the delinquent, and that this punishment was much worse, producing especial pain in the case of short-necked persons. The severest pain was produced, so the guide stated, when the delinquent was seated on the beam and his feet placed crosswise through the holes: he could bear the agony of this position for only a short time.

The American authorities have made great improvements in the prisons and prison discipline. The jails are now so clean that they are almost show places.

The revolutionary disturbances have seriously interfered with the proper execution of the sentences of the courts. It was a usual procedure for revolutionary forces, upon entering a town, to free the prisoners--either as a slap at the government or in order thereby to augment their own strength. In Puerto Plata, a few years ago, a merchant was convicted of fraudulent bankruptcy and sentenced to three years in jail; soon afterwards a revolutionary force took possession of the town and freed the prisoners; and a few hours later the townspeople were amused to see the lawyer who had been instrumental in securing the conviction himself led to prison at the instigation of the culprit.

In March, 1903, when the political prisoners in the Santo Domingo prison broke out, they released the convicts, some of whom retained their gyves during the fighting which followed, until the revolution was successful several days later.

The undeveloped state of the country has offered difficulties to the apprehension of criminals, and the proper enforcement of the law.

Could a criminal but reach the mountains of the interior, which are almost entirely uninhabited, he would be safe from pursuit and might either wait to join the next uprising or proceed to a different part of the country, where he was unknown and where, owing to the difficulty of intercourse, detection would be unlikely. Instances have occurred more than once where an escaped malefactor has become a "general" of other outlaws and by threatening to raise an insurrection has induced the government to pardon him and his a.s.sociates.

In several regions there were up to the time of the American occupation local caciques who were almost absolute monarchs in their district. They and their followers considered themselves above the law and their power and influence were such that the government in the capital preferred to let them alone so long as they kept within bounds. Such gentlemen can hardly be expected to favor the American administration for they have been made to understand that their rights and remedies are no more than those of other citizens.

In view of such conditions so favorable to wrongdoers, the low criminal record of Santo Domingo is all the more remarkable and speaks highly for the character of the population. Crimes evincing malice and a depraved disposition are exceedingly rare. The Dominican boasts that it is possible to travel without fear from one end of the Republic to the other, though unarmed and carrying large sums of money. The few attacks on travelers which are on record have generally been due to revenge or some other personal motive. There is petty thievery, but no more than anywhere else. A friend of mine used to remark that he had never seen so many chickens in a community where there were so many negroes. No criminal is so greatly despised as a thief, and to accuse a person of being "mean enough to steal a pig" is a mortal insult. A distinction is made, however, between public honesty and private honesty, and the impression has been only too general that stealing from the state is not stealing.

The most common serious offenses are homicide and a.s.saults committed in sudden quarrel or due to jealousy. Not a little mischief was caused by the unfortunate habit of going armed.

The attractions of the fair s.e.x give rise not only to crimes of jealous pa.s.sion, but also to other missteps, such as seduction and similar offenses. The average of these is not greater, however, than in other southern countries.

CHAPTER XXI

THE DOMINICAN DEBT AND THE FISCAL TREATY WITH THE UNITED STATES

Financial situation in 1905.--Causes of debt.--Amount of debt.--Bonded debt.--Liquidated debt.--Floating debt.--Declared claims.--Undeclared claims.--Surrender of Puerto Plata custom-house.--Fiscal convention of 1905.--Modus vivendi.--Negotiations for adjustment of debt.--New bond issue.--Fiscal treaty of 1907.--Adjustment with creditors.--1912 loan.--Present financial situation.

Rarely have the fiscal affairs of a country experienced so rapid and radical a change for the better as those of Santo Domingo since 1904, and rarely has a financial measure so quickly proved its efficacy as the fiscal convention between the United States and Santo Domingo. In the beginning of the year 1905 Santo Domingo had fallen to the lowest depths of bankruptcy and financial discredit. After decades of civil disturbance, misrule and reckless debt contraction, the deluge had come. The substance of the country had been wasted in military expenditures; agriculture and commerce were stagnant; a debt of over $30,000,000 had been contracted with nothing to show for it but forty-two miles of narrow-gauge railroad and two small gunboats; the government obligations were chronically in default and interest charges were piling up at ruinous rates; every port of the Republic was pledged to foreign creditors who were clamoring for payment; one port had already been seized and the occupation of the others by foreign powers was imminent. At this juncture the Dominican government applied to the United States for a.s.sistance and the custom-houses of the Republic were placed in charge of an American general receiver, with the obligation of reserving a specified portion of the customs income for the creditors and turning the remainder over to the Dominican government. The situation immediately changed as if by magic. The imports and exports, and with them the income of the government, quickly reached higher figures than the country had ever seen, the national debt was scaled down by almost one-half and the new Dominican bonds issued in 1907 to convert the old debt went nearly to par in the markets of the world.

(a) Periodic acc.u.mulation of floating debt, owing to: 1. Political instability, requiring large outlays for soldiery, for bribery of potential revolutionists, and for suppression of actual revolutions.

2. Corruption of officials.

3. "Asignaciones" or pensions to mollify enemies and to reward friends of the existing regime.

(b) Usurious interest computations, on account of: 1. "Bonus" in princ.i.p.al, 2. Extravagant interest rates.

(c) Interest default and compounding acc.u.mulations.

(d) Recognition and liquidation of excessive or illegal claims as a condition of further advances.

In order to obtain more positive information with reference to outstanding Dominican indebtedness, for use in connection with the pending fiscal treaty, the American government in the early part of 1905 commissioned a financial expert, Prof. Jacob H. Hollander, of Johns Hopkins University, to proceed to Santo Domingo and make an investigation of financial conditions. Prof. Hollander, in an elaborate report, found the amount of the claims pending against the Dominican Republic on June I, 1905, to be $40,269,404.38, distributed as follows:

Bonded debt........................ $17,670,312.75 Liquidated debt...................... 9,595,530.40 Floating debt........................ 1,553,507.79 Declared claims...................... 7,450,053.89 Undeclared claims.................... 4,000,000.00 -------------- Total indebtedness................. $40,269,404.38

The bonded debt, as above designated, comprised the public indebtedness represented by outstanding bonds; the liquidated debt consisted of items secured by international protocols or by formal contracts; the floating debt consisted of admitted indebtedness, neither funded nor secured, but evidenced by public obligations; the declared claims were claims presented for reimburs.e.m.e.nt or indemnity but not expressly recognized by the government; and the undeclared claims were claims of the same nature not yet formally presented. A brief description of each of these items will afford an idea of the general character, of Dominican financiering and a better understanding of Dominican history.

_Bonded Debt_. The bonded debt held by Belgians and French and amounting to $17,670,312.75, was the final outcome of eight consecutive bond issues floated by the Republic, as follows:

Interest per Term Date Amount cent years Name_

1869 757,700 6 25 Hartmont loan 1888 770,000 6 30 Westendorp loan 1890 900,000 6 56 Railway loan 1893 2,035,000 4 66 4 per cent consolidated gold bonds 1893 $1,250,000 4 66 4 per cent gold debentures 1894 $1,250,000 4 66 French-American reclamation consols 1895 $1,750,000 4 66 1897 1,736,750 2-3/4 102 Obligations or de Saint Domingue 1,500,000 4 83 Dominican unified debt 4 per cent bonds

In making its very first loan, in 1869, the Dominican government fell into the hands of sharpers and was mercilessly fleeced. The bargain, even if it had been honestly carried out, was improvident enough.

Reduced to American money the nominal amount of the loan was $3,788,500; of this amount the Republic was to receive but $1,600,000; yet it contracted to pay as interest and sinking fund in twenty-five years a sum amounting to $7,362,500. The contractors for the loan, Hartmont & Co., of London, were authorized to retain $500,000 as their commission. In fact, however, no more than $190,455 was ever paid to the Dominican government. The brokers claimed that they tendered a further sum of $1,055,500, though after the expiration of the time limited in their contract, and that the tender was refused because of negotiations then under way for the annexation of the Republic to the United States, but such tender is denied on the Dominican side. At all events, the loan contract was cancelled by the Dominican senate in 1870 on the ground of non-compliance of the brokers with its conditions and the government made no payments for interest or sinking fund. The brokers nevertheless continued to sell bonds in London and pay the current interest with the proceeds. Incidentally in addition to collecting their commission, they turned a penny for themselves by taking the bonds with their friends at 50 and selling them to the public at 70. When the Dominican repudiation of the bond issue was published in England in 1872 a cash balance of $466,500 still remained to the credit of the Dominican government, but it was coolly pocketed by the princ.i.p.al agent, who claimed it as a set-off against alleged damages in connection with a concession he had near Samana. In the ten years of anarchy that followed in Santo Domingo no attempt was made to straighten out the matter. The bonds having gone into default in 1872 dropped lower and lower until they reached 3 per cent in 1878.

The setback received by the credit of the Republic by reason of the defaulted Hartmont bonds made further bond issues impossible for a number of years. Finally an Amsterdam banking house, Westendorp & Co., was interested and in 1888 and 1890 floated the second and third bond issues for 770,000 and 900,000 respectively. The object of the second issue was to retire the Hartmont bonds at 20 per cent, to pay a number of floating interior debts the owners of which were hara.s.sing the government, and to provide cash for the treasury, princ.i.p.ally for military and naval expenditures, while the third issue was designed to secure funds for the construction of a railroad between Puerto Plata and Santiago. For the purpose of providing for the service of the loan a collection office known as the "caisse de la regie," or simply "regie," under the management of Westendorp, took charge of the customhouses with the obligation of paying a certain amount to the government monthly and devoting the remainder to payment of interest and sinking fund of the loans. The arrangement was thus similar to the later receivership plan, but its vulnerable point was that it was operated by a private concern.

The first instalments of interest and sinking fund on these two bond issues were paid from the proceeds of the bonds, then for several months the "regie" supplied funds, and then came the first crash. The government was ever in need of money and to secure the same violated its agreements by seizing certain revenues to pledge them to local merchants for advances, and by conniving at customs irregularities. As a result, after paying the sums for the budget, the "regie" had nothing left for the service of the bonds and they went into default in 1892.

Westendorp was almost ruined by this occurrence and became anxious to draw out of his Dominican entanglements. He applied to Smith M. Weed and Brown and Wells, New York attorneys, to negotiate a sale of his bonds to the United States government, transferring also his right to collect the Dominican customs. The United States government declined, whereupon Weed, Wells and Brown organized the famous San Domingo Improvement Company under the laws of New Jersey, the claim of which was later the prime factor in bringing about American intervention in Santo Domingo. Subsequently two other companies, the San Domingo Finance Company and the Company of the Central Dominican Railway, were incorporated, also under the laws of New Jersey, as auxiliaries of the Improvement Company, but they were all managed by the same persons.

The San Domingo Improvement Company took over Westendorp's holdings and was placed in control of the "regie." A fourth bond issue, of 2,035,000 was floated through the agency of the Improvement Company in 1893 for the conversion of the outstanding government bonds. The Improvement Company also completed the railroad from Puerto Plata to Santiago, which was the only improvement it ever effected in the Republic and this it did with Dominican money. It further took from the Republic at rates very favorable to the Company a fifth, sixth and seventh bond issue, in 1893, 1894 and 1895 respectively, aggregating $4,250,000, for the payment of government indebtedness. The obligations paid by the first two of these issues were in considerable part inflated claims against the government, capitalized at excessive interest rates, those satisfied by the 1895 issue arose princ.i.p.ally out of indemnity claims made by France for mistreatment of French citizens and for debts due them.

The Dominican government took no warning from previous disasters but continued in its course of reckless debt contraction. In order to equip warships and a.r.s.enals it borrowed money right and left at rates of interest which ranged anywhere from 18 to 30 per cent per annum.

The loans were guaranteed by customs revenues which the creditors were authorized to collect direct from the importer. Thus the amount collected by the "regie" was not sufficient to provide for the service of the ever increasing bonded debt and in 1897 there was another default.

The old remedy of a new bond issue was to be tried again. The San Domingo Improvement Company undertook to float the eighth bond issue of 2,736,750 in bonds at 2-3/4 per cent and 1,500,000 in bonds at four per cent. With these bonds it contracted to convert all previous bonds then outstanding, to pay overdue interest and to secure for the government over $1,000,000 in cash. President Heureaux issued drafts on this presumption, but it soon became evident that it would be impossible for the Improvement Company to carry out the contract. The company blamed the government and the government the company. The situation quickly became chaotic. Eventually the conversion of the older bond issues was completed, though at enormous cost. Bonds to the value of 600,000 were absorbed during the transaction with at most a cash payment of $250,000 to the Dominican fiscal agent in Europe. In the meantime the government tried the experiment of a large emission of paper money in which the customs dues were partly payable. The paper depreciated as fast as it was issued, the revenues were again insufficient and the new bond issue suffered default in April, 1899.

While plans for further action were under consideration, President Heureaux was shot in July, 1899, and the revolution which followed his death made Jimenez president. The new administration in 1900 entered into a contract with the San Domingo Improvement Company for a different distribution of the customs revenues, but a condition was introduced that the consent of the majority of bondholders be obtained for the funding of interest up to 1903. A large number of Belgian and French bondholders had become dissatisfied with the Improvement Company, however, and repudiated the contract and all connection with the Company. In Santo Domingo, too, there was general hostility towards the Improvement Company which was regarded as an a.s.sociate of President Heureaux and an incubus on the development of the country.

The Company claimed it had secured the consent of a majority of bondholders but the government decided it had not and in January, 1901, President Jimenez issued a decree excluding the Improvement Company from the custom-houses.

The government now made a new contract with the Franco-Belgian bondholders, and for the payment of its obligations pledged its customs revenues, and specifically the income of the ports of Santo Domingo City and San Pedro de Macoris. But if there had been default before, in time of peace, with the "regie" in charge of the custom-houses, there was still less money available for the creditors now, with no control by creditors over collections and the government hara.s.sed by constant revolutionary uprisings. Small partial payments were made for two years and then ceased. As the Improvement Company's bond holdings became the subject of a special arrangement, the bonded debt of the Republic was considered to be that held by the French and Belgian creditors. However unsavory the debts which gave origin to the bond issues, and however imprudent most of the bond issues themselves, the great majority of bonds had pa.s.sed into the hands of small holders, innocent third parties who sustained great loss by the continued suspension of payments.

_Liquidated Debt_. The liquidated debt, secured by international protocol or formal contract, Prof. Hollander found to be as follows on June 1, 1905:

San Domingo Improvement Company (American and British)................. $4,403,532.71 Consolidated internal debt (chiefly Spanish, German and American).. 1,737.151.35 Internal debt held by Vicini heirs (Italian)............................... 1,598,876.04 Old foreign debt (chiefly Italian and Dutch)............... 365,183.20 Sala claim (American)....................... 356,314.20 Vicini heirs (Italian)...................... 242,716.32 Italian protocol............................ 186,750.36 Spanish-German protocol..................... 100,034.00 B. Bancalari (Italian)...................... 175,000.00 J. B. Vicini Burgos (Italian)................ 55,500.00 Ros claim (American)......................... 39,967.78 Two cacao contracts (chiefly Dominican and German)............... 68,296.16 Bancalari, Lample & Co. (Italian)............ 16,733.19 Twenty-eight minor contracts (chiefly Spanish, American)............... 249,475.19 ------------ Total.................................... $9,595,530.40