United States Presence
Local caciquismo. The War of Restoration and its guerrilla war tactics left the country fragmented, with any number of local “bosses” that began to dispute power. The political instability was such that, in the period from August 1865 to September 1880, for 15 years, there were more than 50 uprisings and 19 different governments, lasting from 5 years and eight months for the government of Buenaventura Báez (May 1868 to January 1874) to less than a month for Marcos A. Cabral (December 1876).
The conservative and liberal factions, whose geographical centers were located in the south and east for the former and in Cibao and Santo Domingo for the latter, faced the loggers and cattle ranchers, who continued to seek support from foreign influences, along with the tobacco farmers and intellectuals that fought for autonomy.
The struggle between conservatives and liberals, each governing with their own constitution, birthed the creation of the Red and Blue Parties. The former claimed Buenaventura Báez as its absolute leader, who was declared field marshal by the Spanish government during the War of Restoration. The second, also known as the Partido Nacional Liberal, was less compact group in which the men of the Restoration and the Revolution of 1875 found allies in former Santana followers.
The centralization of leadership around one figure, Báez, recognized throughout the country, lent strategic superiority to Reds over the Blues, who suffered a fragmented authority with many regional leaders that often clashed with each other.
United States presence. Only two years after the Restoration, in 1867, secret machinations to rent or sell the Bahía de Samaná to the United States were underway. These plans cost General José María Cabral the presidency, but his successor, Buenaventura Báez, instead of amassing fortune and personal power, dedicated all of his attentions to annexing the country to the U.S. November 29, 1869, an annexation treaty was signed. The U.S. Senate never ratified the treaty, nullifying it, thanks to the opposition of exiled Dominicans and various U.S. senators (among them, Charles Sumner).
Unphased by this failure, Báez then agreed to the rental of the bay of Samaná to a U.S. company named Samaná Bay Company, led by adventurer investor Joseph Fabens. The company would enjoy all of the privileges that were conceded to the U.S. government in the treaty: power to name the executive, legislative and judicial authorities in the Samaná territory, as well as property: for each mile of railroad or canal constructed, the State would grant one square mile of the area surrounding those routes. Signed on December 28, 1872 and ratified February 19 of the following year by the Senate of the Republic, the agreement was rescinded a short time later (in 1874) by the Dominican government, under the Ignacio María González presidency (who had defeated Báez), who took advantage of the company’s late annual payment to end the treaty.
Later, in the 1890s, the Ulises Heureaux government would propose the rental of the bay and peninsula of Samaná to the United States in exchange for economic assistance and military protection for defending against external threats.
Hartmont Loan. While the annexation was negotiated with the U.S. in 1869, Báez took out, in the name of the Dominican Republic, a loan of 420,000 pounds sterling (around 2,000,000 dollars) at 6% interest for 25 years. This transaction represented immediate income for Edward Hartmont – the financier that facilitated the loan – from customs income, national goods, coal mines, State forests and guano deposits on the Alta Vela island. In reality, the Dominican government only received a portion of the agreed loan, in addition to Hartmont authorizing an English bank to issue bonds on the debt for a value of more than 337,700 pounds over the amount indicated in the contract.
The Westendorp y Cía Loan. In October 1888, late in General Ulysses Heureaux’s second presidency, the Dominican government took out a loan of 770,000 pounds sterling at 6% annual interest for 30 years. The creditor, Westendorp y Cía., had the right to charge up to 30% of customs income and to that end named various fiscal agents in the country in charge of collecting said funds in customs and delivering the rest to the Dominican authorities.
A short time later, in 1890, Heureaux obtained another loan from Westerndorp y Cía. for 900,000 pounds sterling, at 6% annual interest for 50 years. He presented the construction of a railway between Santiago and Puerto Plata as the justification, though in reality, a significant portion of the money was destined for bribery and political payments.
Contraband, supported by the Government as a way to evade the payment of the Westendorp custom agents, bankrupted the company in 1893, which preferred to use the Samaná bay and peninsula rental negotiations with the U.S. to sell its Dominican holdings to U.S. capitalists. These capitalists formed the Santo Doming Improvement Company, and among their principal investors was the U.S. Secretary of State and other U.S. government officials.
Santo Domingo Improvement Company. Once the company was created, the Dominican Government solicited two new loans of 1,250,000 dollars and 2,035,000 pounds sterling; in 1893, the amount of the Dominican Republic’s debt rose to 17 million pesos.
The Santo Domingo Improvement Company remained in complete control of national customs and catapulted the U.S. influence in the country to new levels. In addition, maritime transportation between Santo Domingo and New York was monopolized by the Clyde Steamer Line of the United States, and a large portion of foreign-held sugar industry, which had begun to grow during the 1874 Ignacio María González government, again found itself in U.S. hands.
The opposition to U.S. interests, organized by European powers and the presidential candidate opposing General Heureaux, Generoso de Marchena, ended with the imprisonment and execution of De Marchena and the departure of the Banco Nacional de Santo Domingo from the country (1893), as it was the financial center that, since the days of Westendorp, had supported European values.
Other secret and fraudulent loans were taken out in conspiracy with the directors of the Santo Domingo Improvement Company. In 1898, one year before the execution of Heureaux, more than 15,000,000 pesos were owed to the company, which maintained total control over the customs of the country. On the other hand, debts to public officials and national creditors were drowning the government. The distribution of un-backed currency (the so-called “papeletas de Lilís”) and the creation of a new international loan, now with European financiers, aggravated the situation.
In 1900, the Dominican Republic “owed” the U.S. company, and with it, bonds that the company had sold in France, Belgium, Germany, Italy and England, the sum of 23,957,078 dollars, as the internal debt increased to 10,126,628 dollars.
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