File No. 639.003/33.

The Acting Secretary of State to the American Chargé d’Affaires.

No. 69.]

Sir: The Department has received Mr. Russell’s No. 68 of July 15, 1911, and his No. 79 and No. 80, both of August 5, 1911, in regard to the municipal surtax levied on imports in the commune of Santo Domingo and the stamp tax which in part applies to articles of import.

The Department has considered the report upon the working of the municipal surtax made in Mr. Russell’s No. 68, of July 15, and under the circumstances therein set forth has decided to adopt the suggestion that further specific complaint against the recargo municipal be suspended for the present at any rate.

In this connection, however, you will understand that the Department desires you to continue your efforts to effect the abolition of the discrimination against American soap, referred to in Mr. Russell’s No. 80, of August 5, should the matter still be pending. You will, of course, also continue to study further complaints which may be made of this enactment and the stamp-tax law, and will report to the Department thereon.

The Department also is convinced of the imperative necessity of further determined insistence on the principle involved, namely, the right of this Government under article 3 of the convention of 1907 to have its consent a prerequisite to every modification of the Dominican [Page 150] import duties during the life of the convention, and desires that its position in this regard be tactfully but emphatically laid before the Dominican Government to the end that, in future when further modifications of the import duties are contemplated the Dominican, authorities will submit the proposed changes for the approval and consent of this Government. You are accordingly instructed to reply to the note of the minister for foreign affairs, dated August 3, transmitted to the Department with your No. 79, of August 5, in the sense of the following:

The Department of State has instructed you to inform the Dominican Government that, after due consideration of the arguments advanced in this and previous similar representations, it continues firmly convinced of the rightfulness of its contention that the stamp and municipal taxes lately enacted and approved by the Dominican Congress effected changes in the Dominican import duties in the sense of article 3 of the convention of February 8, 1907, and that the previous consent and approval of this Government should have been solicited before the laws were put into operation.

Article 3 of the convention in its language, “a like agreement shall be necessary to modify the import duties,” clearly comprehends all import duties, of whatever nature. In view of this general and all-embracing description of the duties designated, it is difficult to perceive how the scope of the article can be restricted to apply to the specific matter of the duties established in the formal customs tariff. Accordingly the recargo municipal and the portion of the stamp-tax law applying to imports seem as clearly within the language of article 3 as the customs tariff itself. Irrespective of their names, these taxes are by design and in effect “import duties,” supplemental to the formal tariff duties. Potentially, if not in all cases actually, they are of as much importance to the Dominican commerce as the tariff schedule itself. To declare that they are not included within the purview of article 3 is to put a construction upon that article which makes it meaningless and of no effect. The mere fact that the taxes were not specifically mentioned in article 3, though they existed prior to the convention, would seem to have no more significance than the fact that the existing customs tariff was not specifically mentioned.

In reply to the suggestion that the recargo municipal, being a purely municipal matter, is not comprehended within the national engagement, it would seem necessary simply to refer to the condition which existed at the time the convention was made and which now persists, namely, that the tax derives its validity and binding effect wholly from the will and sanction of the nation’s Congress.

Finally, in reply to the suggestion that the previous consent of this Government to a modification of the import duties is to be sought only in the event that a proposed modification, when put into operation, shall cause the revenue from the duties to be reduced to $2,000,000, it must be stated that such a construction seems impossible of application to the plain language of the article under discussion. Both the arrangement of the article and its context as a whole would seem to establish beyond possibility of controversy that the condition referred to, namely,

That the Dominican Executive demonstrate and that the President of the United States recognize that, on the basis of exportations and importations to the like amount and the like character during the two years preceding that in [Page 151] which it is desired to make such modification, the total net customs receipts would at such altered rates of duties have been for each of such two years in excess of the sum of $2,000,000, United States gold,

is simply a condition precedent to an assent by the United States to any actual modification of the duties. The language immediately preceding the condition, namely,

it being an indispensable condition for the modification of such duties,

would seem absolutely to preclude the possibility of construing it as a condition precedent to the obligation of the Dominican Government to submit, and to the right the United States to pass upon, any and every proposed modification of the import duties.

It is upon this particular right to be notified of the proposed modification of the import duties and to have its assent obtained to such modification, a right clearly and unmistakably given by the convention entered into by the two Governments that the Government of the United States must insist. Irrespective of the actual consequences of the present or possible future modifications, the right of the United States in the premises is potentially of such vital importance that it would be gravely remiss in the performance of its solemn duties under the convention were it to concede it away.

In regard to the recent modification effected by the recargo municipal and the estampilla law, after careful investigation and continued study of the effect of these laws, the Government of the United States is of the opinion that while the recargo municipal especially seems to have been in some respects ill-advised and to have been an obstacle to the success of the new customs tariff, its defects do not seem, as the Department is at present informed, sufficiently serious to render imperative at this time any further changes than those already made or now contemplated. Accordingly, the Department will now make no specific objection, but will content itself simply with having made clear its view as to the rights of this Government under the convention, confident that in future should further modification of the Dominican import duties be contemplated, as a result of the present discussion and explanation, the Government of the Dominican Republic will fulfill the obligations imposed by the convention and will notify and consult with the representative of the Government of the United States.

I am, etc.,

Alvey A. Adee.