The Under Secretary of State ( Fletcher ) to the Secretary of the Navy ( Denby )

Sir: In my letter to you of December 29, 1921,55 I informed you that this Department had decided, after a careful study of the matter, to give its authorization to an issue of $500,000 of six months certificates of indebtedness by the Military Government of the Dominican Republic. In that letter it was also stated that it might be understood that the Department of State would, at the proper time, give its sanction to a bond issue by that Government sufficient to retire these certificates of indebtedness at maturity, if such bond issue proved to be necessary for that purpose.

In your letter of acknowledgment of December 31, 1921,56 you informed me of the directions issued by you to the Military Governor of Santo Domingo, together with the officer administering the affairs of the Department of Finance and Commerce for the Military Government, to proceed to Washington for discussion and consultation on the affairs of the Dominican Republic.

I am now informed by the Military Governor and the officer administering the affairs of the Department of Finance and Commerce for the Military Government, who are now in Washington, that the bankers who are willing to advance money against the certificates of indebtedness referred to, require the Military Government to deposit with them as collateral security a bond covering the amount necessary to retire the certificates of indebtedness at their maturity, if a bond issue at that time should prove to be necessary for their retirement. It would, therefore, seem that the sanction referred to in my letter of December 29, 1921, to a bond issue should now be given. It is to be understood, however, that the other conditions under which this Department’s authorization was given in my letter under reference continue fully operative.

The consent of this Government to the increase of the public debt of the Dominican Republic is, therefore, now requested by the Military Government of Santo Domingo pursuant to the provisions of the “Convention providing for the assistance of the United States in the collection and application of the customs revenues of the Dominican Republic”, concluded February 8, 1907,57 Article 3 of which reads as follows:

“III. Until the Dominican Republic has paid the whole amount of the bonds of the debt its public debt shall not be increased except by [Page 81] previous agreement between the Dominican Government and the United States. A like agreement shall be necessary to modify the import duties, it being an indispensable condition for the modification of such duties 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 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.”

It appears that the sum of $500,000 is necessary for the completion of the most essential public works, and that such completion is essential to the interests of the Dominican Republic.

In view of statements made by the Military Governor regarding customs receipts and disbursements, and of assurances given by him that in addition to providing for the present charges against such revenues, namely, those indicated in Article I of the Convention of February 8, 1907, and the charges for the service of the Dominican Government bond issues of 1918 and 1921,58 that there is, and will be in normal times, ample income for the payment of interest and the providing of a sufficient sinking fund for a bond issue of $500,000, this Government approves the issuance by the present Government of the Dominican Republic of such bonds to obtain funds for the completion of public works.

The Government of the United States gives its consent to the inclusion in the Executive Order to be issued by the Military Governor and in the bonds themselves, of the following statement:

“The acceptance of and validation of this bond issue by any Government of the Dominican Republic as a legal, binding and irrevocable obligation of the Dominican Republic is hereby guaranteed and, with the consent of the United States, the duties of the General Receiver of Dominican customs, under the American Dominican Convention of 1907, are extended to this bond issue so far as concerns the revenues which accrue to the Dominican Republic by the terms of that Convention.”

This request of the Military Governor of Santo Domingo on behalf of the Dominican Republic, and the concurrence of this Government therein, may, it is believed, be taken to constitute, in the circumstances, the “Agreement between the Dominican Government and the United States” required by Article III of the Treaty of February 8, 1907, prior to the increase of the public debt of Santo Domingo in the manner proposed.

I have [etc.]

Henry P. Fletcher
  1. Foreign Relations, 1921, vol. i, p. 870.
  2. Not printed.
  3. For text of convention, see Foreign Relations, 1907, pt. 1, pp. 307 ff.
  4. For correspondence concerning these bond issues, see ibid., 1918, pp. 371 ff., and ibid., 1921, vol. i, pp. 854 ff.