himself prior to being put into effect. Mr. Terry will be obliged to return to Porto Rico within a few days; but it is hoped that he will, within a short time, consent to sever his connection with the service in Porto Rico and devote his whole attention to Civil Service in this Republic. It is doubtful if the Civil Service rules will be promulgated until Mr. Terry is in a position to direct the work of the Civil Service Commission which it is in contemplation to establish.

Among matters under the cognizance of the Department of Justice and Public Instruction that pertain especially to legal affairs, several Executive orders recommended by that Department have been issued, among which were Executive Orders Nos. 198 and 199 of August 27, 1918, regulating the practice of the profession of law. An unwritten rule of ethics has prevailed here that one lawyer would not accept a case against another, which resulted in practical civil immunity of all lawyers. One part of Executive Order No. 198 will, it is hoped, remedy this vicious rule. Executive Order No. 201 confers upon women the right to practice law. Executive Order No. 202 defines perjury and provides penalties; formerly there was no penalty for perjury committed outside of actual court proceedings.

During the quarter, the board on prisons has completed its work, but at the end of the quarter its report was not in finished shape ready for submission. Any far-reaching reform in prison conditions will involve a large expenditure, and one that the condition of the Treasury is probably not now prepared to meet. During the quarter, a selection was made of a site for the proposed leprosarium. No Executive order has been issued providing for the establishment of this leprosarium for the reason that a prominent Dominican family has promised to donate the site, and it has not been deemed expedient to do anything publicly that might embarrass this family in purchasing at a reasonable figure the land included in the site selected.

Some matters of interest worthy of mention are the following:

On July 1 the new law of licenses (patentes) went into effect. It was published in Executive Order No. 158 of May 4, 1918. The effect of the law has been, without any notable changes in rates, to increase the collections from about $150,000 per annum to a sum of about $475,000 (estimated) for the entire year. The funds obtained from this law are devoted entirely to educational purposes, and it will be seen what a very great reform was instituted by the Executive order.

On October 1, the new internal revenue law became effective. It combined in one a number of separate laws, and it is expected that under the new law there will be increased collections due rather to the full collection of taxes than to any change in rates. During the first half of 1918 internal revenue collections were $805,383.18, and it is estimated that the total collections for the year will possibly be $1,500,000; in 1915 they amounted to $559,366.87, in 1916 to $674,163.10, and in 1917 to $1,234,177.32. During 1917 the entire Internal Revenue Department was reorganized; this, together with the placing of collections in the hands of an American which was done in the middle of 1916, has resulted in the great increase of internal revenue here noted.

In accordance with an old law, a census has been ordered to be taken in each commune by the Department of Interior and Police. This will not be a thorough census, but it is the best that can be done at the present time, lacking the funds for a census taken under national supervision.

Under the same Department a Bureau of Labor Employment has begun to make its influence felt, and I believe that it will, as experience is gained, prove a measure of great value to the country, to employers of laborers and to laborers themselves.

From time to time, as the office of jefe comunal has become vacant, the experiment has been tried of leaving the office unfilled; the results have been so satisfactory that the entire suppression of the office is believed to be a measure tending to the public good.

Troops of the brigade, assisted by the Guardia Nacional Dominicana, have engaged in field operations in the provinces of Seibo and Macoris during the quarter. Casualties among the Marines number five; one hospital corpsman was drowned crossing a river. The Guardia had no casualties. As previously noted, the bandits have not been entirely dispersed, but they are being kept on the move. As a measure in aid of the suppression of the bandits, inhabitants of certain outlying parts of these two provinces were advised to con

91114°-30-31

centrate at the nearest large place, bringing a month's supply of provisions with them. The concentration was not mandatory, but the advice was very gener ally followed, the work being ably assisted by the native officials. It is a general opinion among the officers who have been engaged in these field operations that the natives in large measure will prefer to remain where they voluntarily concentrated rather than return to their homes, even when entire quiet has been established. One result of the concentration has been that one or more of the sugar estates, which ordinarily have great trouble in getting labor supply, are finding it entirely possible to provide their necessary labor without having to import laborers, as has been the annual custom hitherto. During the quarter, Lieutenant Commander Baughman, who is administering the two Departments of Fomento y Comunicaciones, and Agricultura e Inmigración, accompanied by Mr. Collett, the Director of Public Works, and by Mr. Acevedo, a Dominican engineer who is the technical adviser of the Department of Fomento y Comunicaciones, made an official journey through the interior, touching at a number of places where the inhabitants told him no Government officials had ever before betrayed any interest in their welfare by a personal inspection. The journey was largely undertaken with a view to public works in progress or in contemplation; but the Department of Fomento y Comunicaciones is charged with the administration of postal affairs and of telephones and telegraph, and to both of these Lieutenant Commander Baughman gave attention during the journey. Another important purpose of his tour was the awakening of interest in agriculture, which is also under his cognizance. I believe from the reports of the journey that it has been a measure of the greatest good, assuring the people of the Dominican Republic of the aims of the Military Government and of its interest in their welfare. Within a very few days Brigadier General Pendleton, who will shortly retire from the command of the brigade, accompanied by Brigadier General Fuller, the officer ordered to relieve him, will make a somewhat similar visit to the northern part of the country. Quite apart from the value of this visit as one of military inspection, I consider that it will have a great and good effect from the contact of these officers with the Dominican people, and their expression to Dominicans of the aims of the Military Government.

At about the same time it is my intention to send Civil Engineer Whitman, of my staff, accompanied by Mr. Acevedo, on a visit to Barahona and Azua provinces in connection with public works of interest there. As was the case during the journey of Lieutenant Commander Baughman, these gentlemen will also have as a second and no less important duty the manifestation to the people of the interest of the Military Government in their welfare and prosperity.

At about the middle of October Commander Hagner, Pay Corps, United States Navy, will leave for Washington on duty, and will visit Sanchez, La Vega, Moca, Santiago and Puerto Plata en route, where it will be arranged that he can meet officials and business men and give them first-hand information regarding the matters that have been under his especial cognizance as the administrator of the Department of Hacienda y Comercio, and the director of Food Control. He is also thoroughly in touch with the general administration of affairs, and will still further interpret the Military Government to the Dominican people.

At a later period, when his services can be spared, it is my further intention to have Colonel Lane, United States Marine Corps, who is administering the Department of Justice and Public Instruction, make an extended journey through the country, accompanied by the Superintendent of Education. Colonel Lane's visit will have an excellent effect, and not only on educational matters; for he will also interest himself in matters pertaining to the judicial affairs of the country, and like every other representative of the Military Government coming from the Capital, he will carry to the people a new expression of the objects for which the Military Government is working.

I regard these visits as measures of great importance. It has not hitherto been practicable to arrange for such journeys, but with the increasing tranquillity of the country and the general settling down to a routine of peace and good order, it now becomes possible to spare officers from the seat of the Government. My own visit through the northern part of the country on my return from Haiti in March convinced me of the great value of such personal contact, and it is my intention in the future to have officers go from the Capital from time to time carrying with them direct to the people in

outlying places the ideals of the United States in assisting the Dominican people to live under improved conditions.

The relations of the Military Government with the American Minister and his staff and with the American treaty officials here have continued most cordial, and it is a pleasure to acknowledge the fine spirit of cooperation that has prevailed.

H. S. KNAPP

FINANCIAL AFFAIRS

Proposal for a Bond Issue to Pay Claims against the Dominican Republic Adjudicated by the Claims Commission Appointed in 19171

File No. 439.00/25

The Minister in the Dominican Republic (Russell) to the Secretary of State

No. 289

SANTO DOMINGO, January 29, 1918. SIR: I have the honor to report that the Dominican Claims Commission of 1917 had registered, at the close of December 31, 1917, 8,748 claims aggregating $14,156,518.66.

Claims for salary, pensions, retired pay, etc., which had not passed from the hands of the original creditors amounted to $1,184,764.50. The commission is now about to proceed with the adjudication of the claims, but prefers to make no awards until some means of payment has been determined upon.

I am enclosing herewith copies and translations of the report of the commission to the Military Government containing its recommendations in regard to the liquidation of the awards.

I have [etc.]

WILLIAM W. RUSSELL

[Enclosure-Translation]

The Dominican Claims Commission to the Military Government

SANTO DOMINGO, January 24, 1918. 1. As a basis for renewing its recommendation regarding the liquidation of the awards to be made by the Dominican Claims Commission of 1917, submitted under date of August 11, 1917, and to which reference is respectfully invited, the commission respectfully submits the following report:

2. Claims presented.-Under the terms of the Executive Order No. 65 the period for presentation of claims expired on December 31, 1917, on which date there had been presented a total of 8,748 claims representing a total face value of $14,156,518.66. There will be a few other claims to add to this not yet formally presented but of which notice was received prior to the expiration of the time limit. The total face value of claims presented will also be increased due to the fact that some of the claims as presented are for indeterminate amounts to be ascertained later.

3. Nature of claims.-For convenient reference, the claims as presented may be classified under five general headings, as follows:

(a) Salaries and similar budget items, including pensions, superannuations, endowments, municipal subsidies, wages, costs of material and lighting; (b) Supplies (suministros), including balances due in accounts current to commercial firms in the United States and elsewhere;

(c) Damages and injuries;

(d) Banks and bankers and amounts borrowed by the Government from other

sources;

(e) Stamped paper, stamps, and postage stamps which were given as a guarantee for loans or sold outright at a discount.

'Continued from Foreign Relations, 1917, pp. 720-29.

4. In its preliminary work the commission has not attempted to register the claims as presented according to that classification, and no attempt has been made to ascertain the total amount represented by each class. It is the intention of the commission to classify and register them under the appropriate heading at the time the awards are made, so that the final report will show the totals of each class.

5. Preferred claims.-In discussing this matter with the head of the Military Government in the latter part of December, the commission informally expressed the opinion that it would be desirable, if possible, to give preference to and arrange prompt payment of the claims for salaries and the other items included in subparagraph (a) of the preceding paragraph 3 which are still in the hands of the original creditors. A preliminary examination of the claims presented under that heading shows a total of $1,184,764.50, face value, of such claims not transferred, that is, still in the hands of the original creditors. In this connection, it is stated that there are included in that amount a great many claims presented by officers and enlisted men of military organizations, which are of doubtful validity, and it appears safe to assume that the total awards of such claims will not be in excess of $1,000,000. The commission now makes formal recommendation that that class of claims be accorded preferential treatment and that arrangements be made for the prompt payment of same in cash as soon as the awards are made by the commission.

6. Probable amounts of awards.-The commission expressed the opinion in paragraph 3 of its recommendation of August 11, 1917, that in all probability all of the claims presented could be equitably liquidated within a total of not to exceed $5,000,000. In view of the amount of salary claims still in the hands of original creditors, it now appears advisable to estimate that the total of all awards will not exceed $6,000,000. This opinion is based upon the act, as disclosed by preliminary examinations, that a great many of the claims, particularly of classes (b), (c), (d), and (e), are not well founded and can not be substantiated by the claimants. However, in providing for the payment of the awards it would be better to overestimate rather than underestimate the probable amount required with the understanding that only such part of the amount authorized as may be necessary will be utilized.

7. Method of payment.—It is noted that the budget which became effective January 1, 1918, includes the following items:

(a) A reserve fund represented by the balance on hand, December 31, 1917, of approximately $1,600,000.

(b) A sum of $375,000 is shown as segregated for probable use in the service of a new loan, understood to refer to a loan for the purpose of paying the awards of the Claims Commission.

(c) Balance of estimated income for the year 1918, not appropriated, $210,466.73.

The amount set aside for the service of a new loan and the unappropriated balance therefore represent an available total of $585,466.73, in addition to the reserve fund of $1,600,000.

8. From this it is apparent that the Government is in position, if it so desires, to pay in cash all of the untransferred salary claims, including the similar items above mentioned and to provide a sinking fund for interest and amortization of a loan or bond issue in the principal amount of not to exceed $5,000,000 for the payment of all other awards.

9. Recommendation.-For obvious reasons it is advisable and desirable that a definite arrangement be made as soon as possible for the payment of the awards to be made by the commission. The commission is now in position to adjudicate the claims and to make the awards but, for equally obvious reasons, it considers it advisable not to make any awards until the Government has made arrangement for the payment of same. As hereinbefore stated, the commission formally recommends the payment in cash of untransferred salary and similar claims, and with that exception renews its recommendation in paragraph 7 of letter dated August 11, 1917, as follows:

That the Government arrange for the issuance of bonds in the principal amount of not to exceed $5,000,000, or such part thereof as may be necessary to be applied to the liquidation of awards upon claims to be approved by the commission. Such bonds to be in coupon form, not registered, to bear interest at the rate of 5 per cent per annum, interest pay

able semiannually on January 1, and July 1, the bonds to be dated and draw interest from January 1, 1918, and to mature on January 1, 1938, but to be redeemable at par on any first day of January beginning January 1, 1919, in such amounts as the funds available in the sinking fund provided for the purpose will permit, the bonds to be redeemed to be drawn by lot, and when so redeemed, to be permanently retired and canceled; the payments into the sinking fund for the purpose of amortization to be not less than 5 per cent of the principal amount each year. 10. The only change suggested in that recommendation is that the bonds should be redeemable on each interest date, that is semiannually instead of annually, and that instead of being drawn by lot, they be redeemed in their sequence by series, retiring the smaller denominations first and the larger ones last.

11. Consent of the United States to the proposed plan.—The refunding_of the heretofore unacknowledged floating indebtedness of the Dominican Republic, and the issuance of bonds in satisfaction of the awards to be made by the Dominican Claims Commission of 1917, constitutes, in the opinion of the commission, an increase of the public debt of the Dominican Republic, within the meaning of the terms of the American-Dominican convention, of February 8, 1907, requiring an agreement between the Dominican Government and the United States as a condition precedent to the increase of the public debt and to the validity thereof.

The commission respectfully suggests that steps be taken to secure the express and unqualified consent of the proper authorities of the United States to the increase of the public debt of the Dominican Republic, in the manner described and for the purposes specified in this preliminary report and in the proposed Executive order accompanying same.

The commission further recommends that the Secretary of State of the United States be respectfully requested to give such instructions and to grant such authorization and powers as may be necessary or convenient, to the General Receiver of Dominican Customs, to enable the said official to perform such duties as may be assigned to him under the terms of the proposed Executive order. In this connection your attention is invited to the previous recommendation of the commission, in paragraph 6 of the report of August 11, 1917.

12. For the consideration of the Military Governor there is attached hereto a draft of a proposed Executive order, which the commission believes will provide for the plan of payment as recommended.

Respectfully submitted,

J. H. EDWARDS, President

MARTIN TRAVIESO, JR.

M. DE J. TRONCOSO DE LA CONCHA
J. T. BOOTES

EMILIO C. JOUBERT

JOHN BREWER

Secretary

File No. 439.00/27

The Minister in the Dominican Republic (Russell) to the Secretary of State

No. 306

SANTO DOMINGO, March 4, 1918. SIR: In reference to my No. 289 of January 29, enclosing copies and translations of the report of the Dominican Claims Commission of 1917 to the Military Government with recommendations as to the manner of liquidating the awards, I now have the honor to call to the Department's attention again this important matter.

I am decidedly of the opinion that the commission's recommendations should be approved at once, or at least in so far as concerns the unpaid back salaries, etc., which have not passed from the hands