Mr. Dawson to Mr. Hay.

No. 42.]

Sir: Referring to the subject of former correspondence, the recognition of the financial agent of the United States appointed under the award of July 14, I herewith inclose copies of letters from the financial agent to the minister of hacienda and to myself.

The letter addressed to me reports an interview had by Mr. Abbott with President Morales, in which the latter stated that the amounts due under the award for the current month could not be met by the Dominican Government, and suggested that Mr. Abbott’s formal demand for possession of the custom-house at Puerto Plata might as well be made at once. The letter to the minister of hacienda constitutes such demand.

I have further to report that on the 23d instant the minister of foreign affairs requested an immediate interview with me, in the course of which he said that the President and himself and other members of the cabinet, although that body was not unanimous, were of the opinion that it was best to accept the award in spite of the fact that constitutional and other objections might be urged against its provisions. One of their reasons for this conclusion was the guaranty that would be afforded against revolutionary seizure if one or more custom-houses should be in the hands of a financial agent appointed and protected by and responsible to the American Government. He added, however, that the revenues from all the custom-houses would not be sufficient to pay the running expenses of the administration, the $450,000 under the award, and the other yearly obligations to creditors, and that therefore the Dominican Government felt that it was necessary to receive a guaranty as to the amount required for its budget before allowing the financial agent to take actual possession. He suggested that 60 per cent of the gross revenue be set aside for the Government’s ordinary running expenses, and gave me to understand without saying so categorically that otherwise they would not put Mr. Abbott in possession on October 1, and would present reasons to the American Government why the award seems to the Dominican Government unconstitutional and not capable of being executed in its present form.

I answered that I was not authorized to discuss the validity of the award, and that I regarded it as conclusive and binding; that the arbitral commission must be presumed to have considered the facts bearing upon the adequacy of custom-house receipts to meet the expenses and other requirements of the Dominican Government to which he had just called my attention; that a collateral agreement such as he proposed would be in effect a modification of the award, and that I could not hold out to him any hopes that my Government [Page 281]would enter upon negotiations having as their object that or any other modification. I added, however, that I thought the Dominican Government need have no fears lest a financial agent of the United States would execute the award in such a way as to take away the revenue necessary for the maintenance of the administration, and if when put into practical operation it should be found impossible to pay the full amount without crippling the Government and endangering its ability to maintain order the question of reducing those payments might reasonably be raised, but not at the present time. With this assurance he did not appear satisfied, but it seems to me, and I so said to him, that a more definite one is not possible.

Later I discussed with Mr. Abbott the practicability and advisability of his giving in his private capacity as representative of the improvement company an assurance that a certain minimum sum should be turned over to this Government out of the revenues of the ports mentioned in the award. He deems it unwise, and his reasons for so thinking seem to me good.

In an interview to-day the minister of foreign affairs asked me to use my good offices with Mr. Abbott in securing his consent to delay the execution of the award for two months or even one. I answered that such an arrangement would be a modification of the award which neither Mr. Abbott nor myself would be authorized to make.

* * * * * * *

I have, etc.,

T. C. Dawson.
[Inclosure 1.]

Mr. Abbott to Mr. Dawson.

Sir: I beg leave to report, for your information and for that of the Department of State that on the 21st instant I had an interview with President Morales relative to the award rendered under the protocol of January 31, 1903, between the United States and the Dominican Republic for the settlement of the claims of the San Domingo Improvement Company and its allied companies.

The interview was nearly two hours in length, during which the situation was quite fully discussed. The President’s manner was gracious and cordial, and, while he expressed no gratification at the terms of the award, he said nothing whatever which indicated hostility to them or a desire to escape from their performance.

The result of the interview was that the President informed me that the amounts now due and payable under the award will not be paid during this month; that it was, therefore, his intention to have his Government begin to fulfill the terms of the award by delivering to me, as financial agent under the award, the possession of the custom-house at Puerto Plata on October 1 next. He refrained from making a positive promise to do this, on the ground that he must have a consultation with his cabinet; but he made it perfectly plain that such was his intention and that he did not doubt his ability to secure the adhesion of the cabinet.

I then said to him that I thought that perhaps the time had arrived when I should demand the payment to me by the Dominican Government of the $11,850, due in August, and of the $37,500, due September 1, under the award, or, in default of such payments during this month, the possession of the custom-house of Puerto Plata on October 1 next; that I had refrained from making any demands up to that time because of his absence from the capital; that I would be pleased to have him state whether he would prefer to have such demands made before he consulted with his cabinet or to have them delayed until a decision had been made by his Government, bearing in mind that a favorable decision would render any demands unnecessary, except, possibly, as a matter of form. He replied that he would prefer to have the demands made at once and before he consulted with his cabinet.

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It was therefore agreed between us that I should make the demands immediately and that he would undertake to have the Dominican Government comply with the award and put it in execution by delivering to me the custom house at Puerto Plata on October 1 next, for the purpose stated in the award.

In accordance with that understanding, I sent to the minister of hacienda, on September 21, a letter, of which I inclose a copy.

I am, etc.,

John T. Abbott.
[Subinclosure.]

Mr. Abbott to Señor Velásquez.

Sir: I. Article 7 of the award of the commission of arbitration under the protocol of January 31, 1903, between the Dominican Republic and the United States for the settlement of the claims of the San Domingo Improvement Company and its allied companies reads as follows:

“In addition to the monthly installment of thirty-seven thousand five hundred dollars ($37,500) provided in article 3, there shall be paid to the financial agent during the month of August, 1904, a sum sufficient to pay an equal moiety of the compensation of the arbitrators and an equal moiety of all expenses of this arbitration, being the amount of which the Dominican Republic is liable under Article VIII of the protocol, which amounts shall be certified to the Dominican Government by the Department of State of the United States of America.

“And in case of the failure to pay said amount, or any part thereof, during the said month of August the financial agent shall have and exercise in the collection thereof the same powers as hereinbefore conferred upon him in case of default in the payment of the said monthly installments on the principal and interest of said debt.”

In pursuance with the provisions of said article the Department of State of the United States of America, through the Hon. Thomas C. Dawson, minister resident of the United States at this capital, has certified to the Dominican Government that the amount of said compensation and expenses is $23,700. Under the terms of the award one-half of that sum, or $11,850, is now due and payable to me by the Dominican Government. No part of the same has been paid.

I therefore have the honor to demand that the Dominican Government pay me the sum of $11,850, in discharge of its obligations under Article VIII of the protocol and article 7 of the award.

II. The first part of article 3 of the award reads as follows:

“Said principal and interest shall be payable in monthly installments of thirty-seven thousand five hundred dollars ($37,500) each during the first two years and of forty-one thousand six hundred and sixty-six dollars and sixty-six cents ($41,666.66) each thereafter, to the financial agent of the United States, on the first day of each month, beginning with the month of September, 1904,” etc.

The first installment of $37,500, being the installment due and payable on the 1st day of September, 1904, has not been paid.

I therefore have the honor to demand that the Dominican Government pay to me the sum of $37,500, being the installment due and payable, under the award, on September 1, 1904.

III. A part of article 4 of the award reads as follows:

“In case of failure to receive during any month the sum then due, the said financial agent shall have full power and authority, by himself or by his appointees, to forthwith enter into the possession of the custom house at Puerto Plata in the first instance, and to assume charge of the collection of the customs duties and port dues at that port,” etc.

In case that the two sums above mentioned be not’ paid to me before the expiration of this month I have the honor to demand that the Dominican Government deliver to me or to my appointee, on the 1st day of October next, the possession of the custom house at the port of Puerto Plata, in execution of the provisions of the award in that particular, and that proper instructions be seasonably given to the competent Dominican authorities to make the delivery as requested.

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IV. Another part of article 4 of the award reads as follows:

“Said financial agent shall have the power from time to time to appoint subordinate officials and employees.”

I have the honor to inform the Dominican Government that, in accordance with the power thus conferred upon me, I have appointed Mr. Joseph C. Strickland as my “deputy financial agent at the port of Puerto Plata,” to whom the possession of the custom house at that port, on October 1 next, may be made by the Dominican Government, with the same effect as if the same were delivered to me in person; and in complying with my request for such delivery I ask that orders be issued to the proper authorities to make delivery to me or to Mr. Strickland, as the case may be.

V. I do not at this time make any demand under article 6 of the award, which relates to the salaries and expenses of the financial agent and his appointees, but I reserve all my rights in this particular.

I am, etc.,

John T. Abbott, Financial Agent.