[Inclosure.]

Report to the American Minister by Walter M. St. Elmo, Chief of the Bureau of Information, Police Department, Porto Rico, in charge of the twenty-nine agents appointed to observe the Dominican elections.

[SANTO DOMINGO,] December 20, 1913.

SIR: In accordance with instructions received from the Governor of Porto Rico, Hon. Arthur Yager, the undersigned suggested the names of 29 employees of the Insular Government of Porto Rico, 6 Americans and 23 Porto Ricans, who reported to you on the 11th instant for the purpose of observing the elections held in this Republic on the 15th and 16th instant.

Under your direction these men were sent to different parts of the Island, as follows:

[Names of the men, and names of localities at which they were posted.] The individual reports of the agents, which you now have or will receive, show that the elections in the places as named were held with comparative fairness, taking into consideration an extremely faulty election law and the heretofore prevailing custom on the part of the government in power of using force and coercion to insure results favorable to their interests.

Isolated cases of coercion, violence and fraud were observed, but which in no manner affected the final count of the ballots cast. Shooting occurred in La Vega, San Pedro de Macoris and San Cristóbal, and some disturbance took place in this city and in Moca. In the Capital the Government made a number of arbitrary arrests of leaders of the opposition party, which caused their followers to withdraw from the voting on the second election day, the 16th.

The general good order observed throughout the Republic during the elections was, without any doubt, brought about by the attitude assumed by yourself and the American Government in reference to these elections. The fact that the Commission appointed by the State Department arrived here prior to the elections had an assuring effect on the people; they appeared to be relieved and to feel that our Government meant business and that it intended to ke.g) its promise made to them through yourself to guarantee a free election. The general consensus of opinion appears to be that that promise was kept and that they feel that a step toward a free exercise of suffrage has been made.

While some protests have been made in a number of towns against alleged unfairness and fraud, those protests will in no way affect the general result of the election returns. The fact that the opposition party elected a majority of their candidates appears to be sufficient proof that the Government used no great amount of undue influence, violence or coercion. This fact is all the more astonishing because of the oppressive measures heretofore employed by the governments in power on like occasions.

A most general protest is heard on every side against the present election law. It is faulty in every respect, works a great hardship upon the people and practically prevents a full and free expression of their will at the polls by making it very difficult for the majority to get to the polls to vote and by facilitating fraud through repeating. No entirely free elections can be hoped for in Santo Domingo until a census is taken and electoral lists prepared and an entirely new electoral law enacted; but those just passed were as free and orderly as could be expected under existing conditions and should be a matter of congratulation to yourself and the Government you so worthily represent for having so successfully brought them about.

The [omission] generally prevailing among the people appears to be that the recent elections were free and fairer than they expected and that the good order and absence of former coercive measures and of violence or oppression was almost wholly due to the unofficial intervention on the part of the American Government.

Some of the Horacista party now profess to believe that they were treated unfairly by the Government and that it wilfully sought by trickery and oppression to bring about the defeat of their political party. However, this sentiment is not at all general, even among members of that political faction.

While before our arrival in Santo Domingo, and during the first day or so thereafter, some comment was made in the local press and indulged in by a fev: irresponsible persons on the streets in protest against even non-official intervention in their affairs by us, I am indeed glad to report that no hostile

action against any of us was in any way attempted and that in the majority of cases our stay in Santo Domingo has been without a single disagreeable incident and that in most cases Government officers and others assisted us in our work and tried in every way to make our stay pleasant.

Very respectfully,

WALTER M. ST. ELMO.

File No. 839.00/1027.

The American Minister to the Secretary of State.

[Telegram-Paraphrase.]

AMERICAN LEGATION,

Santo Domingo, December 28, 1913.

The Dominican Government today arrested Frederico Velásquez. I have seen intercepted letters that indicate his participation in a plot to overthrow the Government by force. Several have been detained, others expelled, and still others have voluntarily left the country. I have asked that the accused be tried. The country is tranquil and if the critical condition of financial affairs could be relieved there is hope of continued peace.

SULLIVAN.

FINANCIAL AFFAIRS-CONCLUSION OF A LOAN CONTRACT BETWEEN THE DOMINICAN REPUBLIC AND THE NATIONAL CITY BANK OF NEW YORK, WITH THE APPROVAL OF THE UNITED STATES.

File No. 839.51/864.

The American Minister to the Secretary of State.

[Telegram-Paraphrase.]

AMERICAN LEGATION, Santo Domingo, September 27, 1912. Mr. Samuel M. Jarvis, representing the National Bank of Santo Domingo, informs me that the Dominican Government, being sorely pressed for money, has applied to the bank for a loan to be secured on all stamps and stamped paper for a period of years. The bank stipulates submittal of a statement of the Government's financial condition and approval by the Government of the United States of the loan. Unless a new order of affairs is insisted on by our Government the country will soon be utterly ruined.

RUSSELL

File No. 839.51/911.

The Assistant Secretary of War to the Secretary of State.

WAR DEPARTMENT, Washington, December 11, 1912. MY DEAR MR. SECRETARY: The following cablegram was received this day from the Deputy Receiver General of Dominican Customs:

Bill introduced Dominican Congress December 9 authorizes Executive to contract loan of $1,500,000 specifically recognizing article 3 of the treaty; 7 per

cent interest; $30,000 payable monthly by General Receiver of Dominican Customs. This will probably be handled by local banks. Approval of American Government will not be requested until contract has been signed. In the meantime Santiago Michelena advances $2,500 daily to the Government.

Santo Domingo, December 16, 1912. Congress has passed the bill authorizing the Executive to make a contract for a loan as heretofore reported, and the bill has been signed by the President, who strongly advises that the approval of the Government of the United States be limited to approval of such sums as he may need from time to time, expenditures to be controlled by the Minister of Finance, the Legation and the General Receiver of Customs, and if his Government fall our approval immediately to cease as to any unexpended balance of said loan. I strongly recommend this course be approved by the Department, and as soon as possible.

RUSSELL.

File No. 839.51/913.

The Secretary of State to the American Minister.

[Telegram- Paraphrase.]

DEPARTMENT OF STATE, Washington, December 18, 1912. Inform the President that this Government approves in principle the making of a loan by the Dominican Government to meet its present financial needs and hereby authorizes preliminary advances on this loan to be made to the present Government by the bankers of not to exceed $300,000. Sumas so furnished must be at par, interest not to exceed 7% per annum from date of advances; and, provided they be disbursed under the control and supervision of the Legation and the Receivership, this advance to form part of the total of the proposed loan. Before, however, finally approving the loan contract this Government must know more of its terms, such as the price at which the loan is to be taken. Inform Department as accurately as possible as to the amount necessary to discharge the total recent indebtedness of the Republic and in detail the purposes to which it is to be applied. This Government could not approve the advance or loan of moneys to a Government that had not been recognized by the United States.

ΚΝΟΧ.

File No. 839.51/914.

The American Minister to the Secretary of State.

[Telegram-Paraphrase.]

AMERICAN LEGATION,

Santo Domingo, December 18, 1912.

The Government wishes to know whether or not this loan can be made against the Public Works bonds now on deposit in the United States if, in your opinion, interest will be saved thereby. The Government is in serious need of a part of the loan at once.

File No. 839.51/914.

RUSSELL.

The Acting Secretary of State to the American Minister.

[Telegram-Paraphrase.]

DEPARTMENT OF STATE, Washington, December 24, 1912.

The Department regrets that legal objections will prevent temporary diversion of Public Works funds to the present loan. The loan can probably be best effected with local bankers.

File No. 839.51/919.

WILSON.

The American Minister to the Secretary of State.

[Telegram-Paraphrase.]

AMERICAN LEGATION,

Santo Domingo, December 28, 1912. At the rate of interest required by law the local bankers do not find the loan attractive and each will include in his contract a provision that he be made Government depositary. They inquire what their position would be if the approval of our Government were withheld after the first or any subsequent advance, after they have subscribed for the whole loan.

The Royal Bank of Canada has made a proposal for the whole loan in accordance with a contract form prepared by it.

What is the position of the Department in regard to naming a depositary for convention funds?

I suggest that the loan contract should be drawn up in Washington with express stipulations as to control of disbursements and that each advance should be approved as necessary up to the full amount of the loan.

File No. 839.51/919.

RUSSELL.

The Secretary of State to the American Minister.

[Telegram-Paraphrase.]

DEPARTMENT OF STATE, Washington, December 31, 1912.

The Department hopes to cable you soon a contract form now in

preparation.

File No. 839.51/928.

The Chief of the Bureau of Insular Affairs of the War Department to the Secretary of State.

WAR DEPARTMENT, Washington, January 4, 1913. SIR: At the request of the Chief of the Latin American Division of the State Department, I have carefully gone over the attached draft of a proposal for the $1,500,000 loan of the Dominican Republic.

I believe, under all the circumstances, that the proposal is fair and reasonable, and that if no proposals are received more favorable to the Government the Dominican Government might well be authorized to close with this offer.

Very respectfully,

FRANK MCINTYRE, Brigadier General, U. S. Army.

[Inclosure.]

CONTRACT BETWEEN THE REPUBLIC OF SANTO DOMINGO AND THE NATIONAL CITY BANK OF NEW YORK RESPECTING THE PURCHASE OF $1,500,000 PAR VALUE TREASURY NOTES.

The National City Bank of New York hereby agrees to purchase from the Republic of Santo Domingo, and the said Republic hereby agrees to sell to the said bank, one million five hundred thousand dollars par value Treasury notes dated January 1, 1913, any unredeemed balance due January 1, 1919, bearing interest at the rate of six per centum per annum payable January first and July first of each year, the said notes to be the direct obligation of the Republic of Santo Domingo and issued in coupon form of one thousand dollars denomination each, to be registered as to principal only, principal and interest to be payable at the National City Bank of New York in United States gold coin of the present standard of weight and fineness. The notes shall be numbered from 1 to 1500 consecutively and shall become redeemable and shall be payable in their sequence and in such numbers on each interest date as the amount of the amortization fund available with the bank on such interest date will permit.

To guarantee the payment of the interest on the aforesaid notes and to provide for their retirement within the time specified, the Republic of Santo Domingo, subject to the terms of the convention between the United States and the Dominican Republic, hereby pledges of its customs receipts the sum monthly of thirty thousand dollars gold, which amount the Republic hereby authorizes the Receiver of Customs to deduct monthly, commencing January 1, 1913, from the customs receipts of the Republic, and immediately to deposit said amount with the National City Bank of New York for the service of the loan, such said monthly payments of thirty thousand dollars to be regularly continued by the Receiver of Customs until the total amount so deposited with the bank shall have fully served the requirements of this contract.

The National City Bank of New York hereby agrees to pay to the Republic of Santo Domingo ninety-six and one-half and accrued interest for not exceed ing one million five hundred thousand dollars par value of the above described notes, five hundred thousand dollars of the purchase money to be available to the Republic immediately upon the execution of this contract, and the remainder to be payable to the Republic as required, upon three days' notice to the bank, the payments to be made in New York funds.

Any and all remittances on account of this loan, of coin, bullion or currency, or through the medium of exchange, made by the bank to Santo Domingo or elsewhere, as may be ordered, shall be made at the expense of the Republic, the bank agreeing to charge only the actual cost.