Papers Relating to the Foreign Relations of the United States, 1918
File No. 439.00/25
The Minister in the Dominican Republic ( Russell) to the Secretary of State
Sir: I have the honor to report that the Dominican Claims Commission of 1917 had registered, at the close of December 31, 1917, 8,748 claims aggregating $14,156,518.66.
Claims for salary, pensions, retired pay, etc., which had not passed from the hands of the original creditors amounted to $1,184,764.50.
The commission is now about to proceed with the adjudication of the claims, but prefers to make no awards until some means of payment has been determined upon.
I am enclosing herewith copies and translations of the report of the commission to the Military Government containing its recommendations in regard to the liquidation of the awards.
I have [etc.]
The Dominican Claims Commission to the Military Government
1. As a basis for renewing its recommendation regarding the liquidation of the awards to be made by the Dominican Claims Commission of 1917, submitted under date of August 11, 1917, and to which reference is respectfully invited, the commission respectfully submits the following report:
2. Claims presented.—Under the terms of the Executive Order No. 65 the period for presentation of claims expired on December 31, 1917, on which date there had been presented a total of 8,748 claims representing a total face value of $14,156,518.66. There will be a few other claims to add to this not yet formally presented but of which notice was received prior to the expiration of the time limit. The total face value of claims presented will also be increased due to the fact that some of the claims as presented are for indeterminate amounts to be ascertained later.
3. Nature of claims.—For convenient reference, the claims as presented may be classified under five general headings, as follows:
- (a)
- Salaries and similar budget items, including pensions, superannuations, endowments, municipal subsidies, wages, costs of material and lighting;
- (b)
- Supplies (suministros), including balances due in accounts current to commercial firms in the United States and elsewhere;
- (c)
- Damages and injuries;
- (d)
- Banks and bankers and amounts borrowed by the Government from other sources;
- (e)
- Stamped paper, stamps, and postage stamps which were given as a guarantee for loans or sold outright at a discount.
4. In its preliminary work the commission has not attempted to register the claims as presented according to that classification, and no attempt has been made to ascertain the total amount represented by each class. It is the intention of the commission to classify and register them under the appropriate heading at the time the awards are made, so that the final report will show the totals of each class.
5. Preferred claims.—In discussing this matter with the head of the Military Government in the latter part of December, the commission informally expressed the opinion that it would be desirable, if possible, to give preference to and arrange prompt payment of the claims for salaries and the other items included in subparagraph (a) of the preceding paragraph 3 which are still in the hands of the original creditors. A preliminary examination of the claims presented under that heading shows a total of $1,184,764.50, face value, of such claims not transferred, that is, still in the hands of the original creditors. In this connection, it is stated that there are included in that amount a great many claims presented by officers and enlisted men of military organizations, which are of doubtful validity, and it appears safe to assume that the total awards of such claims will not be in excess of $1,000,000. The commission now makes formal recommendation that that class of claims be accorded preferential treatment and that arrangements be made for the prompt payment of same in cash as soon as the awards are made by the commission.
6. Probable amounts of awards.—The commission expressed the opinion in paragraph 3 of its recommendation of August 11, 1917, that in all probability all of the claims presented could be equitably liquidated within a total of not to exceed $5,000,000. In view of the amount of salary claims still in the hands of original creditors, it now appears advisable to estimate that the total of all awards will not exceed $6,000,000. This opinion is based upon the act, as disclosed by preliminary examinations, that a great many of the claims, particularly of classes (b), (c), (d), and (e), are not well founded and can not be substantiated by the claimants. However, in providing for the payment of the awards it would be better to overestimate rather than underestimate the probable amount required with the understanding that only such part of the amount authorized as may be necessary will be utilized.
7. Method of payment.—It is noted that the budget which became effective January 1, 1918, includes the following items:
- (a)
- A reserve fund represented by the balance on hand, December 31, 1917, of approximately $1,600,000.
- (b)
- A sum of $375,000 is shown as segregated for probable use in the service of a new loan, understood to refer to a loan for the purpose of paying the awards of the Claims Commission.
- (c)
- Balance of estimated income for the year 1918, not appropriated, $210,466.73.
The amount set aside for the service of a new loan and the unappropriated balance therefore represent an available total of $585,466.73, in addition to the reserve fund of $1,600,000.
8. From this it is apparent that the Government is in position, if it so desires, to pay in cash all of the untransferred salary claims, including the similar items above mentioned and to provide a sinking fund for interest and amortization of a loan or bond issue in the principal amount of not to exceed $5,000,000 for the payment of all other awards.
9. Recommendation.—For obvious reasons it is advisable and desirable that a definite arrangement be made as soon as possible for the payment of the awards to be made by the commission. The commission is now in position to adjudicate the claims and to make the awards but, for equally obvious reasons, it considers it advisable not to make any awards until the Government has made arrangement for the payment of same. As hereinbefore stated, the commission formally recommends the payment in cash of untransferred salary and similar claims, and with that exception renews its recommendation in paragraph 7 of letter dated August 11, 1917, as follows:
That the Government arrange for the issuance of bonds in the principal amount of not to exceed $5,000,000, or such part thereof as may be necessary to be applied to the liquidation of awards upon claims to be approved by the commission. Such bonds to be in coupon form, not registered, to bear interest at the rate of 5 per cent per annum, interest payable [Page 373] semiannually on January 1, and July 1, the bonds to be dated and draw interest from January 1, 1918, and to mature on January 1, 1938, but to be redeemable at par on any first day of January beginning January 1, 1919, in such amounts as the funds available in the sinking fund provided for the purpose will permit, the bonds to be redeemed to be drawn by lot, and when so redeemed, to be permanently retired and canceled; the payments into the sinking fund for the purpose of amortization to be not less than 5 per cent of the principal amount each year.
10. The only change suggested in that recommendation is that the bonds should be redeemable on each interest date, that is semiannually instead of annually, and that instead of being drawn by lot, they be redeemed in their sequence by series, retiring the smaller denominations first and the larger ones last.
11. Consent of the United States to the proposed plan.— The refunding of the heretofore unacknowledged floating indebtedness of the Dominican Republic, and the issuance of bonds in satisfaction of the awards to be made by the Dominican Claims Commission of 1917, constitutes, in the opinion of the commission, an increase of the public debt of the Dominican Republic, within the meaning of the terms of the American-Dominican convention, of February 8, 1907, requiring an agreement between the Dominican Government and the United States as a condition precedent to the increase of the public debt and to the validity thereof.
The commission respectfully suggests that steps be taken to secure the express and unqualified consent of the proper authorities of the United States to the increase of the public debt of the Dominican Republic, in the manner described and for the purposes specified in this preliminary report and in the proposed Executive order accompanying same.
The commission further recommends that the Secretary of State of the United States be respectfully requested to give such instructions and to grant such authorization and powers as may be necessary or convenient, to the General Receiver of Dominican Customs, to enable the said official, to perform such duties as may be assigned to him under the terms of the proposed Executive order. In this connection your attention is invited to the previous recommendation of the commission, in paragraph 6 of the report of August 11, 1917.
12. For the consideration of the Military Governor there is attached hereto a draft of a proposed Executive order, which the commission believes will provide for the plan of payment as recommended.
Respectfully submitted,
- J. H. Edwards, President
- Martin Travieso, jr.
- M. de J. Troncoso de la Concha
- J. T. Bootes
- Emilio C. Joubert
John Brewer
Secretary