In Santo Domingo there was opposition to the
plan by interested parties and by persons not sufficiently mindful of
past errors and present dangers. The Dominican Congress mutilated the
contracts with the bankers, who not only refused to accept the
modifications, but declined to treat further with Minister Velazquez
unless he were first invested with plenary powers. The Dominican
Congress then extended the necessary authority, but it came late, for
the fall of 1907 witnessed a money panic in the United States and the
floating of a bond issue was impossible.
After months of negotiations and struggle with recalcitrant creditors
Minister Velazquez and Prof. Hollander finally perfected an
arrangement under which the creditors were paid the amounts specified
in the plan of adjustment, twenty per cent in cash and eighty per cent
in bonds guaranteed by the fiscal convention. For the purpose of the
cash payments the creditors' fund accumulated under the modus vivendi
was utilized. The bonds were delivered to the creditors at the rate of
98-1/2 per cent of their face value.
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