Minister Dawson to the Secretary of State.

No. 123.]

Sir: Referring to the subject of my No. 122, of March 27, a modus vivendi in regard to the Dominican debt and custom-houses, I have the honor to confirm your telegram of March 29, as follows: [Printed ante.]

I immediately communicated the contents thereof to the minister of foreign affairs, to the President, and to the minister of finance and commerce. That the United States was willing to acquiesce in the modus vivendi proposed by them gave them great satisfaction. The minister of finance undertook to draw up an Executive resolution embodying the original proposition of this government with the modifications necessary to make it meet your suggestions.

He made no objection to the elimination of the provision as to the United States taking possession of the four northern ports under the award of July 14, 1904, but on three other points he requested me to communicate further with you. First, he wanted a joint international commission of receivers, on the ground that this would tend to insure the adhesion of the European creditors. I told him that these creditors would, I knew, be better pleased with a single receiver indicated by the American Government, and that I did not feel justified in telegraphing his suggestion to the Department.

Second, he wanted to substitute the words “President of the United States” for “Secretary of War,” insisting that the explicit mention of the latter official would give rise to popular misapprehension and press criticism. I agreed to submit this suggestion to you, and accordingly telegraphed as follows:

Santo Domingo, March 30, 1905.

Secretary of State, Washington:

Dominican Government prefers to say “the President of the United States” instead of “Secretary of War;” otherwise will accept your telegram of 29th categorically.

Dawson.

[Page 363]

The third point involved considerable discussion. He insisted that the terms of your telegram were too vague in regard to the functions of the proposed receivers, and also suggested that they ought only to collect the percentage to be deposited for the creditors. He said, and correctly, that the Executive could not by a mere resolution repeal the laws and constitutional provisions in regard to the administration of the custom-houses and the appointment of employees. He therefore wanted to have appointed a single American in each port to verify the acts of the Dominican officials as well as to receive the money. I answered that it seemed to me impracticable to frame, at the present time, a clause exactly defining the limitations of the functions of the officials which were to be named by his government on presentation by the President of the United States; that a receiver in chief, with power to take all the revenue and distribute it, who should nominate as many deputies and assistants as he might find advisable and who would be backed by the Dominican Government in taking such measures as might be found necessary to carry out the latter’s pledge that all legal revenues should be turned over, disregarding all existing special contracts and exemptions, would probably successfully carry out the purpose of the modus vivendi, but the matter must be left open for changes and amendments until after the arrival of Doctor Hollander.

With the Italian war ship in port and the existence of sporadic disorders in the interior, President Morales was extremely anxious that the proposed resolution should be published at once, and on my reiterating to him, to Minister Sanchez, and Minister Velasquez that my government had only authorized me to acquiesce in case this government should accept categorically the telegram of the 29th, the minister of finance ceased discussing the details.

In the meantime I had received your telegram, as follows:

Washington, March 31, 1905.

American Legation, Santo Domingo:

‘The President of the United States” substituted for “Secretary of War” in my telegram of 29th.

Adee, Acting.

Accordingly, I addressed a note to the minister of foreign affairs asking for a categorical acceptance of your telegram of the 29th, as modified by your telegram of the 31st, having been verbally assured that the answer would be in the affirmative. I inclose a copy of said note and a copy and translation of Minister Sanchez’s reply thereto.

I also confirm my telegram to you, as follows:

Santo Domingo, April 1, 1905.

Secretary of State, Washington:

Dominican Government accepts your telegram of the 29th. Has issued a decree establishing modus vivendi. It takes effect April 1.

Dawson.

This afternoon there was published and officially proclaimed the Executive resolution or decree in question. Copy and translation inclosed. It seems to me to cover the ground so far as is practicable before the coming of Doctor Hollander and the beginning of the actual work of reorganization. I believe he can obtain additions thereto which may be found necessary.

I have the further honor to confirm the following telegrams in regard to the Italian war vessel Calabria, which has been here for the [Page 364]purpose of obtaining a prompt settlement of the Italian claims. See my No. 122, of March 27, for a report of her first visit.

Santo Domingo, March 11, 1905.

Secretary of State, Washington:

Italian war vessel Calabria is expected to arrive here 14th.

Dawson.

Santo Domingo, March 14, 1905.

Secretary of State, Washington:

Calabria just arrived. Please inform the Navy Department.

Dawson.

The latter clause was inserted at the request of Commander E. J. Dorn, the senior naval officer at this port, in order to avoid the necessity of his going to the unnecessary expense of telegraphing to the Secretary of the Navy the Calabria’s arrival.

Santo Domingo, March 20, 1905.

Secretary of State, Washington:

Calabria gone Habana.

Dawson.

But it appears that the Italian Government deemed it best to have the Calabria at a port whence she could be more conveniently recalled here than from Habana, and after her departure I learned from an unofficial but certain source that she had in fact gone to Kingston, Jamaica, on orders received at the last moment. Accordingly, I telegraphed you as follows:

Santo Domingo, March 21, 1905.

Secretary of State, Washington:

Unofficially we learn that Calabria at the last moment was ordered Kingston.

Dawson.

On the afternoon of the 28th of March the Calabria again appeared in this port, where she still remains. I telegraphed you as follows:

Santo Domingo, March 28, 1905.

Secretary of State, Washington:

Calabria returned. Expects remain here until relieved by Dogali from Trinidad.

Dawson.

Commander Dorn kindly took prompt measures to ascertain the probable purpose of her return and the probable length of her stay. It appeared that Captain Moriundo had received orders at Jamaica to return to Santo Domingo and await the arrival of the Dogali, which was then at Trinidad. Afterwards he expected to continue his original itinerary to the ports of Venezuela, Brazil, Argentina, etc. At Jamaica he had heard that the Dominican-American convention had failed to receive the approval of the Senate, and he knew nothing of any negotiations for a modus vivendi.

Next day he called on the minister of foreign affairs to say that he was instructed to emphasize the demand of the resident Italian chargé d’affaires for an immediate resumption of payments according to the terms of the Italian protocols. The minister told him that his government was unable to comply, but that a modus vivendi which would satisfactorily guarantee all the creditors was now under consideration and would shortly be put into force. Captain Moriundo courteously [Page 365]replied that in that case he did not expect that his visit would be a long one. The Italian chargé d’affaires accordingly made a formal written demand for resumption and the minister of foreign affairs answered, repeating in writing what he said about the modus vivendi. This correspondence has been referred to the Italian Government, and Captain Moriundo and the local Italian creditors do not doubt but that the modus vivendi will be officially accepted.

From expressions used by Captain Moriundo in conversation with me, I infer that he now does not expect the Dogali, but I have no definite assurance to this effect.

On my communicating Doctor Hollander’s expected arrival to the President and Minister Sanchez, they expressed a lively satisfaction that the State Department had chosen such a distinguished and experienced man to take up the financial matters of the Republic. They regard—as do I—his coming at this time as peculiarly opportune, and they hope that he will come empowered to act as receiver in chief at once.

The internal situation of the country, while critical and uncertain, is quiet, except in a few localities, and it is not probable that any serious outbreak will be caused by the publication of the modus vivendi. Rather does the assurance that the Morales government will not be hampered by aggressive acts on the part of creditors, foreign and domestic, discourage the malcontents. The modus vivendi makes it impossible for them to borrow money from speculative or discontented merchants, and they hesitate to engage in a conflict with a government which has had, since the 1st of February, and will continue to have, a regular and secure income applicable to putting down any insurrection which may burst out.

* * * * * * * *

I have, etc.,

T. C. Dawson.
[Inclosure 1.]

Minister Dawson to General Sanchez.

Mr. Minister: I have the honor to inform your excellency that I am in receipt of the following telegram from the Secretary of State:

Washington, March 29, 1905.

“Answering your telegram of the 25th, the President is favorable to the modus which the Dominican Republic proposes to adopt for the purpose of keeping the pending treaty alive until the Senate shall have acted upon it and in order to permit of its full execution should it be ratified, while at the same time not prejudicing any rights should the treaty eventually fail. You are instructed that the Government of the United States will acquiesce in the Dominican proposal. The President of the United States will present for nomination by the President of the Dominican Republic men to act in the positions referred to in both the northern and the southern ports, using utmost care to select men of capacity and absolute integrity, with some knowledge of Spanish. All moneys collected from both northern and southern ports not turned over to the Dominican Government in the proportion prescribed in your telegram will be deposited in some New York bank, to be designated by the President of the United States, there to be kept until the Senate has acted; if the action is adverse, the money will be turned over to the Dominican Government; if it is favorable, the money will be distributed among the creditors in proportion to their just claims under the treaty.”

Will you do me the honor of indicating your acceptance or rejection thereof so that I may transmit your answer to my government?

I should also be grateful if you would transmit to me a copy of the action of the Dominican Executive by which it is proposed to put the modus vivendi into operation.

I improve, etc.,

T. C. Dawson.
[Page 366]
[Inclosure 2.—Translation.]

General Sanchez to Minister Dawson.

Mr. Minister: I have the honor to advise your excellency of the receipt of your note dated yesterday, announcing to me that the Government of the United States of America is disposed to accept the modus vivendi that the Dominican Government proposes to adopt for the administration of the custom-house revenues of the Republic until the American Senate shall approve or reject the Dominican-American convention signed on the 7th of February last between both governments.

Our respective governments being in accord as to the basis on which said modus vivendi should rest, according as appears from the telegram received by your excellency and which you have just communicated to me and from the official document published in the Gazette of this date, I take pleasure in notifying your excellency of said accord, inclosing you a copy of the Gazette, in which is inserted the resolution of my government about the matter.

I salute, etc.,

Juan Fco. Sanchez.

[Inclosure 3.—Translation.]

Carlos F. Morales L., constitutional President of the Republic:

For the purpose of protecting all the creditors of the Republic until the Dominican Congress and the Senate of the United States shall act upon the convention signed on the 7th of February of the current year by the representatives of the governments of the Dominican Republic and of the United States of maintaining alive meanwhile the said convention, and of facilitating its full execution if it should be ratified or not prejudicing any right should it be rejected;

The opinion of the council of secretaries of state having been heard,

Resolves: 1. To name a person to receive the revenues of all the custom-houses of the Republic, and, for the better guaranteeing of the latter’s creditors, to leave to the President of the United States the designation of the person who will receive said revenues, the Dominican Executive conferring upon him the office, providing always that the designation shall be satisfactory to it.

2. The sums collected shall be distributed in the following manner:

(a)
Forty-five per cent to be used in administrative expenses;
(b)
The necessary expenses of collection, including the salaries of all employees of the custom-houses.

3. The remainder, as a sum destined to the payment of debts, shall be immediately deposited in a bank in New York which shall be designated by the President of the United States, remaining on deposit for the benefit of all the creditors of the Republic, Dominican as well as foreign, and shall not be withdrawn before the Dominican Congress and the Senate of the United States shall have acted upon the pending convention.

4. If the final action of the Congress of the Dominican Republic and of the Senate of the United States should be favorable to the pending convention, the sums so deposited shall be distributed among the creditors in proportion to their just claims in accordance with said convention. If the action of the said Congress and Senate should be adverse, the said sums shall be at the disposition of the Dominican Government for equitable distribution among the creditors, according to the arrangement that it shall make with them.

5. In order to do effectively what is above provided for, the Executive suspends all payments upon the debts of the Republic of whatever nature during the time that this modus vivendi continues in operation.

§ No document shall be received in payment of customs or port duties, and the total amount of all revenues payable through the custom-houses shall be delivered to the receiver of whom this resolution makes mention.

6. This modus vivendi is not intended to interfere with or change the substantive rights of the creditors, nor to repudiate or modify any of the agreements heretofore made by the government, except in so far as the immediate enforcement of such rights and agreements may be suspended by the general moratorium herein declared.

7. This modus vivendi will take effect from the 1st of April of the current year.


Morales L.

Countersigned:
Federico Velasquez H.,
The Minister of Finance and Commerce.