Financial situation in 1905.--Causes of debt.--Amount of debt.--Bonded debt.--Liquidated debt.--Floating debt.--Declared claims.--Undeclared claims.--Surrender of Puerto Plata custom-house.--Fiscal convention of 1905.--Modus vivendi.--Negotiations for adjustment of debt.--New bond issue.--Fiscal treaty of 1907.--Adjustment with creditors.--1912 loan.--Present financial situation. Rarely have the fiscal affairs of a country experienced so rapid and radical a change for the better as those of Santo Domingo since 1904, and rarely has a financial measure so quickly proved its efficacy as the fiscal convention between the United States and Santo Domingo. In the beginning of the year 1905 Santo Domingo had fallen to the lowest depths of bankruptcy and financial discredit. After decades of civil disturbance, misrule and reckless debt contraction, the deluge had come. The substance of the country had been wasted in military expenditures; agriculture and commerce were stagnant; a debt of over $30,000,000 had been contracted with nothing to show for it but forty-two miles of narrow-gauge railroad and two small gunboats; the government obligations were chronically in default and interest charges were piling up at ruinous rates; every port of the Republic was pledged to foreign creditors who were clamoring for payment; one port had already been seized and the occupation of the others by foreign powers was imminent. At this juncture the Dominican government applied to the United States for assistance and the custom-houses of the Republic were placed in charge of an American general receiver, with the obligation of reserving a specified portion of the customs income for the creditors and turning the remainder over to the Dominican government. The situation immediately changed as if by magic. The imports and exports, and with them the income of the government, quickly reached higher figures than the country had ever seen, the national debt was scaled down by almost one-half and the new Dominican bonds issued in 1907 to convert the old debt went nearly to par in the markets of the world. (a) Periodic accumulation of floating debt, owing to: 1. Political instability, requiring large outlays for soldiery, for bribery of potential revolutionists, and for suppression of actual revolutions. 2. Corruption of officials. 3. "Asignaciones" or pensions to mollify enemies and to reward friends of the existing regime. (b) Usurious interest computations, on account of: 1. "Bonus" in principal, 2. Extravagant interest rates. (c) Interest default and compounding accumulations. (d) Recognition and liquidation of excessive or illegal claims as a condition of further advances.