839.00/2461
The Secretary of the Navy (Denby) to the Secretary of
State
Washington, 30 January,
1922.
Sir: Referring to our Conference of this date,
I recommend that the Military Governor and the American Minister be
instructed to return to Santo Domingo, and to call together, upon their
return, for conference, Representatives of all political factions in the
Republic and other representative Dominicans; that the American
representatives be instructed to advise the Dominican leaders that this
Government is unwilling to permit present conditions to continue any
longer, and to inform them that, unless they now request the issue of a
call for election, and agree to participate in the elections, the
Proclamation of June 14, 1921,3 will be withdrawn and the Military Government
will then continue until such time as the urgent public works have been
completed and an adequate Dominican Constabulary is functioning.
[Page 6]
The Representatives of the United States should further be instructed to
discuss with the political leaders, with the utmost frankness, the
financial situation along the lines of the letter on Dominican finances
submitted by the Military Governor of Santo Domingo, a copy of which I
enclose herewith. It should be made clear to the political leaders that
permanent financing is essential for the Dominican Government, and that
if such financing is not undertaken immediately by the Military
Government, advantage cannot be taken of the terms specified for the
redemption of the 1918 and 1921 loans,4 with consequent loss to
the Dominican Treasury; that if such permanent financing is delayed
until elections take place and a National Government has been installed,
the Dominican Government, immediately upon assumption of office, will be
forced to negotiate the flotation of such permanent loan since it will
thereupon encounter a deficit in the National Treasury; and that,
therefore, in order that advantage may be taken of the terms provided
for the redemption of the 1918 and 1921 loans, in order that Dominican
finances may be stabilized, in order that the program of public
improvements inaugurated by the Military Government may be continued,
and in order that a Dominican Government may enter upon its duties with
a balance in the Treasury, the Government of the United States has
authorized the Military Government to negotiate, immediately, the
flotation of a permanent loan of $10,000,000,5 the allocation of which
will be in accord with the memorandum of the Military Governor, herewith
attached.
The flotation by the Military Government of this permanent loan will
necessarily entail the extension of the life of the Receivership
General, the establishment of which was provided in the Convention of
1907.6 Such an extension of our control over
Dominican finances will be necessary whether the permanent loan is
floated by the Military Government or by a subsequent Dominican
Government, since no loan, I am convinced, can be obtained without an
extension of the duties of the Receiver General in this manner.
Should the conference result in a request by the leaders for a call to
elections, a proclamation for elections should be issued by the Military
Governor in the same form as his preceding proclamation for that
purpose. Should the conference not result in a request for elections,
the Military Governor should be instructed to issue a proclamation
substantially in the form enclosed herewith.7
[Page 7]
Although the Military Governor, in his letter herewith, has recommended a
loan of $10,000,000.00, which should give a fair working balance in the
Treasury after the completion of the East and West roads and other
expenditures contemplated from the loan, it is possible that
authorization of a larger loan, from which additional funds could be
obtained if required by the Dominican Government, might be good policy
and is submitted for your consideration.
Respectfully,
[Enclosure]
The Military Governor of the Dominican
Republic (Robison) to the Secretary
of the Navy (Denby)
[Santo Domingo,] 21
January, 1922.
1. The Military Governor submits the following with reference to
Dominican finances, and urgently requests the Department’s favorable
consideration of the proposed method of stabilizing them, both in
the interest of the Dominican people, and in the following of an
enlightened and vigorous policy by the Government of the United
States.
2. The best Dominican sentiment is not in favor of a very early
withdrawal. It is in favor of permanent financing as the first
essential. I am reliably informed that the Senate Committee, which
recently visited the Island, is in favor of a financial program,
substantially as set forth herein, and I am in receipt of a request
from the Chamber of Commerce of Santo Domingo that a loan of sixteen
millions be obtained.
3. The plan proposed for stabilizing Dominican finances must be in
effect (money available) before May 1, 1922, in order that advantage
can be taken of the terms specified for the redemption of the 1918
and 1921 loans. Unless these loans are redeemed, the Dominican
Government has no security to offer for a new loan, work on new
public roads will stop, the Policia National Dominicana cannot be
recruited, and withdrawal of marines will be impracticable. The
finances will be in such a state that, combined with the fact that
marines cannot be entirely withdrawn, it is certain that no party
will respond to an election call under the Proclamation of June 14,
1921. Whereas, with a good working balance in the Treasury, the
strong sentiment against retention of marines or a military mission,
might possibly be overcome.
4. Therefore permanent financing is necessary whether an early or
delayed withdrawal is now contemplated.
[Page 8]
5. Loans.
| Year |
Original Amount |
Now
Outstanding |
Yearly charges,
Interest and
Amortization |
Date
complete
Amortization |
| 1908 |
$20,000,000 |
$7,534,000 |
$1,200,000 |
1927–1929 |
| 1918 |
4,161,000 |
1,627,000 |
289,000 |
|
| 1921 |
2,500,000 |
2,242,000 |
814,000 |
July 1, 1925 |
|
|
$11,403,000 |
$2,303,000 |
|
| 6. |
Other obligations. |
| Internal Indebtedness |
{ |
Budget deficit, 1921, |
$550,000 |
} |
$1,050,000 |
| Unpaid taxes, 1921, |
500,000 |
|
|
(Due Ayuntamientos) |
|
|
| Tobacco acceptances due May 1, 1922 |
950,000 |
| 7. |
Revenues, 1922. |
|
|
Estimated internal |
$2,500,000 |
|
Estimated customs, gross $3,000,000 (Less service of loans
and expenses coll) Net |
500,000 |
|
Total |
$3,000,000 |
| 8. |
Budget, 1922—Including Public Schools |
$3,000,000 |
| 9. |
Required 1922 to continue work Public Roads |
$1,200,000 |
|
Recruit Policia Nacional Dominicana to strength necessary
to enable Marines to be withdrawn |
250,000 |
|
Foster Agriculture |
50,000 |
|
Total |
$1,500,000 |
10. To stabilize Dominican finances, wipe out deficit, continue work
on roads, and procure funds to recruit Policia Nacional Dominicana,
Military Governor proposes to negotiate a $10,000,000 twenty year
loan, noncallable for eight years and with no provision for
amortization for the same length of time (or until expiration of
1908 loan) and to extend the duties of the General Receivership to
the service of the loan.—$7,500,000 loan to be floated immediately
and the remainder as required.
11. The $7,500,000 to be expended as follows:
| 1922 |
{ |
Wipe out internal indebtedness |
|
$1,050,000 |
| Redeem 1918 and 1921 bonds |
|
4,000,000 |
| Public Works |
} |
1,500,000 |
| Guardia Nacional |
| Agriculture |
| Meet Tobacco acceptances |
950,000 |
| Total |
$7,500,000 |
[Page 9]
| 12. |
Subsequent expenditures from receipts, tobacco
sales |
$800,000 |
|
1923 |
{ |
Requirements for Public Works |
} |
$1,500,000 from loan |
700,000 |
|
Guardia Nacional |
|
Agriculture |
|
|
|
|
|
|
$1,500,000 |
|
To June 30, 1924 |
{ |
Requirements for Public Works |
|
|
|
|
Guardia Nacional |
|
|
|
|
Agriculture |
|
From loan |
750,000 |
13. Available from loan June 30, 1924—$1,050,000 less discount—(Rate
at which loan is taken)—at which time the United States can
complete[ly] withdraw from Santo Domingo except Receivership of
Customs, leaving a well trained and equipped Policia Nacional
Dominicana to maintain order.
14. Yearly charges for service of 1908 loan and new loan, assuming 7%
interest on new loan (which appears to be now obtainable) will be:
| 1922 |
{ |
1908 Loan, Int. and amortization 1 yr |
$1,200,000 |
| 1918 Loan, Int. 6 mos |
45,000 |
| 1921 Loan, Int. 6 mos |
88,000 |
| New Loan, Int. 10 mos |
437,500 |
|
|
Total |
$1,770,500 |
| 1923 |
{ |
1908 Loan, Int. and amortization |
$1,200,000 |
| New loan, Interest |
574,000 |
|
|
Total |
$1,774,000 |
| 1924 |
{ |
1908 Loan, Interest and amortization |
1,200,000 |
| New Loan, interest |
667,750 |
|
|
Total |
$1,867,750 |
| 1925 |
} |
Each |
{ |
1908 loan |
1,200,000 |
| 1926 |
| 1927 |
700,000 |
| 1928 |
| 1929 |
$1,900,000 |
| 1930 |
New Loan |
{ |
Amortization |
$833,333 |
| Interest |
700,000 |
| Total |
$1,533,333 |
Subsequent years, constant amortization as above,
with interest charges reduced $58,000 each year.
15. The amortization of the New Loan is based on redeeming bonds at
par and starting in 1930. The New Loan would be paid
[Page 10]
off in 1942. Suitable provision should
be made to amortize more rapidly if increase in revenues warrant
such action. The 1908 loan carries such a provision with the result
that the loan instead of expiring in 1958 as contemplated will
expire not later than 1929.
16. The reduction of yearly charges on loans and any increases in
revenues before 1924 should be applied principally to reopening
public schools, now closed for lack of funds. (School budget which
is included in General Budget reduced from approximately $1,000,000
in 1920 to approximately $600,000 for 1922).
17. Unless there is a very material increase in the prices of
Dominican products, 1921 taxes (par. 3) collected in 1922 will
probably be balanced by unpaid taxes in 1922.
