Way to the North American intervention

Way to the North American intervention

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 principal leaders antagonistic to 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’etats 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 very U.S. Government protecting the Company’s interests.

1903 Protocol

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 arbiter named by the Dominican Republic, another by the United States and a third by agreement of both governments, which would, in reality, be a member of the U.S. Supreme Court.

Arbitration decision, 1904

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.

Modus Vivendi, 1905

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 in 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, Dominican as well as foreign”.  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.

Adjustment plan

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.  Mr. 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, as 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.

Debt consolidation and the American-Dominican Fiscal Convention of 1907

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, as 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 and Company firm of New York 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 investment.  In reality, they were used discretionally by President Ramón Cáceres to consolidate his power in the First Magistrate of the Republic.  The technicians at the Bank of New York received a commission of 800,000 dollars.

Accompanying this loan, the 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 the employees of the customs administration 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.

In this way, the U.S. segured 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 (excerpted from the Enciclopedia Ilustrada de la República Dominicana, Vol. VII, pag. 201):

“Treaties of protectorate or subjection, which are always between powerful States and weak or unorganized States, have often had, as the 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 North American 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, to have an international personality.”

Collections

Though 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, by the approval  of the president of the United States, William Howard Taft, the 15% reduction in the customs tariff on importation rights and 50% reduction on exportation.

In those years, the following customs income was recorded:

Death of Ramón Cáceres

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, that of Eladio Victoria, begun in December 1911 and that of Juan Isidro Jimenes in December 1914, were constitutional.

U.S. administration, 1914

In January 1914, the provisional government of José Bordas accepted the naming of an administrator by the United States that would have under his care the supervision of 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.

Wilson Plan, 1914

In the face of the confrontation of the Horacista and Jimenista forces and other political factions (Velazquistas and Vitalistas) that wanted to remove José Bordas from power, 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 laying down of arms by all revolutionaries.
  
• Election of a provisional president by agreement between forces.  Without an agreement, the U.S. government would choose and maintain the president and secure him with its own forces.
  
• Organization of elections by the provisional president, which would be supervised by the United States.
  
• Commitment of all factions to respect the new government, which in addition would enjoy the support the U.S. government, as it refused to tolerate more revolutions.

Juan Isidro Jimenez was elected president in the elections held on December 1914.