The Department of State to the Dominican Legation.
Washington , June 13, 1905 .
The Department of State has received the memorandum of the Dominican legation, dated June 1, 1905, in regard to the claim of the agents of the foreign bondholders of the Dominican Republic for the payment of the sum of $10,000 annually for their services.
As respects this claim, it seems to the President, first, that, pending the time when there is no service being rendered in the matter of collections by the agents of the foreign bondholders, it is properly open to question whether the $10,000 is payable at all. The question is not raised by the governments themselves, but by the agents of the private corporations who, under a previous arrangement, were to make certain collections.
On the 1st day of April last the so-called modus vivendi between the United States and the Republic of Santo Domingo went into force. Its terms are found in the telegram of the President of the United States to Minister Dawson, and the acceptance thereof, with certain additions, by President Morales, of Santo Domingo, subsequently acquiesced in by the President of the United States. This modus vivendi has been in operation and officers have been acting under it now for more than two months, with the knowledge of all the foreign governments, and no objection whatever has been raised to its being carried out. It is to be assumed, therefore, that any previous contract whose terms were in conflict with this was, by either tacit or express agreement, suspended in operation, and the modus vivendi took the place, temporarily or permanently, as the case maybe, of the suspended agreement. Under the modus vivendi 55 per cent of the revenues were to be collected and deposited in the City National Bank of New York, less the cost of collection; the fund to await the action of the Senate of the United States in the confirmation of the pending treaty, and then to be distributed as either the treaty or, if the treaty was not confirmed, as equity may require. If any equitable claim or lien arises by reason of the previous arrangement for the payment of $10,000 a year to agents of foreign bondholders for their services of agency, representation, and collection, the adjustment of such claims must necessarily await the disposition of the fund in the New York bank, and can not be taken out of the 45 per cent needed by the Government of President Morales and expressly awarded to that government for its running expenses under the modus vivendi.