The Secretary of State to Commander Dillingham.

Sir: The President, having full confidence in your ability and discretion, and being aware of your exceptional knowledge of the present conditions in the Dominican Republic, desires you to proceed with all possible dispatch to that Republic.

Upon arrival at Santo Domingo City you will confer with the American minister and then call upon the President of the Dominican Republic and such of his representatives as you may deem best to see.

You will recall to President Morales your interviews with him in the spring of 1904, and the voluntary offer which he then made to you to turn over all of the custom-houses in the Dominican Republic to the Government of the United States for the purpose of enabling it to establish an orderly and businesslike administration of the Dominican revenues, the payment of the recognized foreign claims, the defraying of the necessary expenses of government, and the creation of a sinking fund for the gradual liquidation of the national indebtedness.

You will state, at such time and in such manner as your wisdom and knowledge of the conditions indicate, that the Government of the United States, in view of the continued state of unrest which seems to prevail in Santo Domingo, and in view of the imminent and pressing danger of intervention on the part of certain European creditors to the end of obtaining a settlement of claims overdue, that this government is now disposed to assist the Government of Santo Domingo in the work of regulating the finances of the Republic by undertaking the administration of all its custom-houses.

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You may state that this government would be inclined to pay about 40 per cent of the net revenues derived from import duties to the Government of Santo Domingo for its own uses, retaining 60 per cent for interest payments on the acknowledged indebtedness of the Republic and for the establishment of a moderate sinking fund, together with the necessary charges of administration and the payment of other claims which may be recognized.

This government will also undertake to adjust recent claims which have not been adjudicated through the agency of some impartial tribunal, and will lend President Morales such assistance as it properly may to restore the credit of the Republic, preserve order, and advance its welfare.

President Morales, on his part, will be expected to agree, for his government, to make no change in the existing tariff or taxation laws without the advice and consent of this government, but to make such revision of the tariff from time to time as wisdom and the exigencies of the situation would seem to demand, upon the formal request of the Government of the United States.

The Department is informed that President Morales seems disposed to enter into some such arrangement as I have briefly outlined. You will give him such advice and assistance as you properly can, and if he desires it, and you think it wise, you may confer with leading men of the Republic for the purpose of enlisting their support of the proposed plan of financial reform. It will probably be well for you, after you have visited San Domingo City, to visit the north coast of Santo Domingo for the purpose of conferring with men of recognized standing representing the various factions at Puerto Plata, Santiago, Monte Christi, and some other points.

You will be expected to report to the President, through the Department of State, both by cable and letter, as often as you think it necessary.

It is desirable that you should work in harmony with the American minister at San Domingo City, and inform him, from time to time, respecting the situation in the various parts of the Republic which you visit.

You will advise the Department the time of your departure from San Juan and your arrival at San Domingo City, and of your subsequent movements.

Your cablegrams from San Domingo City to the Department may be charged to the account of the American legation, if you so desire.

* * * * * * *

A naval vessel will meet you at San Juan. This vessel will be at your disposition and will convey you to such parts of the Dominican Republic as you deem it advisable to visit.

I have etc.,

John Hay.