Local caciquismo. The Restoration War 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 Restoration War. The second, also known as the Partido Nacional Liberal, was a 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 of 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).
Báez overcoming this failure, 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; 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 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 British pounds (around 2,000,000 dollars) at 6% interest for 25 years. This transaction represented a mortgage in favor of Edward Hartmont – the financier that facilitated the loan – on 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, and Hartmont authorized an English bank to issue bonds on the debt valued 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.
With this loan, the government paid 142,860 pounds sterling claimed by the Hartmont firm, settled part of the internal debt that it held with public servants and local loans, and greased the political machinery that maintained Ulysses Heureaux in power with the purchase of loyalties, weapons, army uniforms and the acquisition and construction of war ships.
A short time after that, 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 then took advantage of 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 were 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.
Political Succession of Lilís (Ulises Heureaux). Among the figures that participated in the overthrow of President Heureaux, putting an end to his 15 years in power, were Juan Isidro Jimenes and Horacio Vásquez. The first had organized an anti-Heureaux expedition in a steamed named Fanita just before the assassination of the dictator. The second participated, together with Ramón Cáceres and Jacobino de Lara, in the actual execution.
Both men were among the main leaders antagonizing the presidency in a period characterized by political upheaval and foreign pressure that would end in the U.S. invasion and occupation in 1916. Their opposing factions were named the Jimenistas or bolos and the Horacistas or coludos. The Jimenistas were composed of former Heureaux supporters, while the Horacistas issued from the most liberal extreme of the former Blue Party.
Coup d’états against one group and another, armed uprisings and political persecution among parties were the distinguishing characteristic of internal politics, which increased the foreign pursuit of sovereignty over the Dominican Republic.
European and U.S. Pressures. Early in the 20th century, the European bond holders of the Dominican debt embarked on a campaign to their respective governments to force the Dominican government to pay its balance. The Santo Domingo Improvement Company brought its case before the U.S. State Department in order to have the U.S. Government protecting the Company’s interests.
In 1903, when Horacio Vásquez was president, a protocol was signed by the Dominican Republic and the Improvement Company in which the country recognized its obligations to the company for more than 4.5 million dollars and promised to settle the debt in accordance with the form of payment established by an international arbitration. The arbitration would be composed of an arbitrator named by the Dominican Republic, another by the United States, and a third by agreement of both governments, that lacking an agreement would be a member of the U.S. Supreme Court.
The following arbitration decision of June 1904 arranged the specialization of the customs income of Montecristi, Puerto Plata, Samaná and Sánchez toward the payment on the debts owed to the Improvement Company. This decision dispatched a financial agent from the Company to be responsible for the budgeting of the customs income and to authorize the Dominican State’s expenditures. Due to the rejection of the clause by European bond holders and Dominican creditors, it was never applied.
After a series of negotiations held between the President of the United States, Theodore Roosevelt, and the President of the Dominican Republic, Carlos Morales Languasco, and an agreement never ratified by the U.S. Senate, due to its virtual establishment of a protectorate over the Dominican Republic, on March 31, 1905, the provisional arrangement “Modus Vivendi” was created.
Through this pact, the Dominican President authorized his U.S. counterpart to name a person in charge of collecting customs income to be distributed in the following manner: 45% of the total income delivered to the Dominican government to cover the national public administration’s needs; the other 55% to be used by the U.S. government for the payment of the customs employees and to make a deposit in a New York bank “…to the benefit of all of the creditors of the Republic, Dominicans as well as foreigners”. The general head of customs designated by the U.S. Government was Colonel George R. Colton.
This plan contributed to reducing contraband, increased the quantity of income that the Dominican government received and calmed the European bond holders that now saw that the U.S. Government, and not a private company, was concerned with guaranteeing the payment of the credit balance.
Fifteen months after initiating the arrangement, some two million dollars had been deposited in the National Bank of New York.
Later in 1905, President Roosevelt sent a financial expert to determine exactly how much the debt of the Dominican Republic had increased and what proportion was legitimate or fraudulent debt. Jacobo Hollander reported that, to the date, the amount of the debts claimed on national and international levels settled at around 40 million dollars. This sum could be reduced by half, considering that many of the claims lacked legitimacy. From then on, between March and September 1906, the two governments worked together to verify each record and obligated creditors to accept a reduction in their demands. The total debt of the Dominican Republic thus fell to 17 million dollars.
As one of the foreign policy objectives of the United States was to gain full control of the Antilles in order to strengthen its position in the Panama Canal, it was clear to President Roosevelt that the Dominican Republic should not have European creditors that could attract their governments’ influence to the area. To this end, he orchestrated for the Kuhn, Loeb & Company, a New York firm, to lend 20 million dollars to the country, destined for the cancellation of all pending debts, while the remaining three million would be dedicated to carrying out public works and other investments. In reality, they were used discretionally by President Ramón Cáceres to consolidate his power during his first presidency of the Republic. The technicians at the Bank of New York received a commission of 800,000 dollars.
Accompanying this loan, the U.S. Congress approved the American-Dominican Fiscal Convention on May 3, 1907, a treaty in which the Dominican government turned over the administration and control of its customs to the government of the United States until completing the payment of the new debt and promising to not modify its customs tariff nor increase its public debt without the previous consent of the president of the United States. The customs income would be distributed in the manner established in the “Modus Vivendi”: 45% for the Dominican government, 5% for the payment of customs administration employees and 50% for the payment of the loan.
The second article of the Convention stated that the head administrator of customs, named by the president of the United States, would have the protection of the U.S. government if the Dominican government was unable to provide it.
This way, the U.S. secured its control over the Dominican Republic early in the 20th century.
In an argument against the approval of the Convention of 1907, Congressman Alfredo Morales stated (excerpt from the Enciclopedia Ilustrada de la República Dominicana, Vol. VII, p. 201):
“Treaties of protectorate or subjection, which are always between powerful States and weak or unorganized States, have often had, as their only goal, what is now called pacific conquest. A strong State lends help to a weak one only when it is guided by specific interests. The list of usurpations committed by the great Republic of the United States of America under the pretext of the Monroe doctrine is long (…) if we approve the current negotiations, the Dominican Republic will not be able to work as equals with another nation in the future; it will cease to be an Independent State, and will no longer have an international role.”
Through these “agreements” customs collections experienced a constant increase as a result of the growth, increase and diversification of agricultural production, the rise of its prices on the international market and, in 1910, the 15% reduction in the customs tariff on importation rights and 50% reduction on exportation approved by the president of the United States, William Howard Taft.
In those years, the following customs income was recorded:
The assassination of President Ramón Cáceres in November 1911, unleashed a civil war between the head of the Army, Alfredo Victoria, the Horacistas, who had planned the fall of the Cáceres government, and the Jimenista rebels, led by Desiderio Arias, that momentarily gained control of border customs. The two latter factions, united by the fact that Haitians had taken advantage of the power vacuum to occupy Dominican territories, pushed the United States to exercise the American-Dominican Fiscal Convention of 1907 to intervene and mediate internal Dominican politics, which had again dissolved into instability and chaos. Between November 1911 and November 1916, eight different presidencies rose to power, of which only two were constitutional: Eladio Victoria, beginning in December 1911, and Juan Isidro Jimenes in December 1914.
In January 1914, the provisional government of José Bordas accepted the designation by the U.S. government of an administrator that would supervise all of the expenditures of the Dominican government and the execution of the national budget. From this arrangement, 40,000 dollars of customs income was advanced to the Dominican government, which was permitted to use 1,200,000 dollars in unsold bonds from the 1907 loan.
In the face of the confrontation of the Horacista and Jimenista forces and other political factions (Velazquistas and Vitalistas) that wanted to remove from power José Bordas, who had won through fraudulent elections, the United States sent a mediating committee to the country in July 1914 that carried a proposal written by the president of the United States, Woodrow Wilson. Under threat of the invasion of U.S. infantry, the “Wilson Plan” established:
The events that gave the final push to the 1916 U.S. intervention were:
In May 1916, the U.S. Marine disembarkation began. On May 16, they took Santo Domingo, and by the end of July, the principal military posts in the country were in their hands. On November 29, 1916, Captain H.S. Knapp published the official proclamation of the occupation.
In order to replace the old armed forces in the Navy and the Republican Guard of the period of Ramón Cáceres, in 1917, the invaders created the National Guard, an organization of repression whose end was to efficiently combat any intent at sedition. The Dominicans that joined its ranks were almost all from a lower socio-economic status or unemployed and were trained according to the regulations of the Marine Infantry of the United States, making them into a sort of extension of the force. It is from this “body of order”, later named the National Police and even later converted into the National Army, where the dictator Rafael Leonidas Trujillo emerged.
In 1918, the Directorate General of Internal Income was created with the purpose of regulating the application and payment of taxes on national manufacturing. A modern system of public accounting was also incorporated, as well as a new land registration system.
The need for greater military control over the country motivated the invading authorities developed a construction plan for highways that reached the various regions and that facilitated a real political unification of the country. In 1922, the Duarte highway was inaugurated between the cities of Santo Domingo and Santiago. The highway to the east traveled from Santo Domingo to San Pedro de Macorís, while the highway to the south stretched from the capital to Azua. This network was completed a short time after the occupation ended, after being planned and initiated during the Ramón Cáceres presidency.
Other works consisted of repairing docks and customs buildings, the creation a telecommunications system and construction of educational and sanitary buildings.
It is estimated that in 1916, more than 90% of the Dominican population was illiterate. One of the first initiatives of the occupation government was the promotion of a law that established obligatory, free, primary education for children between 7 and 14 years of age, and the creation of the National Council of Education, charged with the general supervision of public education. Numerous primary school establishments were built in rural areas.
On the other hand, little attention was paid to secondary education, the Universidad de Santiago was closed and the Universidad de Santo Domingo was given the category of institution.
“Dance of the Millions”. World War I caused an increase in the demand for Dominican sugar, tobacco, coffee and cocoa, raising the price of these products on the international market. The resulting greater buying capacity of Dominicans produced a rise in the demand for imported manufactured articles and contributed to the incipient urbanization and modernization process in towns such as Santiago, La Vega, San Pedro de Macorís and Puerto Plata, along with Santo Domingo. This economic effervescence was especially present between 1918 and 1921, when it was known as the “Dance of the Millions”.
It ended in 1921 with the sharp plunge of the Dominican product prices on the international market, pushing the country into a new crisis.
New Loans. It is important to note that the investments made by the occupation government were sustained, in part, by customs funding that belonged to the Dominican government and had been retained by the U.S. authorities as a pressure mechanism since the impasse with President Jimenes. The measures were also supported by loans authorized by the State Department under the Convention of 1907. Thanks to the new loans, the debt of the Dominican Republic climbed to almost 15,000,000 dollars.
Dominican political leaders and businessmen manifested their disagreement, alleging that the foreign government did not have the right to place the country in debt.
Gavilleros. In spite of censorship and disarmament, a group of rebels continued to struggle against the foreign authority. The gavilleros operated in the eastern part of the country and were, for the most part, composed of peasants dispossessed of their land during the apogee of the foreign investment sugar industry, beginning in the late 19th century and growing in the first 15 years of the 20th. They hid in the mountains and attacked using guerilla war tactics, relying on the collaboration of the population and even the administrators of the sugar refineries that, in order to avoid the burning or assault of their fields and storage facilities, gave them food and money.
They could only be pushed back when operations against them received the help of the Dominican National Guard soldiers. In 1922, they accepted a general amnesty offered by the occupation government with the understanding that a Dominican provisional government would be installed that year under the Hughes-Peynado Plan.
The gavilleros‘ most important leaders were Vicente Evangelista, Ramón Natera, Martín Peguero, José Piña, Luciano Reyes, Pedro Tolete, Marcial Guerrero and Félix Laureano.
The public resistance was based in urban areas and was structured on the various initiatives of the Dominican intellectual class that expressed a preference for a free country with revolutions rather than an occupied country with an imposed peace.
The defense of the reestablishment of Dominican sovereignty was expressed through various cultural manifestations: speeches, books, letters, plays, editorials. Even the baseball games held between Dominicans and U.S. Marines teams served to channel the rejection of the oppressive authority
Hughes-Peynado Plan, 1922. The economic crisis unleashed in 1921, the national and international campaigns against the intervention and the election of a new U.S. president favorable to the departure of the occupation troops, provided for this new agreement that set the foundation for the Dominican Republic’s return to independent life. It was named after its negotiators: Francisco J. Peynado for the Dominican Republic and Secretary of State Charles Evans Hughes for the United States. The plan stipulated:
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