File No. 839.51/1208b.
The Acting Secretary of State to Minister Sullivan.
Washington, January 26, 1914, 3 p.m.
The Department learns from all sources, official and unofficial, that the present financial distress in Santo Domingo threatens to bring about a virtual suspension of government before the close of the Constitutional Convention to which delegates were chosen at the recent election. The freedom of this election is attested by the fact that the results were favorable to the opponents of the present officials in control whose disposition to deal fairly with all parties was thus effectively shown.
[Page 200]The practical breaking down of government at this time would tend to defeat the objects of the Constitutional Convention and prevent the proper consideration of the important constitutional provisions with which the Convention is to deal.
The United States desires to do everything in its power to avert such a disaster and hope that both Houses of the Dominican Congress will cooperate with the existing Government in carrying out in a spirit of common patriotism a plan of relief. To this end it is hoped that the President of the Dominican Republic will be immediately authorized to adopt the following measures:
- 1.
- To negotiate Dominican bonds now in the hands of the Guaranty Trust Company so as to produce, approximately, $1,200,000, to be expended under supervision and approval of a financial expert hereinafter mentioned, in payment of immediately pressing claims aggregating $742,000 and overdue salaries from June to October, about $400,000. It is understood that this would practically liquidate all current outstanding obligations of the Dominican Government.
- 2.
- To double or at least increase alcohol and tobacco tax and to pay monthly $20,000 thereof to the Guaranty Trust Company, so that the proceeds of the bonds negotiated under clause one will have been returned within five years, or prior to the time when these funds would probably be required for public works. If the Dominican Government would so request, this Department is disposed to arrange that the Receivership collect the alcohol and tobacco tax without any additional expense whatever to the Dominican Government, thus saving costs of collection and increasing the revenues collected. This suggestion emanates solely from a desire to extend all possible aid to the Dominican Government. It must be clearly understood, however, that if the Dominican Government while collecting taxes pledged should default in any two or more consecutive monthly payments it agrees to turn over to the Receiver General of Customs, on request of the State Department, the collection and administration of the alcohol and tobacco taxes, to be administered by the Receivership only until the amounts used from the public works funds shall have been returned.
- 3.
- To invite an American financial expert to come to Santo Domingo to aid the proper officials of that Government in paying outstanding claims, in devising a proper system of public accounting, and in devising and putting into effect additional means of increasing revenues and adjusting expenditures to them with the object of assuring financial order and stability and preventing deficits. Such a measure seems to be necessary to enable the Dominican Government to fulfill the Convention of 1907, which forbids that Government to contract new debts without the approval of the United States. This requirement has been repeatedly disregarded. The salary of the financial expert may be determined at a later date by mutual agreement.
Confer with the President and leading members of the Congress as to the immediate acceptance of this plan.