839.51/2192
The Military Governor of Santo Domingo (Snowden) to the Secretary of the Navy (Denby)35
1. Referring to references, copies of which are appended,36 I have to renew my request for the consent of the United States Government for the Military Government to contract a loan of five million dollars ($5,000,000.00) on behalf of the Dominican Republic for the completion of the public works still unfinished by this government.
2. These works should be completed before the turning over of the government of the country to the Dominican people takes place, as projected in the Proclamation of December 23, 1920. Attention is invited to the loss of prestige and the unfortunate showing made by the uncompleted condition of these works, which are so necessary to the well-being of the Dominican people, notably the main public road across the island, and other main roads, harbor improvements, etc.
3. The rather sudden decision to prepare to turn over the government to the natives finds the Military Government with these works to be completed before the turning over process can be properly consummated.
4. The Department of State is now awaiting the submission of this projected loan to the Consulting Commission recently appointed under the provisions of the Proclamation of December 23, 1920, before arriving at a final decision in the premises.
5. Attention is invited to a confidential letter from the acting technical adviser to the Consulting Commission, copy enclosed marked (a), showing that it is not advisable to lay this question before the commission because for political reasons it will surely refuse [Page 859] its approval. The Commission has besides published in the local press a statement that it has no cognizance of the loan and would not approve it in any case, translation of statement enclosed marked (b).
6. I beg, therefore, to renew my request for the consent of the United States Government to the increase of the public debt of the Dominican Republic in the amount of five million dollars, pursuant to the provisions of the American–Dominican Convention of 1907, providing for the assistance of the United States in the collection and application of the customs revenues of the Dominican Republic.
7. Attention is invited to the fact that this loan would be amortized and paid from the current revenues of the Government and would not interfere with the payment of the loans of 1908 or 1918,37 which by existing provisions will be paid off, the first by 1924 instead of 1958, or 34 years before due, and the second (of 1918), due in 1938, will be paid off by December 31, 1922, or 16 years before due.
8. The tables contained in reference (c) have been brought to date in accordance with the actual revenue for 1920 and the reduction budget placed in effect and, as revised, are given below.
Public Debt
$20,000,000 customs administration loan of 1908 due 1958, as of january 31, 1921
| Bonds issued | $20,000,000.00 | |
| Bonds purchased and held “alive” in sinking fund | $10,678,250.00 | |
| Bonds in Depositary Account | 49,500.00 | |
| Cash balance in Sinking Fund January 31, 1921 | 274,014.08 | |
| 11,001,764.08 | ||
| Balance required to redeem issue | $8,998,235.92 |
$4,161,300 bond issue of 1918 due in 1938, as of feb. 28, 1921
| Bonds issued | $4,161,300.00 |
| Bonds redeemed to Feb. 28, 1921 | 1,628,850.00 |
| Balance | $2,532,450.00 |
| Cash in Sinking Fund—Feb. 28, 1921 | 682,767.92 |
| Balance required to redeem issue | $1,849,682.08 |
recapitulation of debt
| Balance required, 1908 Bond Issue | $8,998,235.92 |
| Balance required, 1918 Bond Issue | 1,849,682.08 |
| Total Public Debt | $10,847,918.00 |
9. The following tables give the estimated amortization for the outstanding issues and are based on customs receipts for 1921 of $4,500,000 ($1,700,000 less than 1920) and on receipts for 1922 and [Page 860] future years of $6,200,000 (equal to receipts of 1920) which estimates will be seen to be conservative and likely to be exceeded.
$20,000,000 Bond Issue of 1908 Due 1958
| Assets in Sinking Fund, January 31, 1920 | $11,001,764.08 |
| Balance outstanding | 8,998,235.92 |
| Total | $20,000,000.00 |
estimated amortization
| Feb. 1, 1921, Interest on $10,678,000 Bonds in Sinking Fund “alive” | $266,950.00 |
| Aug. 1, 1921, Interest on $10,945,000 Bonds in Sinking Fund “alive” | 273,625.00 |
| From 1921 Customs Revenues of $4,500,000 January to December | 950,000.00 |
| Feb. 1, 1922, Interest on $12,168,000 Bonds in Sinking Fund “alive” | 304,200.00 |
| August 1, 1922, Interest on $12,473,000 Bonds in Sinking Fund “alive” | 311,825.00 |
| From 1922 Customs Revenues of $6,200,000 January to December | 1,800,000.00 |
| Feb. 1, 1923, Interest on $14,584,000 Bonds in Sinking Fund “alive” | 364,600.00 |
| Aug. 1, 1923, Interest on $14,948,000 Bonds in Sinking Fund “alive” | 373,700.00 |
| From 1923 Customs Revenues of $6,200,000 January to December | 1,800,000.00 |
| Feb. 1, 1924, Interest on $17,121,000 Bonds in Sinking Fund “alive” | 428,025.00 |
| Aug. 1, 1924, Interest on $17,549,000 Bonds in Sinking Fund “alive” | 438,725.00 |
| From 1924 Customs Revenues of $6,200,000 January to December | 1,800,000.00 |
| Total | $9,111,650.00 |
or $113,415.00 more than required. Since the bonds are being purchased for the Sinking Fund in the open market at prices in the neighborhood of seventy-eight (78) it will be seen that the figures given above will actually represent a much greater value when converted from cash into bonds and that therefore, naming December 31, 1924, as the final redemption date of this loan is conservative.
$4,161,300 Bond Issue of 1918 Due 1938
| Balance outstanding on Mar. 1, 1921 | $1,849,682.08 |
estimated amortization
| From 1921 Customs Revenues of $4,500,000 Amortization provided for by Executive Order 19338 by drawing | $208,000.00 |
| From 1921 Customs Revenues extra amortization provided for by Executive Order 27239—by purchase in open market | 450,000.00 |
| From 1922 Customs Revenues of $6,200,000 amortization provided for by Executive Order 193 by drawing | 208,000.00 |
| From 1922 Customs Revenues extra amortization provided for by Executive Order 272—purchase in open market | 960,000.00 |
| Total | $1,826,000.00 |
In view of the fact that purchases in the open market are being made at prices below par it is evident that the entire issue will be redeemed by December 31, 1922.
10. Revenue released by final amortization of above loans.
December 31, 1922—$1,168,000 per annum (neglecting interest) by final amortization of Bond Issue of 1918.
December 31, 1924—$2,800,000 per annum (including interest charge of $1,000,000 per annum) by final redemption of Bond Issue of 1908.
It is therefore still practicable to provide for the amortization of the proposed serial bond issue as indicated in reference (c) which was as follows:
| December 31, 1923 | $1,000,000.00 |
| December 31, 1924 | 1,000,000.00 |
| December 31, 1925 | 3,000,000.00 |
11. There follows a statement showing the actual revenue collected during 1920 and a very conservative statement of the estimated income for 1921 and the budget appropriations for 1921. These have been reduced from the figures given in reference (c) in order to make allowance for present economic conditions and the unsettled condition brought about by the Proclamation of December 23, 1920. It is confidently expected that the receipts will exceed those shown. It will be noted that the first estimate for the tax on imports and exports has been reduced by two million dollars and that the item of $600,000 to be derived from the tax on the income of corporations and commercial associations has been eliminated since it is not now considered wise to place this new tax in effect at the present time.
| Source | Actual Income |
| Import, export duties; Port Charges | $6,273,741.24 |
| Consular Fees | 150,536.30 |
| Wharfage Charges | 244,145.10 |
| Internal Revenue on Alcohol Production | 40 874,478.36 |
| Internal Revenue on Documents | 148,768.36 |
| Internal Revenue on Domestic Production | 452,864.86 |
| Postage stamps | 97,508.38 |
| Telegraph, Telephone & Radiography | 108,989.08 |
| Rentals | 2,816.64 |
| Public Sales | 4,028.52 |
| Registry Fees | 42,203.77 |
| Post Office Boes | 5,163.65 |
| Trade Marks | 2,385.00 |
| Interest on Deposits, etc | 99,026.21 |
| Road Tax, Executive Order No. 101 | 37,218.31 |
| Miscellaneous Receipts | 114,535.96 |
| Fidelity Fund | **8,428.17 |
| Fines | 28,737.10 |
| Surcharges and Transfers of Licenses | 8,450.79 |
| Centeal Dominican Railway | 53,032.49 |
| License Tax | 743,181.76 |
| Property Tax | 1,011,002.09 |
| Total | $10,494,386.35 |
Estimated Receipts 1921 (Revised)
| Source | Actual Income |
| Import, Export Duties; Port Charges | $4,500,000.00 |
| Consular Fees | 150,000.00 |
| Wharfage Charges | 200,000.00 |
| Internal Revenue on Alcohol Production | 800,000.00 |
| Internal Revenue on Documents | 140,000.00 |
| Internal Revenue on Domestic Production | 450,000.00 |
| Postage Stamps | 100,000.00 |
| Telegraph, Telephone and Radiograph | 100,000.00 |
| Rentals | 2,800.00 |
| Public Sales | 4,000.00 |
| Registration Fees | 42,000.00 |
| Post Office Boxes | 5,100.00 |
| Trade Marks | 2,300.00 |
| Interest on Deposits, etc | 40,000.00 |
| Road Tax | 37,000.00 |
| Miscellaneous Receipts | 7,500.00 |
| Fidelity Fund | 5,000.00 |
| Fines | 28,000.00 |
| Surchaages and Transfer of Licenses | 8,000.00 |
| Dominican Central Railway | |
| License Tax | 740,000.00 |
| Property Tax | 1,100,000.00 |
| Total | $8,461,700.00 |
Deductions for Debt Chargés, etc.
| Interest and Amortization $20,000,000 Loan | $1,950,000.00 |
| Interest and Amortization 1918 Bonds | 748,000.00 |
| 5% allowed by Dominican-American Convention to Receivership of Customs for collection expenses | 225,000.00 |
| Personal Fees as per Law of Customs & Ports | 30,000.00 |
| 60% of funds collected in accordance with Road Law for special work on roads | 22,200.00 |
| 40% of funds collected in accordance with Road Law for special work on Municipal Roads | 14,800.00 |
| Art. X, Law of Customs on Imports and Exports | 3,000.00 |
| For probable reimbursements of customs duties paid in excess | 7,500.00 |
| For reimbursements of Internal Revenue paid in excess | 7,500.00 |
| For reimbursement of duty on goods of Military Forces | 3,500.00 |
| For Municipalities as per property Tax Law | 580,000.00 |
| For Municipalities | 125,000.00 |
| Reserve for Public Works | 700,000.00 |
| Reserve for interest on new $5,000,000 Bound Issue | 400,000.00 |
| Total | $4,816,500.00 |
| Total Receipts | $8,461,700.00 |
| Total Expenditures | 4,816,500.00 |
| Balance | $3,645,200.00 |
Reduction Budget 1921
| Legislative Power | $3,400.00 |
| Executive Power | 100,000.00 |
| Judical Power | 550,000.00 |
| Interior and Police | 675,000.00 |
| Health and Charities | 100,000.00 |
| Froeign Relations | 67,500.00 |
| Finance and Commerce | 685,840.00 |
| Agriculture and Immigration | 130,000.00 |
| Development and Communications | 480,000.00 |
| Justice and Public Instruction | 850,000.00 |
| Total | $3,641,740.00 |
| Available | $3,645,200.00 |
| Reduction Budget 1921 | 3,641,740.00 |
| Surplus | $3,460.00 |
Note: It should be noted that under “Deductions, etc.,” appear deductions to provide for interest on a $5,000,000 Bond Issue and a reserve for Public Works sufficient to cover contract payments on works under private contract and certain equipment, the purchase of which was contracted for in 1920.
12. The amount of the loan now proposed, $5,000,000, would be expended within a twelve months’ period and would permit all projects, upon which work has been commenced, to be finished.
13. Attention is invited to the fact that the program does not extend to future needs. All projects listed thereon are urgently needed at the present time. Commercial, political and military reasons urge the completion of all roads and port improvements. The present lack of communication has long been a barrier to progress and the separation of the northern and southern sections of the Island and the sectional feeling caused thereby has been the underlying cause of many revolutions.
14. The politicians oppose the loan principally for the reason that they are unalterably opposed to anything that will add to the prestige of the United States with the people. If the public works be completed, our occupation of Santo Domingo will be justified in the minds of the Dominican people, the prestige of the United States enhanced, and a lasting monument to the friendly occupation of the Republic by the United States left behind us—something that cannot be dissipated in a few months, as perhaps can other accomplishments of the occupation which are less tangible.
15. It is believed that a brief, practical consideration of the situation will convince the State Department of the necessity of insuring without delay the completion of the public works. The need of these works in Santo Domingo is extreme. If abandoned, the main highway designed to cross the Island will remain uncompleted—only 3½ kilometers remain to be cleared of forest, 17½ kilometers still to be graded, and approximately 42 kilometers to have the macadam top applied. Roads leading only into the tropical forest would be subject to rapid deterioration from lack of use, buildings partially completed are subject to rapid deterioration in this climate. Approximately $6,000,000 has been invested in these partially completed works—$3,000,000 of which was appropriated from the “trust funds for public works” deposited in the Guaranty Trust Company, and $3,000,000 from the savings made by the Military Government on Administration expenses. To stop or further delay the completion of the works would mean that in a comparatively short time the value of the construction thus far accomplished would be entirety lost.
[Page 864]16. The question of Dominican politics should not be allowed to enter into the decision of this matter as experience has shown the unlikelihood of any useful enterprise being carried to a successful conclusion if such influences be permitted to be brought into play.
17. Lieutenant Commander Arthur H. Mayo, Supply Corps, U.S. Navy, the officer administering the affairs of the Department of State of Finance & Commerce, will carry this letter to Washington. His credentials as the Special Financial Representative of the Dominican Republic are already on file in the State Department. He has full authority to act for the Military Government in this matter and will consult with and supply any information that the State Department may desire.
- Document bears the notation: “For State Department.”↩
- Enclosures not printed.↩
- For correspondence concerning the 1918 loan, see Foreign Relations, 1918, pp. 371 ff.↩
- Foreign Relations, 1918, p. 377.↩
- Ibid., 1919, vol. ii, p. 148.↩
- Should read “874,478.91”.↩
- Actual collections from this source were $15,453.28 but losses were paid amounting to $23,881.45,making a deficit of $8,428.17 instead of an excess for use as Government income.[Footnote in the original.]↩