  Financial system.—National revenues.—Customs tariff.—National budget.—Legal tender.—Municipal income.—Municipal budgets. The financial system of Santo Domingo is characterized by an inequitable mode of obtaining public revenue, whereby the burden of supporting the state is thrown upon the poorest classes in the form of indirect taxes upon articles of necessary consumption, and wherein taxation of property or contribution according to economic capacity plays little part. This is especially true with regard to municipal taxation. NATIONAL FINANCIAL SYSTEMThe revenues of the general government are derived chiefly from customs duties and secondarily from miscellaneous minor sources. There is no direct tax on land. Prior to 1904 the revenues fluctuated according to the state of tranquillity of the country, being usually something less than $2,000,000 per annum, but immediately upon the establishment of the American receivership in April, 1905, they went up rapidly. The increase has continued steadily and the government's annual income now amounts to over $4,500,000. The proportion of revenue calculated from the various sources has fluctuated but little in the different budgets. The proportions appearing from the budget of 1916 are here shown, as well as those of the budget of 1910, at which period the interior revenues were administered with less leakage. Per cent of total Almost 95 per cent of the customs receipts are obtained from import duties. The present customs tariff, which took effect on January 1, 1910, made a radical change in the Dominican tariff system and was a step in the country's financial regeneration. Theretofore the Dominican tariff system was about as unscientific as could be imagined. It had been a tariff for revenue only, in the sense that the object was to obtain all the revenue possible and more; accordingly the common necessities of life were most heavily taxed. Originally, it appears, the tariff provided for the payment of an ad valorem duty on goods imported; later the discretionary power involved in the appraisement was taken away and a fixed, arbitrary value was assigned by law to each article, and on this value, known as the "aforo," a specified percentage was payable as customs duty. Successive governments, in their efforts to raise money, gradually increased this percentage until it reached 73.8 per cent. As the "aforo" valuation was as a general rule higher than the real value the imposition of so elevated a tax made all imported articles inordinately expensive. With respect to many items the lawmakers overreached themselves, for the duties were raised far beyond the point of maximum return. For years a desire prevailed to adjust the tariff on a rational and equitable basis, but as there were no statistics and the government feared its income might be reduced, nothing was accomplished. After the establishment of the receivership, full statistics of imports and exports became available. The general receiver's office and the Dominican government accordingly drafted a new tariff, to which the American government agreed under the terms of the fiscal convention. The new tariff is based almost entirely on specific schedules; only in exceptional instances, such as in the case of drugs, are ad valorem duties imposed. There were many reductions from the former tariff, especially on articles of prime necessity, but in some cases the rate remained substantially the same, while in a few it was slightly increased, a tendency being observed to protect home industries. On the whole the revision made an average reduction of about 15 per cent as compared with the former tariff, but the new duties are scientifically distributed and after a year of commercial readjustment the revenue reached higher figures than ever before. Less than 6 per cent of the customs receipts are derived from export duties. Such duties are imposed on cacao and a number of other articles, but not on sugar or tobacco. The tax is not a large one, but the imposition of any export tax is deplored. Wars and crop conditions have had their influence on the customs receipts, but the figures continue satisfactory, as appears from the following table of collections since the establishment of the receivership: GROSS CUSTOMS COLLECTIONSFirst Modus Vivendi year, April 1, 1905, to March 31, 1906 ……………………………………………. $2,502,154.31 Second Modus Vivendi year, April 1,1906, to March 31, 1907 ……………………………………………. $3,181,763.48 Four months' period, April 1, 1907, to July 31, 1907 (termination of Modus Vivendi)…………………. $1,161,426.61 First convention year, Aug. 1, 1907 to July 31, 1908 ……………………………………………. $3,469,110.69 Second convention year, Aug. 1, 1908 to July 1909 ……………………………………………. $3,359,389.71 Third convention year, Aug. 1, 1909 to July 1910 ……………………………………………. $2,876,976.17 Fourth convention year, Aug. 1, 1910 to July 1911 ……………………………………………. $3,433,738.92 Fifth convention year, Aug. 1, 1911 to July 1912 ……………………………………………. $3,645,974.79 Sixth convention year, Aug. 1, 1912 to July 1913 ……………………………………………. $4,109,294.12 Seventh convention year, Aug. 1, 1913 to July 1914 ……………………………………………. $3,462,163.66 Five months' period, Aug. 1, 1914 to Dec. 31, 1914 ……………………………………………. $1,209,555.54 Ninth fiscal period, Jan. 1, 1915 to Dec. 31, 1915 ……………………………………………. $3,882,048.40 Tenth fiscal period, Jan. 1, 1916 to Dec. 31, 1916 …………………………………………… $4,035,355.43 Eleventh fiscal period, Jan. 1, 1917 to Dec. 31, 1917 …………………………………………… $5,329,574.20 With regard to port dues, the Dominican government was long bound by a concession made to the Clyde line in 1878. Upon the redemption of this concession the port dues were in 1908 reduced to their present figure. An impost on alcohols was established in 1905, and ought to become an important source of revenue. The law is crude in that it taxes the distillation rather than the sale of alcohol and does not sufficiently guard against fraud. The receipts, which in the beginning were quite promising, fell off strangely in late years. The most recent sources of revenue are the Central Dominican Railway, from Puerto Plata to Santiago, acquired from the San Domingo Improvement Company under the debt settlement in 1908; the Moca extension of the railroad, finished by the government in 1910; and the wharves acquired by the redemption of the various port concessions. These properties at first gave the government a handsome revenue, which later diminished in a suspicious manner. The budget of the Republic kept pace with the growth of income, but the appropriations were practically all for personnel, while public works continued to be neglected and no provision was made for future contingencies or the establishment of a reserve fund. The annual budget enacted to become effective July 1, 1916, may be summarized as follows; ESTIMATED RECEIPTSCustom-houses: Import duties $3,500,000 Subtotal: $3,800,000 Imposts: Subtotal: 365,000 Communications: Postage stamps 36,000 Subtotal: 46,000 Consular fees 40,000 State properties: Ozama lighting plant 4,500 Subtotal: 205,500 Miscellaneous 6,200 Total estimated receipts $4,552,700 ESTIMATED DISBURSEMENTSService of public debt $1,966,746.86 Legislative power 132,400.00 Executive power……………………………….. $ 25,460.00 Judicial power…………………………………. 316,160.00 Including salaries of supreme court (with a chief justice at $250 per month, six associate justices at $160, and a state's attorney at $200); 3 courts of appeals (each having a chief justice at $180 per month, 4 associate justices at $140 and a state's attorney at $180); 12 courts of first instance (each having a judge at $150 per month, a state's attorney at $130-$150, and one or two judges of instruction at $130); 3 courts-martial costing $2,916 each; 70 justices of the peace with salaries ranging from $25 to $55 per month; and jails in each province, the jailers receiving from $35 to $69 per month. Department of Interior and Police…………………. 329,638.00 Including office of secretary of interior, who receives $320 per month; 12 provincial governors with salaries from $160 to $180 per month; 53 communal chiefs, at $30 to $60; church salaries amounting to $3,600; public celebrations $5,100; expenses of sanitation service $15,000; and a long pension list amounting to $188,240. Most of these pensions are of $10, $12 or $15 per month, but 7 widows of former presidents and other distinguished men receive $100 per month. Department of Foreign Affairs…………………….. 122,572.00 Department of Finance and Commerce…………………. 356,678.04 Including office of secretary, who receives $320 per month; general comptroller's office; 10 treasury agents with salaries from $80 to $112 monthly; custom-houses (the collectors of the port receiving from $80 to $200 per month); receiver-general's office $43,152 (the salary of the general receiver is given as $9,848.04 per annum and that of his deputy as $5,988); coast guard service $6,000; wharf repairs $20,000. Department of War and the Navy……………………. 593,815.26 Including office of secretary; 12 military posts (the commanders receiving from $60 to $150 per month); 10 armories $4,980; military instructors $4,380; president's staff $12,380; one infantry regiment of about 470 officers and men (the colonel receiving $95 monthly, the men $l5); a band of 33 men; a police force, called "republican guard" of about 800 officers and men (salaries ranging from $200 for the brigadier general and $140 for the colonel, to $18 for the private); 2 military hospitals $31,867; a machine shop $4,440; port captains at $50-$90 per month, and doctors at $25-$50; and the gunboat $26,444. Department of Justice and Public Instruction……….. 318,208.00 Department of Agriculture and Immigration………….. 18,740.00 Department of Development and Public Works…………. 332,596.00 Chamber of Accounts……………………………… 7,980.00 Miscellaneous…………………………………… 61,872.00 Contingent expenses……………………………… 25,000.00 Constitutional assembly………………………….. 10,000.00 Total estimated disbursements, besides debt service … $2,651,119.30 The figures in the budgets were not, absolute but were subject to modification by transfer of appropriation through presidential decree. The contingent expense fund and the military appropriations were thus frequently swelled at the expense of other services. The budget above shown was the last one enacted under the old conditions. It was never applied, but is given as a sample, because, while differing only slightly from the old budget which continued in force, it better illustrates conditions at the beginning of American occupation. The military government made numerous changes in the budget and rendered the appropriations for salaries of the president and cabinet secretaries available for other purposes, as the American naval and marine officers now performing the duties of these positions receive no compensation from the Dominican treasury. A comprehensive new budget, the first one of the period of transition and providing for some of the innovations recently introduced, was expected to become effective early in 1918. For the purpose of bringing order and efficiency into the collection and disbursement of the public revenues of Santo Domingo, the American government in 1913 urged that it be permitted to designate an American comptroller and financial adviser and the Bordas administration at length consented, but as there was no legal authority for such action and as the appointee was not characterized by unusual ability, the Jimenez administration declined to continue the arrangement. During the present military government and under the efficient direction of the acting comptroller-general, J. H. Edwards, valuable work is being done in revising the accounting system and generally placing the country's finances in order. All the accounts of the Republic are carried on in American money, which is legal tender and is current in all parts of the country. For about fifty years after the declaration of independence, coins of many countries, principally Mexican silver and Spanish gold, were in circulation, with the rate of exchange constantly fluctuating. In 1890 the Republic joined the Latin convention and in the following year through the then existing Banque Nationale de Saint Domingue issued silver and copper coin to the value of about $200,000. The fall in the value of silver caused depreciation and a few of the silver coins of this issue which are still in circulation are valued at forty cents gold for five francs; the copper coins at a little less. In 1894 the gold standard was adopted and though no actual coinage took place all official financial transactions were thereafter based upon gold values. In 1895 and 1897 President Heureaux issued more silver coins or, rather, coins washed over with silver, to the nominal amount of $2,250,000, but the seigniorage was so enormous that the issue was a case of a government counterfeiting its own money. The rate of exchange fell to five pesos for one dollar gold and this is the rate legalized by the law of June 19, 1905, which made the American gold dollar the standard of the Dominican Republic. For a while the ordinary smaller business transactions continued to be based on silver values. On a trip to Santo Domingo in 1904 a friend and myself were driven from the wharf to the hotel and the coachman asked for two dollars. It seemed an outrageous charge, but we considered ourselves in the hands of the Philistines, and handed over an American two-dollar bill. "Excuse me until I can get change," said the coachman to our surprise, and ran into the hotel; in a moment he reappeared with a double handful of coins: "Here is your change," he said, "eight dollars." The charge had been only forty cents in gold. At the present time American money is the basis and Dominican silver and copper is regarded merely as fractional currency, one peso Dominican being equivalent to twenty cents American. At various times the Dominican Republic has had disastrous experiences with paper money issued without sufficient guarantees. One service rendered by the Spaniards during their occupation in the sixties was the retirement of large amounts of such paper. The troubles accompanying unsecured paper money had been forgotten when Heureaux in his attempts to raise funds floated an issue of a nominal amount of $3,600,000 in notes, of the Banque Nationale, in addition to a small amount already emitted by the bank. Such demoralization resulted that at one time it took twenty dollars in paper money to purchase one dollar in gold. The national bank notes having been demonetized, various amounts were purchased at auction by the administrations succeeding Heureaux and destroyed, and almost all the remainder has been redeemed at five to one under the 1907 debt settlement. The only paper now seen is American paper money, which circulates at a par with American silver and gold. MUNICIPAL FINANCESLike the national government, the municipalities or communes depend almost entirely upon indirect taxation for their revenues. One of the principal sources of income is the tax on the slaughter of cattle and sale of meat. The communes may further, with the authority of Congress, levy a "consumo" tax, a small duty on the imports and exports of merchants within their jurisdiction, which tax has given rise to much confusion and controversy. Business licenses also form an important fount of revenue. By a law of Congress (soon to be superseded by a decree of the military government) the municipalities are divided into several classes, according to their importance, and the licenses payable by the various kinds of business in the several classes are designated. The national government turns over to the various municipalities a portion of the impost on spirits and grants educational subventions to several municipalities for their primary schools. Minor sources of revenue are taxes on lotteries and raffles, vehicle licenses, amusement permits, cockpits, etc. Two towns, Santo Domingo and Santiago, have municipal lotteries. Under all these taxes a man might own scores of houses and great expanses of land without paying towards the maintenance of the state and municipality more than the poorest peon on his property. The sums collected for municipal purposes in all the communes of the Republic may be calculated at about $600,000 per annum, derived from the following sources: MUNICIPAL RECEIPTSApproximate percentage Municipal charges on imports and exports………….. 17.7 The largest budget is that of the capital city, with Santiago second. According to the latest figures available, in round numbers the income of the thirteen more important cities and towns is annually about as follows: Santo Domingo…………………… $160,000 In almost every town the largest item of expenditure is for education, the maintenance of public primary schools. The more important cities, especially the capital, make fair appropriations for street repair and other municipal public works, but in the lesser communes such appropriations are negligible. Very little, practically nothing, is appropriated for roads. Some communes pay a small subvention to the church and assist in the repair of church buildings. On the whole, municipal services are only scantily looked after, but the fault is due more to lack of revenue than to improper distribution. Occasionally the national government renders assistance in the construction of some work pertaining to a municipality. The average distribution of municipal disbursements may be estimated about as follows: MUNICIPAL EXPENDITURESApproximate percentage of whole expenditure Education…………………………………… 27.1 Public works, street cleaning, etc…………….. 27. Police……………………………………… 8.4 Administrative expenses (salaries of municipal officials and cost of tax collection)………….. 7.5 Public lighting……………………………… 7. Sanitation………………………………….. 4. Charity…………………………………….. 2.2 Municipal debts……………………………… 1.9 Miscellaneous……………………………….. 14.2 ——— 100. In view of the lack of resources or interest on the part of municipalities and the central government, services of a public nature have frequently been assumed by private initiative. Many clubs and lodges maintain schools. Firemen's corps, where there are any, are volunteer organizations. For charity work, hospitals, educational work, etc., local committees are formed which raise funds by private subscription or by lottery, and in a number of towns the embellishment of the plazas is in charge of a "junta de ornato." |
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