The Dominican Chargé to the Department of State.
New York , June 1, 1905 .
memorandum in the matter of the claims of the agents of the foreign bondholders of santo domingo for payment of $10,000 annually for services.
Claim is made by the agents of foreign bondholders to be paid by the Government of the Dominican Republic the sum of $10,000 per annum for services in representing their principals in Santo Domingo.
Under an agreement entitled “Belgian Contract, 1901,” made by Dr. Henriquez y Carvajal, June 3, 1901, on behalf of Santo Domingo with foreign bondholders, it was provided that a certain amount should be paid annually by the government toward the outstanding bonded indebtedness, held mainly in Belgium and France, the amount [Page 376] to be not less than $300,000 in gold annually, in equal monthly installments of $25,000 each. In the fourth article of the agreement it was further provided that these bondholders should be represented by a general agent, and in the eleventh article it was further provided that “the expenses of the representation of the bondholders provided for in article 4 shall not exceed $20,000 in gold per year; $10,000 shall be paid by the government in twelve monthly installments, and in accordance with the rules already provided in article 3. The balance shall be taken from sums which are applicable to the service of the debt.”
By recent resolution of the Dominican Government of March 31, 1905, with the consent of the United States of America, control of the finances has been placed temporarily in the hands of an agent appointed by the United States with the sanction of the Dominican Government, 55 per cent of the customs revenues passing to such agent and 45 per cent only being reserved for the conduct of the affairs of the government. This 55 per cent has been set aside as a fund out of which, after ratification of the treaty now pending before the Senate of the United States and the Congress of Santo Domingo, all creditors shall be paid in the manner to be provided.
Since March 31, 1905, no moneys have been paid by the Dominican Government to the representatives of the foreign bondholders, and as a matter of fact no moneys are available for that purpose. The contract of June, 1901, is therefore for the present” suspended,” with the possibility of never coming into effect again. The bondholders, as well as the agents, undoubtedly are aware of all that has been arranged between the Government of the United States of America and the Dominican Republic. There is no fund out of which to pay $25,000 each month, and in fact it was the purpose of the contracting parties that those payments should cease. There being no moneys to collect and transmit, it would seem to follow as a natural consequence that there were no services for the agents of the foreign bondholders to perform.
The claim of the agents to be paid at the rate of $10,000 a year is both unreasonable and unjust, and should not even be granted to the extent of having that payment allowed out of the 55 per cent of the revenues to be retained by the aforesaid agent appointed by the United States. It is clearly a secondary claim, based and dependent for its force upon the claim of the creditors represented. When payment of the claims of the main creditors is suspended, it does not seem unreasonable or improper that the agents’ rights to compensation should fall, at least until payments are resumed under the terms of the contract of June, 1901.
The Government of Santo Domingo is very anxious to avoid any friction with the foreign bondholders or their respective governments, and would, if the Government of the United States finds it convenient, concede the payment of the $10,000 out of the 55 per cent of the revenues now controlled by its agent; but the Dominican Government can not agree to the payment of this $10,000 out of its 45 per cent of the revenues, as this amount at present is insufficient to meet the needs and expenditures of the Government.