Fifty Years of Public Service / Personal Recollections of Shelby M. Cullom, Senior United States Senator from Illinois

by Shelby M. Cullom

CHAPTER XXVI SANTO DOMINGO'S FISCAL AFFAIRS

For some years the Santo Domingo protocol and treaty were before the Committee on Foreign Relations, and in the Senate. They came before the Senate very suddenly. On January 20, 1905, there appeared in the press what purported to be a protocol, agreed to by Commander Dillingham on the one hand, and Minister Sanchez of the Dominican Republic on the other, by the terms of which the United States was to take charge of the custom houses of the Dominican Republic, adjust and liquidate its debt, and generally to take charge of the fiscal affairs of the Republic. By the terms of this protocol, it was to go into effect February 1, and there was no provision at all for Senatorial action. Senator Bacon and other Democratic Senators became very much aroused over this as a usurpation of the rights of the Senate. Resolutions were introduced, calling upon the State Department for information, and the subject was considered by the committee at several meetings.

I confess that I too was considerably surprised at the action of the State Department, and I called on Secretary Hay one morning and asked to be informed as to the facts.

Secretary Hay stated that he would communicate with me in writing, which he did on March 13, 1905, saying:

"In answer to your verbal request, I submit herewith a statement of the facts with reference to the making of the Santo Domingo protocol, and enclose herewith a copy of the protocol of January 20, 1905. That protocol was not drawn up by the Department of State and was never seen by any of its officials until it appeared in the newspapers on January 22d last, as given out by the Dominican officials. The Department has never authorized its signing; it never gave any instructions authorizing its signature; and no full powers had ever been given authorizing the signature on the part of the United States Government. The Minister of Foreign Affairs of the Dominican Republic visited Washington during the Spring of 1904, and during a stay of nearly three months repeatedly solicited the assistance of the United States Government for the restoration of order in the island and for the regeneration of his country, but the responsible officials of the Department advised against meeting his request, and the President, to whom the matter was referred, decided against taking any action as long as it could wisely be avoided.

"The Dominican Government again brought the matter to the attention of the United States Minister at Santo Domingo the latter part of 1904. In the meantime an investigation had been going on quietly by our Government through Commander Dillingham, to obtain information as to the real condition in the island. After the President became thus familiar with the situation there, and on the report of the United States Minister, and after repeated requests for help from the Dominican Government, the Department of State, on January 6, 1905, prepared a cablegram setting forth the basis on which alone the United States would be able to render assistance. . . .

"Neither that cablegram nor any other despatch whatsoever went further than simply lay down a basis; and acting on this, but without instructions authorizing it, the Dillingham-Sanchez protocol was signed. The Department was advised by cable on January 20 that an arrangement had been agreed to, and thereupon the Department officials at once set to work to prepare a treaty; and its officials were actually engaged in drafting one to send to Santo Domingo, when the publication of the protocol of January 20 appeared. The Department at once cabled to Santo Domingo to forward a copy of the protocol; and as soon as its text could be received, the Department began work in making amendments and adjusting terms on which the United States Government could consent to act. As soon as the two Governments could arrive at substantial agreement as to the terms, full powers were communicated to Dawson, and the protocol now before the Senate was accordingly signed.

"In view of the misapprehensions that at once arose, growing out of publication of the protocol, which upon its face stated it was to go into effect February 1st, and from which it might naturally be inferred it was intended to go into effect before the Senate could have an opportunity to consider it, and without its having been referred to the Senate for consideration, I considered the question of the propriety of stating the fact that no instructions and no powers had ever been granted authorizing the signing of the protocol of January 20. The decision was reached that repudiation of the action of Dillingham and Dawson might be construed as a censure, and that it might cause offence to them as well as to their friends, who might feel that when the circumstances should become fully known, that Dillingham and Dawson were justifiable in assuming the responsibility they did in signing the protocol instead of making a formal memorandum of the basis agreed on and communicating it to the Department for the drafting of a treaty. Both of these officials have a record of faithful and skilful service and competency, and it was hoped when the facts should become more fully known, a correct understanding of the actual situation would remove any ill effects of previous misapprehension.

"The department has been advised that the protocol of January 20 was given out for publication by the Dominican Government in order to calm the popular mind on account of its uncertainty as to the character of negotiations which were actually being carried on between the two Governments.

"(Signed) John Hay."

From 1865, until the time that the United States assumed the collection of customs, conditions in Santo Domingo were about as bad as they could be in every respect. One revolution succeeded another. There had been twenty-six different Administrations since 1865, only one of which was brought about by means of a regular election. Most of the others were caused by revolutions, assassination, forced resignations, and a general condition of anarchy. Debt after debt, bond issue after bond issue, piled up, each Administration seemingly bent only on seeing how much actual cash could be raised, utterly regardless of obligations assumed. None of the principal and only a trifling portion of the interest were paid, and it seems that the different Administrations never had any intention of liquidating the obligations of the Republic. The principal portion of the bonds was held by European creditors.

But finally the Santo Domingo Improvement Company, an American corporation, succeeded as the fiscal agents of the Republic, to float its bond issues. The improvement company was displayed, and its claim was settled for four million, five hundred thousand dollars. Then a protocol was entered into between the United States and Santo Domingo by which the manner of payment was submitted to arbitration, our arbitrators being Judge George Gray and John G. Carlisle. An award was rendered providing that an agent of the United States should take possession of certain custom houses, in order to pay a debt which the Government of Santo Domingo had acknowledged to be due an American corporation.

This did not satisfy foreign creditors, French, Belgian and Italian, who had actually been given, by an agreement with Santo Domingo, the right to collect revenues at certain custom houses. Santo Domingo appealed to the United States and the foreign Governments threatened that if the United States did not enforce some remedial plan, they would be compelled to take action for the relief of their own citizens, whose claims aggregated twenty million dollars. Italian warships were already in Santo Domingo waters ready to enforce their demands. This, briefly, was the condition of affairs when the protocol of 1905 was submitted to the Senate for ratification.

For more than a quarter of a century we have had a peculiar interest in Santo Domingo. As is well known, under the Administration of President Grant a treaty was negotiated and sent to the Senate providing for the annexation of Santo Domingo. Senator Sumner was Chairman of the Committee on Foreign Relations, and as such was able to prevent the consideration of the treaty by the committee, and its ratification by the Senate. Some one said that the only objection that Charles Sumner had to the treaty was that President Grant had suggested it first. This was one of the reasons why Senator Sumner was deposed as chairman of the Foreign Relations Committee. It would probably have been better for the United States, and it certainly would have been better for the Dominican Republic, if the treaty had been ratified.

The protocol submitted to the Senate involved very large responsibilities on the part of the United states. It provided that the United States was to adjust all the obligations of the Republic, the arrangement of the payment, to pass upon all claims of Santo Domingo, determine their amount and validity, take charge of all the custom houses, and collect and disburse the customs receipts, giving to Santo Domingo forty-five per cent of the customs receipts and devoting the balance to the liquidation of her debts.

This protocol had the active opposition of the minority of the committee and in the Senate and, in addition, such conservative members as Senator Hale and other prominent Republicans opposed it. We fought over it in committee month after month; but finally, on March 10, 1905, it was reported by me to the Senate with a large number of amendments. It was considered by the Senate, recommitted at the end of the Congress, and again reported at the following Congress. But those in favor of it became convinced that we did not have the two-thirds necessary to ratify it, and it was never brought to a vote. It was thought that nothing more would be heard of the Santo Domingo protocol; but Senator Root, when Secretary of State, took the subject up de novo, and made a new treaty, in which the United States did not assume the broad obligations it assumed under the first one, and which was not generally of so complicated a character.

It imposed the duty upon the Santo Domingo Republic itself of arriving at an adjustment with its creditors, conditioned only on the administration of the custom houses by the United States.

In the meantime, an arrangement was made by American banking houses to furnish the money to liquidate the debt; the creditors were satisfied; the foreign debt was liquidated on a basis of fifty per cent of the face value, and domestic debts and other claims less than ten per cent. A loan of twenty million dollars was made through Kuhn, Loeb & Company, of which the Dominican Republic received nineteen million dollars for the payment of its debts; seventeen million dollars was used to satisfy thirty-one million, eight thousand dollars worth of bonded debts, and the remaining two million, two thousand dollars were to go for internal improvements.

There was some objection to the ratification of the treaty negotiated by Secretary Root, but not of a very serious character, and the treaty went through, even Senator Morgan not opposing it. I had the honor of reporting it and having charge of it in the Senate.

The treaty has now been in force several years, and it has proved even more advantageous than was expected when it was ratified. It has restored order in the Republic, and the country's debts are rapidly being liquidated. The time may come when the United States may be compelled to take similar action with some of the other republics south of us. Such action would be beneficial both to the United States and to the people of those republics.