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ADVERTISEMENT. ADVERTISEMENT. ' ADVERTISEMENT. ' ADVERTISEMENT.
ANOTHER PAGE OF HISTORY is written by the DOMINICAN REPUBLIC V A report of President Rafael L. Trujillo’s successful fight for the liberation of the Ty * Dominican Republic’s financial burdens. President Trujillo’s message to the Senators and Deputies assembled in the national Congress on July 17, 1947. follows: MESSERS. DEPUTIES: MESSERS. SENATORS: I have come to present before the National Congress a project of law by ™ a®™™ necessary funds will be appropiated FOR THE LIQUI- . DATION OF THE ENTIRE FOREIGN DEBT. The significance of this project is so great that I have wanted to present ii personally before the Legislative Chambers. By decision of the Dominican people 1 will return on the 16th of August to swear before God, by my coun tr> and my honor, to sustain and defend the independence of the Republic. The execution of the Bill that I bring to submit for your consideration "'ll constitute the final step in the process of financial liberation of the Re puhlic and will eliminate the last trace of foreign interference in the man agement of our finances . . . interference that began in the year 1888 through rights ceded to European banking firm of Westendorp and Company to col lect the customs income, which was used to make effective the guarantee conceded that firm for the loan that they made to the Republic. HISTORY OF THE DEBT f A* distant as that date may seem, now that 59 years have passed cover ing more than half of our independent life, the loans of 1922 and 1926 are intimately linked to this cycle of our national history. Because of the notori ous ineptitude of previous administrations, we had to deliver a part of our sovereignity in exchange for foreign economic aid. This condition began to be remedied in 1930. The first loan negotiated abroad by the Dominican Government was made by the firm of Hartmont and Company of London, in 1869. In spite of the fact that the contract gave the bankers the right to collect customs reve nue which came into the Ports of Santo Domingo and Puerto Plata, to guar antee the payment of interest and amortization of the loan, the reverses suf fered in the execution of this disastrous operation would not permit bringing into practice the collection by agents of our creditors as provided for in the contract. This became effective with the loan negotiated in 1888, through the “La Regie” or General Collection Agency, into which there entered only foreigners, of diverse nationalities and without whose permission, as repre sentatives of the bondholders of the loans contracted then and later, the Dominican Government could not modify the excise tax nor name the em ployes of these offices aside from being unable to make any other dispositions such as were guaranteed and reserved for them by the Constitution of the Renublic. From November 1, 1888, when the Collection Agency began its functions, tbe finances of the Republic were handled through foreign interference. Under this regime, the country suffered the most painful humiliations. The public debt grew immeasurably. It passed from one mistake to one even greater, when the administration of Ulises Heureaux, together with the Westendorp group, the Santo Domingo Improvement Co., gave birth to the law’ of August 9, 1897, authorizing a loan for the conversion and consolidation of the public debt which reached 4,236, 750 pounds Sterling. , This same law' conceded to the aforementioned company the right to ask the Governments of Holland, Belgium, Great Britain, France and the United States to intervene in the collection and disbursement of customs funds of the Republic. Because of the conditions imposed by the first four of these governments, in practice, intervention could only be asked, as it was later, of the Government of the United States of America. The debt converted and consolidated in 1897 defaulted on April 1, 1899. Upon the death of Heureaux, the foreign public debt was raised to $23,957, 078'and the national debt to $10,126,628, or a total of $34,083,706. The result of that law and the subsequent financial disorder were causes of the breakdown from which the Republic suffered in the beginning of the present century. It was the germ from which the instrument known by the naVie of Protocol grew, subscribed to by the Government of the Republic and that of the United States of America on January 31, 1903. The decree wa^i issued by the Arbitration Commission instituted by the above mentioned Protocol, in which payments were to be made to the Santo Domingo Improve ment Co. and were guaranteed by the income through customs in the Ports of Puerto Plata, Sanchez, Santana and Monte Cristi. The American Govern ment was authorized to name a financial agent who would establish an office in Santo Domingo. It was this same decision that authorized the financial agent to take possession of the customs of Puerto Plata. ° — . . . • . 1 • t n tt* rr*1 1'tr. ..1i_- _ r rom tnis moment, cnaos reigneu in me rvepuunc. j. uc unn^un situation and the frequent internal convulsions disturbed the Governments of Italy, France and Germany, whose worships were seen in Dominican waters waiting for the moment to disembark troops in order to satisfy their credits by force of arms. This disturbed the government of the United States because of the menace it signified to its policy in the Archipelago and the Antilles. January 20, 1905. saw the signing of the first Dominican American Pact stipulating that the Government of Washington would take charge of arrang ing. all the obligations of our government, foreign as well as internal, and would take under its authority the customs income. The Pact of February 7 of the same year re-affirmed these decisions; but since this was not satisfac tory to the Congress of the United States because it did not apprcfve the method employed by President Theodore Roosevelt in concluding this Pact, the Dominican Government itself, by the Resolution of March 31, 1905, known as the Modus Vivendi, conceded unilaterally to the United States the same rights that the Covenant has ceded it upon our customs income. THE COVENANT OF 1907 On February 8, 1907, the Dominican American Covenant was signed. It succeeded in obtaining the constitutional sanction of the Congress of the Republic and of the Senate of the United States. This Treaty gave to the President of the United States the right to name a General Receiver of Customs to collect all customs taxes of the Dominican Republic until payment and retirement of Dominican Government bonds which were to be issued for the purpose of settling its debts. The exercise of this right by the Receiver of Customs resulted in a pain ful situation. Frequently, he assumed the attitude of naming employees of his - - - - - <. Opportunities Abound! J ( The Dominion Republic offers unlimited opportunity for I ' protected investment in industrial, business, manufacturing A / and agricultural development. For detailed information /# } write: ) !' DOMINICAN INFORMATION CENTER j ( CIUDAD TRUJILLO ( Dominican Republic, West Indies j _^ department without consulting his superiors in the Dominican Government. This instrument also decreed that the Republic could not increase its public debt nor modify the excise and import taxes without the consent of the United States Government. According to the Treaty of 1907, there w’ere issued in 1908, $20,000,000 in bonds at S'/o annual interest from the sale of which foreign and national creditors were paid according to what was called the Adjustment Plan. Creditors were satisfied or payment made with a discount. THE TREATY OF 1907 SERVED AS A PRETEXT FOR MILI TARY INTERVENTION WHICH WE SUFFERED FROM 1916 to 1924. During the time of the military government that was imposed upon us by force, two foreign bond issues were made. One in 1918 in the amount of $4,161,300 destined for the payment of the claims against the state caused previously by the Adjustment Plan. Another in 1922 authorized an issue of $10,000,000 of which $6,700,000 worth was sold that year. In March, 1926, the remnant of $3,300,000 was sold. In 1924, the Government of General Horacio Vasquez called a new meeting with the Government of the United States that substituted the agreement of 1907, in which there were maintained the same tight clauses on the national sovereignty which were contained in the pre vious treaty. This time the purpose of the agreement was to make a loan of $25,000,000 to the Dominican Republic for the purpose of consolidating the foreign debt and to realize certain public works. In spite of the fact that the aforementioned conversion was not put into effect during 1926 and 1928, an issue of bonds at 5'/i% was floated for $10,060,000. Contrary to what had been promised, the 1926 loan was made under conditions even more onerous than those stipulated by prior loans. A charge was imposed upon the government for the payment of amortization com pletely disproportionate to its financial capacity. Beginning in 1930, amor tization payments on the 1922"loan were to have been made in the amount of $841,666.66 a year plus 10^r of the customs income in excess of $4,000,000 and upon the issue of the 1926 loan there would be paid 10^r of its principal or $1,000,000 annually. THE SITUATION IN 1930 This was the situation I found with regard to the foreign debt when 1 was elected to the Presidency of the Republic in 1930. The bad previous admin istration had made such ineffective use of the millions provided by the loans and had demonstrated such evident inefficiency in accepting a plan so dis proportionate in administration that it left me only the painful glory of a State compromised with a treasury from which it Was impossible to make disbursements for even the most essential public services. I esteem it essential to affirm that the chaotic economic situation that l had to face in 1930 was not created exclusively by the mistakes of the pre vious Administration. Previous administrations and the American Govern ment made errors that contributed to this-condition. The payments that were to be made on the amortization in 1931. or in the same period in which accent was placed upon the great world economic crisis of that time, came to the sum of $1,841,666 and the payment of interest to a little less than $1,000,000, making an approximate total of $2,841,000. Meanwhile, the National Budget, during the years in which the loans were spent was maintained at a figure of about $13,000,000. It dropped to $7,311, 417, leaving only $4,000,000 for public service Had not a common-sense policy been placed into effect in the face of this tragic situation, the most intense era of misery and backwardness of our history would have been produced. The credit of the nation W'ould have been destroyed forever. There did not appear to be an alternative other than submitting to the hard conditions contracted for or to repudiate our obligations exposing ourselves to the humiliation of new military intervention. THE 1934 ACCORD The path chosen, however, avoided the grave dangers that menaced us and served on the contrary, to begin the most prosperous period in our finances. Unilateral action w'as not resorted to as most of the Latin Ameri can Governments of this time did, but on the other hand, recognizing fully the obligations imposed upon the Republic, I persuaded our creditors to come to an understanding that later culminated in the Accord of 1934 with the Pro- N tective Council of Foreign Bondholders of the United States. This Accord authorized the Government to reduce payment for service of the public debt from $2,800,000 to $957,000, which started financial reconstruction of the Government and economic development of the country. This Accord was publicly lauded by the Protective Council of Foreign Bondholders. A letter dated August 10, 1934, from its president, Mr. J. Reuben Clark, said: “I have instructions from the Council to take advan*. tage of this opportunity to make known to you and to your government its" feeling of gratitude for the spirit of tolerance and the adaptability that has ' characterized the discussions by your representatives and to express to you the felicitation of the Council for the fact that in the face of a world depres sion, the Dominican Government under your direction, manifests a desire to begin servicing its public debt, not only paying fully the interest, but also effecting in a continuous manner all the payments of amortizatipn. recogniz ing in this fashion the necessity of confronting both elements in the service of a public debt.” The execution of the agreement with the aforementioned Council offered the world a brilliant demonstration of the administrative capacity of this government. Personally assuming the direction of the public treasury, scrupulously balancing income and disbursements, demanding the - strictest honesty in handling of public funds and the most efficient investment of the time, the government once more acQuired the moral authority neces sary to convince the creditors of the Republic that they could have faith in its words and actions. That was how I could give full development to a patriotic aspiration that was conceived from the very moment that I took charge of my presi dential office. THE TRUJILLO-HULL TREATY In letters sent to the President of the United States, Franklin Delano Roosevelt, in 1939, if was made dear hy the Dominican people their hope of modifying the instrument called the Dominican American Covenant for the purpose of returning to the Republic its sovereign rights. The comprehension of the North A merican Chief of State and his Secre tary of State, the Honorable Cordell Hull, made possible, after negotiations, the formation of the Treaty that was signed in Washington September 24,1940. It is unnecessary to mention here what the Trujillo-Hull Treaty signified for Dominican dignity and for the ambition of my co-citizens in a harmoni ous life of a country liberated from the humiliating limitations giving it faith in its destiny. My patriotism, however, not satisfied with this achievement, wished to complete it in an absolute manner and it is in order to announce our total and definite economic liberation and unrestricted rescue of our national sovereignty, that today I appear before you with great civic pride. THE LIBERATING PLAN As you will observe by reading the project that is submitted for your consideration, the funds necessary to complete the sum of $9,401,855.55, that is being appropriated for the payment of the foreign debt, is arrived at in the following fashion:* $1,201,855-55 income of the present year, and $8,200,000.00 that is advanced against the income of next year received ■from special taxes in force and that at the present moment are being used for other purposes. Besides, it is not amiss to mention that executive power has given its approval in accordance with the law to the contract for the sale of the next sugar crop at a price, of 5c per pound. In tjie formation of this plan of payment that brings with it a substantial sum, I have been careful not to disturb the public works plan the government is executing. This plan, which in total leaves the sum of $10,192,2X0.96, will continue to be executed during the rest of 1947 and during 194X, There still will remain at our disposal as a reserve more than $3,000,000. The plan that I have conceived places no bonds at public sale. The government is planning new negotiations with the Reserve Bank of the Republic, in order to negotiate the bond issue contained in the attached bill, which carries 5% annual interest pavable in 1948. PRESENT FINANCIAL POSITION The financial position of the Government and the condition of the Reserve Bank demonstrated by its statement of June 10th past, revealed that this operation will be of great convenience to the Treasury as well as ' to our first banking institution. nntfirA _ £ iL ___I_1. _t__ , . I P f IPSA non Ann --- - VI V.v 1 V.ivi » V wanr\ Xliwns n IUU1I U| lll'llin with deposits totaling close to $30,000,000, out of which $10,185,000 are gov ernment deposits. The reserve hank has on deposit in the Federal Reserv e Bank of the United States $29,500,000, of which $8,200,000 will find appro, priate location in values that will advance against the special taxes of next year, to which I referred. Looking into the future and contemplating the insecurity projected hy the international situation, the payment of the foreign debt conforming I' the plan contained in the attached bill will strengthen our financial an< economic position. Contrary to what has been happening in nearly all the Republics of Latin America, in the Dominican Republic the amount of dollars has con stantly increased. These amounts, that are maintained by deposits which the banks established in the country maintained in foreign correspondent banks for Dominican accounts and for United States bills in circulation in national territory, were $4,000,000 in 1936, $10,000,000 in 1941, $40.000,000 in 194$. $42,000,000 in 1946 and the 30th of June of this year reached $60,037,174. Thus, I have considered this the most propitious moment to effect the surrender of all pending bonds belonging to the loans of 1922 and 1926. Effecting this payment now, we pay funds that we do not need for the devel opment of our economy, leaving us free of amortization and foraign interest charges, with which we strengthen our position in international exchange. BESIDES, TO PAY BONDS IN 1947 THAT WERE DESTINED TO BE REDEEMED IN 1961 AND IN 1969, WE OFFER THE GREAT EST EVIDENCE OF SECURITY THAT THIS REPRESENTS TO FOREIGN AND NATIONAL INTERESTS FOR THE INVESTMENT OF THEIR CAPITAL IN OUR COUNTRY. THE GREAT TASK COMPLETED I have traced before you with indispensable detail, because of the im portance of this case, a complete picture of the history of our foreign debt from its beginning^to the present time. I have shown how, because of this debt, the ineptitude of past administrations and the sentiment of national inferiority that was the inevitable sequel, the Republic saw' itself deprived of its most essestial prerogatives, 'until the Treaty that was discussed and signed in Washington, September 24, 1940, recovered for us the scepter of sovereignty that many errors and misfortunes had torn from us. It was not due in this way out of a desire to censure the men of the past, who, perhaps, were not completely masters of their decisions, tied as they were to desperate situations that mere governmental action of the moment could not instantly remedy. The solution of the foreign debt problem now takes material expression in a financial operation, such as the one now' pro. posed to you on this solemn and glorious day. But, certainly, it would have been infantile to ask any past government, even the best inspired ones we had, for a financial operation of these proportions. Actions of this kind and of such range cannot be improvised. They require long previous preparation, a basis of peace, of progress, of reconstruction and prestige, and an economy that is robust, solid and profound. Because of this, before thinking of the work which we will now bring to a happy ending, my aspirations as Chief Executive are constituted principally in giving to the Republic a basis of such vigor and preparation that-not only can the cancellation of the foreign debt be realized easily in all its financial aspects but fhat, in addition, it will cause not the least depression in administrative activity nor the slightest contraction of our national economics. The circumstance which makes possible this successful operation Is q symbol of the integral potentiality of the Republic in its present era. Rut it is also something more. It is the most convincing proof of what the will of an administration profoundly interested in the progress of its country, and essentially dedicated to the sacred question of redeeming it from a painful past can do . . . organiring it for a fuller life in the present and future. I leave ip the hands of the National Congress, therefore, the greatest history-making bill that has passed through the hands of the Dominican Legislators. I hope that, in approving it, you feel in your hearts the same great patrL otic emotion with which it was conceived and prepared. And now' I leave it in vour hands. (Signed) RAFAEL L. TRUJILLO. [THIS BILL UNANIMOUSLY PASSED AND WAS SIGNED THE SAME DAY BY PRESIDENT TRU. JILLO. TWO DA YS LA TER, A CHECK WAS DEL IV ERED TO OLIVER P. NEWMAN, REPRESENTING THE AMERICAN BONDHOLDERS IN THE AMOUNT OF S9J71JSSSM PLUS f 1.102,62>.70 AND ACCRUED INTEREST ALREADY ON CREDIT IN NEW YORK. THE GUARANTY TRUST COMPANY OF NEW YORK. FISCAL AGENTS. PUBLICLY AD VERTISED THE BONDS OF 1922 AND 1926 WOULD BE REDEEMED RESPECTIVELY ON SEPTEMBER 1 AND OCTOBER 1. 1947.] Interesting Travel Guide | To the Land of Many Firsts! 7 Hie Dominican Republic is a land of modernity—blended 7 with many of civilisation's oldest landmarks. Send for \\ colorful literature describing the history, scenic countryside, cities, liotels, tours and vacation advantages now available ,1 . . . write: / DIRECTOR OF TOURISM ) CIUDAD TRUJILLO j , | Dominican Republic, West Indies ^ This Advertisement Placed by the Information Center of the Dominican Republic L. Information Center 30 Rockfeller Plato, New York, N. Y„ which It registered with the Foreign Agents' registration section of the Deportment of Justice, Woshington, D. C., os on agent of the government of the Dominican Republic, West Indies. A copy of this Advertisement it being filed with the Deportment el Jwtice, where the registration statement of' the Dominieon Information Center it availaWe for intpeetion. Registration of the Foreign Agoatt' Registration Aet does not indicats approval or disapproval of this odvortitamant by lha Umtad States Govammant. V /■ n ' '