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                     THE HERZFELD CARIBBEAN BASIN FUND, INC.

                                     BY-LAWS

                                    ARTICLE I

                                     OFFICES

      Section 1. The principal office of the Corporation shall be in the City of
Baltimore, State of Maryland. The Corporation shall also have offices at such
other places as the Board of Directors may from time to time determine or the
business of the Corporation may require.

                                   ARTICLE II

                       STOCKHOLDERS AND STOCK CERTIFICATES

      Section 1. Every stockholder of record shall be entitled to a stock
certificate representing the shares owned by him. Stock certificates shall be in
such form as may be required by law and as the Board of Directors shall
prescribe. Every stock certificate shall be signed by the Chairman or the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, and sealed with the corporate seal,
which may be a facsimile, either engraved or printed. Stock certificates may
bear the facsimile signatures of the officers authorized to sign such
certificates.

      Section 2. Shares of the capital stock of the Corporation shall be
transferable only on the books of the Corporation by the person in whose name
such shares are registered, or by his duly authorized attorney or
representative. In all cases of transfer by

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an attorney-in-fact, the original power of attorney, or an official copy thereof
duly certified, shall be deposited and remain with the Corporation or its duly
authorized transfer agent. In case of transfers by executors, administrators,
guardians or other legal representatives, duly authenticated evidence of their
authority shall be produced, and may be required to be deposited and remain with
the Corporation or its duly authorized transfer agent. No transfer shall be made
unless and until the certificate issued to the transferor, if any, shall be
delivered to the Corporation or its duly authorized transfer agent, properly
endorsed.

      Section 3. Any person desiring a certificate for shares of the capital
stock of the Corporation to be issued in lieu of one lost or destroyed shall
make an affidavit or affirmation setting forth the loss or destruction of such
stock certificate, and shall advertise such loss or destruction in such manner
as the Board of Directors may require, and shall, if the Board of Directors
shall so require, give the Corporation a bond or indemnity, in such form and
with such security as may be satisfactory to the Board, indemnifying the
Corporation against any loss that may result upon the issuance of a new stock
certificate. Upon receipt of such affidavit and proof of publication of the
advertisement of such loss or destruction, and the bond, if any, required by the
Board of Directors, a new stock certificate may be issued of the same tenor and
for the number of shares as the one alleged to have been lost or destroyed.

      Section 4. The Corporation shall be entitled to treat the holder of record
of any share or shares of its capital stock as the owner thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
the Corporation shall have express or other notice thereof.


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                                   ARTICLE III

                            MEETINGS OF STOCKHOLDERS

      Section 1. The Corporation is not required to hold an Annual Meeting in
any year in which the Corporation is not required to convene a meeting under the
Investment Company Act of 1940. In the absence of any specific resolution,
Annual Meetings, if held, shall be held at the Corporation's principal office,
or at such other place within or without the State of Maryland as the Board of
Directors may from time to time prescribe. Meetings of stockholders for any
other purpose may be held at such place and time as shall be fixed by resolution
of the Board of Directors and stated in the Notice of the Meeting, or in a duly
executed Waiver of Notice thereof.

      Section 2. Special meetings of the stockholders may be called at any time
by the Chairman, President or a majority of the members of the Board of
Directors and shall be called by the Secretary upon the written request of the
holders of at least fifty percent of the shares of the capital stock of the
Corporation issued and outstanding and entitled to vote at such meeting. Upon
receipt of a written request from such holders entitled to call a special
meeting, which shall state the purpose of the meeting and the matter proposed to
be acted on at it, the Secretary shall issue notice of such meeting. The cost of
preparing and mailing the notice of a special meeting of stockholders shall be
borne by the Corporation. Special meetings of the stockholders shall be held at
the principal office of the Corporation, or at such other place within or
without the State of Maryland as the Board of Directors may from time to time
direct, or at such place within or without the State of Maryland as shall be
specified in the notice of such meeting.


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      Section 3. Notice of the time and place of the annual or any special
meeting of the stockholders shall be given to each stockholder entitled to
notice of such meeting not less than ten days nor more than ninety days prior to
the date of such meeting. In the case of special meetings of the stockholders,
the notice shall specify the object or objects of such meeting, and no business
shall be transacted at such meeting other than that mentioned in the notice.

      Section 4. The Board of Directors may close the stock transfer books of
the Corporation for a period not exceeding twenty days preceding the date of any
meeting of stockholders, or the date for payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or for a period of not exceeding
twenty days in connection with the obtaining of the consent of stockholders for
any purpose; provided, however, that in lieu of closing the stock transfer books
as aforesaid, the Board of Directors may fix in advance a date, not exceeding
ninety days preceding the date of any meeting of stockholders, or the date for
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at any such
meeting and any adjournment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, or to give such


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<PAGE>

consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.

      Section 5. At all meetings of the stockholders a quorum shall consist of
the holders of a majority of the outstanding shares of the capital stock of the
Corporation entitled to vote at such meeting. In the absence of a quorum no
business shall be transacted except that the stockholders present in person or
by proxy and entitled to vote at such meeting shall have power to adjourn the
meeting from time to time to a date not more than one hundred twenty days after
the original record date without further notice other than announcement at the
meeting. At any such adjourned meeting at which a quorum shall be present any
business may be transacted which might have been transacted at the meeting on
the date specified in the original notice. If a quorum is present at any
meeting, a majority of votes cast is sufficient to approve any matter properly
before the meeting, except as otherwise required in the Investment Company Act
of 1940, and also except a plurality of all votes cast at a meeting at which a
quorum is present shall be sufficient for the election of a director. The
holders of a majority of the shares of capital stock of the Corporation issued
and outstanding and entitled to vote at the meeting who shall be present in
person or by proxy at such meeting shall have power to adjourn the meeting to
any specific time or times, and no notice of any such adjourned meeting need be
given to stockholders absent or otherwise.

      Section 6. At all meetings of the stockholders the following order of
business shall be substantially observed, as far as it is consistent with the
purpose of the meeting:

      Election of Directors;

      Ratification of Selection of Independent Auditors; and


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      New business.

      Section 7. At any meeting of the stockholders of the Corporation every
stockholder having the right to vote shall be entitled, in person or by proxy
appointed by an instrument in writing subscribed by such stockholder or by his
duly authorized attorney-in-fact and bearing a date not more than eleven months
prior to said meeting unless such instrument provides for a longer period, to
one vote for each share of stock having voting power registered in his name on
the books of the Corporation.

      Section 8. For any proposals to be properly brought before an annual or
special meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation, and the proposal must
involve a fundamental change in the structure of the Corporation. To the fullest
extent permissible under applicable law, the Chairman shall have the authority
to decide whether a stockholder proposal involves a fundamental change in
corporate structure. To be timely, any such notice must be delivered to or
mailed and received at the principal executive offices of the Corporation at
least 60 days, and no more than 90 days, prior to the date of the meeting. Any
such notice by a stockholder shall set forth as to each matter the stockholder
proposes to bring before the annual or special meeting (i) a brief description
of the business desired to be brought before the annual or special meeting and
the reasons for conducting such business at the annual or special meeting, (ii)
the name and address, as they appear on the Corporation's books, of the
stockholders proposing such business, (iii) the number of shares of the capital
stock of the Corporation which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. Notwithstanding
anything in the By-Laws to the contrary, no business shall be conducted at any


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annual or special meeting except in accordance with the procedures set forth in
this Section 8. The Chairman of the annual or special meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Section 8, and if he should so determine, he shall so declare to the meeting
that any such business not properly brought before the meeting shall not be
considered or transacted.

                                   ARTICLE IV

                                    DIRECTORS

      Section 1. The Board of Directors shall consist of not less than two nor
more than twelve members; provided that if there are fewer than three
stockholders, then the number of Directors may be the same number as the number
of stockholders, but not less than one. The Board of Directors may by a vote of
the entire board increase or decrease the number of directors without a vote of
the stockholders; provided that any such decrease shall not affect the tenure of
office of any director. Directors need not hold any shares of the capital stock
of the Corporation.

      Section 2. The directors shall be classified with respect to the year of
expiration of their respective terms of office into three (3) classes, each
class consisting of not fewer than one (1) nor more than three (3) directors.
Directors of each class shall hold office for a term of three (3) years, with
the term of one class expiring each year. Upon the adoption of this provision,
the classes and the initial expiration years of their respective terms shall be
as follows and shall carry forward at three-year intervals thereafter:

            Expiration Year
            ---------------
Class I           1997
Class II          1998
Class III         1999


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At any meeting of stockholders at which any class of directors is to be elected,
the stockholders may determine by resolution the actual number of directors of
that class to be elected, subject to the limits provided above. If no such
resolution is passed, the number of directors to be elected shall be the same as
the number serving within that class. The directors shall be elected by the
stockholders of the Corporation at an annual meeting or at a special meeting
called for such purpose, and shall hold office until their successors shall be
duly elected and shall qualify.

      Section 3. The Board of Directors shall have the control and management of
the business of the Corporation, and in addition to the powers and authority by
these By-Laws expressly conferred upon them, may exercise, subject to the
provisions of the laws of the State of Maryland and of the Articles of
Incorporation of the Corporation, all such powers of the Corporation and do all
such acts and things as are not required by law or by the Articles of
Incorporation to be exercised or done by the stockholders.

      Section 4. The Board of Directors shall have power to fill vacancies
occurring on the Board, whether by death, resignation or otherwise. A vacancy on
the Board of Directors resulting from any cause except an increase in the number
of directors may be filled by a vote of the majority of the remaining members of
the Board, though less than a quorum. A vacancy on the Board of Directors
resulting from an increase in the number of directors may be filled by a
majority of the Board of Directors then in office. A director elected by the
Board of Directors to fill a vacancy shall serve until the next annual meeting,
whenever held, or special meeting called for that purpose, and until his
successor is elected and qualifies.

      Section 5. The Board of Directors shall have power to appoint, and at its
discretion to remove or suspend, any officers, managers, superintendents,
subordinates,

                                       -8-

<PAGE>

assistants, clerks, agents and employees, permanently or temporarily, as the
Board may think fit, and to determine their duties and to fix, and from time to
time to change, their salaries or emoluments, and to require security in such
instances and in such amounts as it may deem proper.

      Section 6. In case of the absence of an officer of the Corporation, or for
any other reason which may seem sufficient to the Board of Directors, the Board
may delegate his or her powers and duties for the time being to any other
officer of the Corporation or to any director.

      Section 7. The Board of Directors may, by resolution or resolutions passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation which,
to the extent provided in such resolution or resolutions and by applicable law,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. Any such committee shall keep
regular minutes of its proceedings, and shall report the same to the Board when
required.

      Section 8. The Board of Directors may hold their meetings and keep the
books of the Corporation outside of the State of Maryland, at such place or
places as it may from time to time determine.

      Section 9. The Board of Directors shall have power to fix, and from time
to time to change the compensation, if any, of the directors of the Corporation.


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<PAGE>

                                    ARTICLE V

                               DIRECTORS MEETINGS

      Section 1. The first regular meeting of the Board of Directors shall be
held each year within seven business days following the annual meeting of
stockholders at which the Directors are elected. Regular meetings of the Board
of Directors shall also be held without notice at such times and places as may
be from time to time prescribed by the Board.

      Section 2. Special meetings of the Board of Directors may be called at any
time by the Chairman, and shall be called by the Chairman upon the written
request of a majority of the members of the Board of Directors. Unless notice is
waived by all the members of the Board of Directors, notice of any special
meeting shall be given to each director at least twenty-four hours prior to the
date of such meeting, and such notice shall provide the time and place of such
special meeting.

      Section 3. One-third of the entire Board of Directors shall constitute a
quorum for the transaction of business at any meeting; except that if the number
of directors on the Board is less than six, two members shall constitute a
quorum for the transaction of business at any meeting. The act of a majority of
the directors present at any meeting where there is a quorum shall be the act of
the Board of Directors except as may be otherwise required by Maryland law or
the Investment Company Act of 1940.

      Section 4. The order of business at meetings of the Board of Directors
shall be prescribed from time to time by the Board.


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<PAGE>

                                   ARTICLE VI

                               OFFICERS AND AGENTS

      Section 1. At the first meeting of the Board of Directors after the
election of Directors in each year, the Board shall elect a Chairman, a
President and Chief Executive Officer, one or more Vice Presidents, a Secretary
and a Treasurer and may elect or appoint one or more Assistant Secretaries, one
or more Assistant Treasurers, and such other officers and agents as the Board
may deem necessary and as the business of the Corporation may require.

      Section 2. The Chairman of the Board shall be elected from the membership
of the Board of Directors, but other officers need not be members of the Board
of Directors. Any two or more offices may be held by the same person except the
offices of President and Vice President. All officers of the Corporation shall
serve for one year and until their successors shall have been duly elected and
shall have qualified; provided, however, that any officer may be removed at any
time, either with or without cause, by action by the Board of Directors.

                                   ARTICLE VII

                    INDEMNIFICATION OF OFFICERS AND DIRECTORS

      Section 1. The Corporation shall indemnify each officer and director made
party to a proceeding, by reason of service in such capacity, to the fullest
extent, and in the manner provided, under Section 2-418 of the Maryland General
Corporation Law: (i) unless it is proved that the person seeking indemnification
did not meet the standard of conduct set forth in subsection (b)(1) of such
section; and (ii) provided, that the Corporation shall not indemnify any officer
or director for any liability to the Corporation or its security holders arising
from the


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wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office.

      Section 2. The provisions of clause (i) of Section 1 of this Article VII
notwithstanding, the Corporation shall indemnify each officer and director
against reasonable expenses incurred in connection with the successful defense
of any proceeding to which each such officer or director is a party by reason of
service in such capacity.

      Section 3. The Corporation, in the manner and to the extent provided by
applicable law, shall advance to each officer and director who is made party to
a proceeding by reason of service in such capacity the reasonable expenses
incurred by such person in connection therewith.

                                  ARTICLE VIII

                               DUTIES OF OFFICERS

                              CHAIRMAN OF THE BOARD

      Section 1. The Chairman of the Board shall preside at all meetings of the
stockholders and the Board of Directors and shall be a member ex officio of all
standing committees. He shall have those duties and responsibilities as shall be
assigned to him by the Board of Directors. In the absence, resignation,
disability or death of the President, the Chairman shall exercise all the powers
and perform all the duties of the President until his return, or until such
disability shall be removed or until a new President shall have been elected.

                                    PRESIDENT

      Section 2. The President shall be the Chief Executive Officer and head of
the Corporation, and in the recess of the Board of Directors shall have the
general control and


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<PAGE>

management of its business and affairs, subject, however, to the regulations of
the Board of Directors.

      The President shall, in the absence of the Chairman, preside at all
meetings of the stockholders and the Board of Directors. In the event of the
absence, resignation, disability or death of the Chairman, the President shall
exercise all powers and perform all duties of the Chairman until his return, or
until such disability shall have been removed or until a new Chairman shall have
been elected.

                                 VICE PRESIDENTS

      Section 3. The Executive Vice President, and the Vice Presidents, shall
have those duties and responsibilities as shall be assigned to them by the
Chairman or the President. In the event of the absence, resignation, disability
or death of the chairman and President, the Executive Vice President shall
exercise all the powers and perform all the duties of the President until his
return, or until such disability shall be removed or until a new President shall
have been elected.

                     THE SECRETARY AND ASSISTANT SECRETARIES

      Section 4. The Secretary shall attend all meetings of the stockholders and
shall record all the proceedings thereof in a book to be kept for that purpose,
and he shall be the custodian of the corporate seal of the Corporation. In the
absence of the Secretary, an Assistant Secretary or any other person appointed
or elected by the Board of Directors, as is elsewhere in these By-Laws provided,
may exercise the rights and perform the duties of the Secretary.

      Section 5. The Assistant Secretary, or, if there be more than one
Assistant Secretary, then the Assistant Secretaries in the order of their
seniority, shall, in the absence or


                                      -13-

<PAGE>

disability of the Secretary, perform the duties and exercise the powers of the
Secretary. Any Assistant Secretary elected by the Board shall also perform such
other duties and exercise such other powers as the Board of Directors shall from
time to time prescribe.

                     THE TREASURER AND ASSISTANT TREASURERS

      Section 6. The Treasurer shall keep full and correct accounts of the
receipts and expenditures of the Corporation in books belonging to the
Corporation, and shall deposit all monies and valuable effects in the name and
to the credit of the Corporation and in such depositories as may be designated
by the Board of Directors, and shall, if the Board shall so direct, give bond
with sufficient security and in such amount as may be required by the Board of
Directors for the faithful performance of his duties.

      He shall disburse funds of the Corporation as may be ordered by the Board
of Directors, taking proper vouchers for such disbursements, and shall render to
the President and Board of Directors at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions on behalf of
the Corporation and of the financial condition of the Corporation, and shall
present each year before the annual meeting of the stockholders a full financial
report of the preceding fiscal year.

      Section 7. The Assistant Treasurer, or, if there be more than one
Assistant Treasurer, then the Assistant Treasurers in the order of their
seniority, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer elected
by the Board shall also perform such duties and exercise such powers as the
Board of Directors shall from time to time prescribe.


                                      -14-

<PAGE>

                                   ARTICLE IX

                           CHECKS, DRAFTS, NOTES, ETC.

      Section 1. All checks shall bear the signature of such person or persons
as the Board of Directors may from time to time direct.

      Section 2. All notes and other similar obligations and acceptances of
drafts by the Corporation shall be signed by such person or persons as the Board
of Directors may from time to time direct.

      Section 3. Any officer of the Corporation or any other employee, as the
Board of Directors may from time to time direct, shall have full power to
endorse for deposit all checks and all negotiable paper drawn payable to his or
their order or to the order of the Corporation.

                                    ARTICLE X

                                 CORPORATE SEAL

      Section 1. The corporate seal of the Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization, and the words
"Corporate Seal, Maryland." Such seal may be used by causing it or a facsimile
thereof to be impressed or affixed or otherwise reproduced.

                                   ARTICLE XI

                                    DIVIDENDS

      Section 1. Dividends upon the shares of the capital stock of the
Corporation may, subject to the provisions of the Articles of Incorporation of
the Corporation, if any, be declared by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash, in property, or
in shares of the capital stock of the Corporation.


                                      -15-

<PAGE>

      Section 2. Before payment of any dividend there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board of Directors may, from time to time, in its absolute discretion, think
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board of Directors shall deem to be for the best interests of the
Corporation, and the Board of Directors may abolish any such reserve in the
manner in which it was created.

                                   ARTICLE XII

                                   FISCAL YEAR

      Section 1. The fiscal year of the Corporation shall end on the last day in
June of each year.

                                  ARTICLE XIII

                                     NOTICES

      Section 1. Whenever under the provisions of these By-Laws notice is
required to be given to any director or stockholder, such notice is deemed given
when it is personally delivered, left at the residence or usual place of
business of the director or stockholder, or mailed to such director or
stockholder at such address as shall appear on the books of the Corporation and
such notice, if mailed, shall be deemed to be given at the time it shall be so
deposited in the United States mail postage prepaid. In the case of directors,
such notice may also be given orally by telephone or by telegraph or cable.


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      Section 2. Any notice required to be given under these By-Laws may be
waived in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein.

                                  ARTICLE XIV

                                   AMENDMENTS

      Section 1. These By-Laws may be amended, altered or repealed by the
affirmative vote of the holders of a majority of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote thereon, or by a
majority of the Board of Directors, as the case may be.


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