Minister Dawson to the Secretary of State.

[Extracts.]
No. 213.]

Sir: Referring to the subject of my Nos. 205 and 208, of the 17th and 29th ultimo, the collection of the sugar-production tax, I have the honor to inclose herewith a copy and translation of a note from [Page 613]the minister of foreign affairs acknowledging the receipt of my note of January 29.

I also confirm your telegram, as follows:

Washington, January 31, 1906.

[Referring to] your [dispatch] No. 205. Interested parties here represent that Dominican Government requires payment and proposes seizure of sugar in violation of promise, reported in your dispatch of January 5. Urge that this should not be done.

Root.

This came on the evening of its date, and the next morning I called on the minister of foreign affairs. His Government had taken no action in violation of its promise and proposed to take none.

[At his suggestion] I telegraphed to one of the proprietors of the Santa Fe estate, who is also the manager of the dock company, as follows:

Santo Domingo, February 1, 1906.

Have representatives Government taken any action lately about embargoing sugar? Answer.

Dawson.

To this I received the following reply:

San Pedro de Macoris, February 1, 1906.

Not up to this afternoon. Shipments going on without interruption.

Ross.

In the course of my conversation in the morning with the ministers of foreign affairs and finance the former had begged me to make as clear as possible to my Government the attitude of his own and its views of the facts.

The following memorandum of his statement has been submitted to him and the minister of finance, and they find it correct:

The minister of finance, finding this sugar-tax law on the statute books when he took office, thinks, and has always thought, that it is his duty to enforce it, without prejudice, however, to the legal rights of the producers to attack its constitutionality in the courts. The usual method of enforcing the collection of taxes is by a seizure and sale of the taxed article, a process practically equivalent to an attachment under the common law, and called in civil law an “embargo.” In February, 1905, he ordered an embargo of sugars belonging to the “Porvenir” estate, but at the request of the American Legation ordered the process discontinued in order to give the State Department an opportunity to decide whether it wished to intervene.

In May he proposed to the united planters of Macoris to bring a test case against any one of them to determine once for all the validity of the tax. In said suit there would be no embargo, but the planters were to give security for their compliance with a decision by executing obligations payable in the event that the suit went against them. This proposition was accepted by some of the local sugar estate managers ad referendum, but was finally rejected. Shortly subsequently the Government brought suits for the recovery of the tax against the Cristobal Colon, the Santa Fe, the Porvenir and Consulo estates. In these suits no embargo was levied. W. L. Bass, the proprietor of the Consuelo, answered to the merits. The other three defendants plead in abatement, contending that as foreign [Page 614]residents they could not be served with process in this country. The lower court dismissed the latter three suits, and the Government promptly appealed. The supreme court in October reversed the lower court as to the Porvenir and Sante Fe, holding that being corporations with their principal place of business here they could be served in this country. As to the Cristobal Colon the decision was affirmed because the proprietors are natural persons residing abroad. The minister of finance is not advised that new suits have been begun against the Porvenir, Sante Fe, and Cristobol Colon.

Meanwhile the merits were being argued in the Bass case and about November the lower court gave judgment against him. Before he began an appeal the sugar exporting season came on and he and the other producers prepared to make shipments without paying the tax. In December the minister of finance issued an administrative order prohibiting the exportation of sugars which had not paid. Bass then appealed from the decision of the lower court and the minister of finance suspended the order prohibiting exportations.

No subsequent steps to enforce the tax, beyond a preparation of the case for the supreme court, have been taken by this Government and none are in contemplation. If the decision is against Bass the Government proposes to enforce collection against him and the other planters by all legal means, including embargo, and thinks that the American Government ought not to ask it to refrain from using all remedies and processes given by Dominican law. Further, if any or all other planters now declare their intention not to be bound by the Bass case and to compel the beginning of separate suits against them, this Government suggests that it would not be unjust for it immediately to begin suits aided by the embargo, but it has no immediate intention of so doing and in no event will bring such suits until after the planters have had ample opportunity to indicate their attitude toward the Bass suit.

I have, etc.,

T. C. Dawson.