File No. 639.003/32.


No. 79.]

Sir: Referring to the department’s No. 53 of June 15, and to my No. 64 of July 8, I have the honor to inclose you herewith copies and translations of the reply of the minister for foreign affairs to my note forwarding a memorandum1 reiterating and reaffirming the views of the Government of the United States as to the proper interpretation of the convention of February 8, 1907, in regard to the law of the Dominican Republic providing for the imposition of a stamp tax on foreign and domestic letters of exchange, etc., and a resolution of the Dominican Congress putting into operation a municipal surtax upon articles of import levied by the commune of Santo Domingo.

I have, etc.,

William W. Russell.

The Minister for Foreign Affairs to the American Minister.

Book B. No. 239.]

Mr. Minister: I have the honor to acknowledge the receipt of your excellency’s courteous communication of July 7, No. 59, confirming the views contained in the memorandum presented to my predecessor on April 11 last, in regard to the law of July Z, 1910, creating the stamp tax, and the resolution of Congress on the 8th of the same month approving and putting into effect a municipal surtax on certain articles of import established by the municipality of Santo Domingo.

I have examined carefully the points set forth in the above-mentioned memorandum, a copy of which your excellency was pleased to forward for that purpose, and I do not find in them a foundation for the right which the United States thinks it has to criticize said taxes from the viewpoint of article 3 of the Dominican-American convention of February 8, 1907.

[Page 148]

The tax comprised wholly under the law of July 2, 1910, is undoubtedly a particular and internal tax, whose nature and collection are completely different from the nature and collection of those provided for by article 3, which your excellency cites, and consequently not within the reach of this article which refers solely to duties purely from customhouses. A proof of this is that the tariff schedule, in spite of that law, has remained intact.

To have the stamp taxes included under the provisions of article 3 it was necessary to have been so specifically stated, which could have been done had it been the common intention of the high contracting parties, as the law referred to is nothing more than a reproduction of the law of 1906 with some slight changes, which latter law is anterior to the convention.

The position taken by the Government of your excellency leads to the conclusion that the Dominican Government can not in any case, or in any form, establish of its own free will taxes on articles from abroad, which was not the intention of the convention, nor could it have been, as there would have thereby been affected one of the most essential rights of the sovereignty of the Dominican nation.

The reasons set forth above are applicable to the municipal surtax alluded to, and of which it must be said in addition that it is not a creation of the nation, nor is it collected in its name or for its benefit. As a tax on consumption and for local uses it is the work of the municipality of Santo Domingo guaranteed by the constitution. The tax is collected in the name of and for the benefit of said municipality and is applied exclusively to communal uses, and consequently it is not confounded with, nor can it be, as far as the convention is concerned, with national revenues which are the only ones capable of being affected by national engagements.

So that: supposing the impossible case that the municipal tax is customs tariff legislation, and that it was really created by the Nation for its benefit, neither in that case is the Government of your excellency right.

It is true that article 3 provides that for any modification of the import duties of the Republic there must be a previous agreement between the Dominican Government and the United States; but the same article specifies the true reach of this provision, explaining clearly the sense in which said modifications must be understood. The letter and spirit of the convention demonstrate that said agreement is only to be had in case the modification of import duties causes them to be reduced to $2,000,000.

As the principal object of the convention is to guarantee with the customs revenues the payment of the 5 per cent bonds, it was natural that the United States should concern itself that said revenues shoul not fall below a definite sum, and for this reason the provisions of article 3 were established; but there is no rational explanation for that provision when a modification leaves the revenues intact in general or tends to augment them.

On the other hand, the municipal tax referred to is so small that there is no danger that it will have any influence on the customs revenues, as proved by the fact that far from being diminished said revenues have increased, giving more guarantee, in consequence, for the fulfillment of the obligations of the nation.

The position of my Government then is in direct line with the provisions of the oft referred-to article 3. And even if there should be any ambiguity or obscurity in said article the interpretation would have to be made in conformity to that position which is that which is in harmony with the right of sovereignty of the Dominican Nation.

My Government, the best judge on the subject, is of the opinion that the legislation referred to by your excellency, far from being prejudicial to the best interests of the Republic, is a factor for good, because with an increase in the revenues, no damages of any sort being occasioned, the prosperity of the country is increased; said revenues being applied with greater zeal and honesty to works of common progress, as your excellency will see on comparing the present state of the Republic with that of former years.

My Government hopes that your excellency, with your usual high spirit of justice, will know how to appreciate in their just value the arguments in favor of the Dominican Government in this case, and consequently will not insist upon a discussion which as far as the United States is concerned is at least lacking in interest.

The occasion is favorable for renewing, etc.

J. M. Cabral y Báez.
  1. Not printed.