839.6463/110: Telegram
The Commissioner in the Dominican Republic (Welles) to the Secretary of State
[Received April 13—4:50 p.m.]
47. For Francis White.13 Referring to the Department’s number 7, March 8, 7 [3] p.m., to the Legation. I have carefully studied the history of this case [garbled group] and conferred with the representative of the company and have reached the following conclusions:
In its telegram above referred to the Department instructed the American Minister to recommend insistently to the Provisional Government that the latter purchase the plants and rights of the company as the only possible settlement. In sending this instruction the Department apparently ignored the fact that the Provisional Government, by the terms of the Plan of Evacuation agreed upon by the Government of the United States and the Commission of Dominican Representatives, has no power to take the proposed action. In the second place the material increase in the public debt required to enable [Page 920] the National Government to purchase public utilities which benefit only a small section of the Republic would [establish?] a dangerous precedent in this country. In the third place the Department’s insistence that the National Government increase the national indebtedness at a time the Dominican Government is facing a material increase in its expenditures by reason of the expenses which will be incurred in the carrying out of the new electoral law and the other extraordinary expenditures which must be incurred during the coming year to carry out the Plan of Evacuation for the purchase of properties which it has the means of operating, has not unnaturally given rise to adverse criticism at a moment when it is essential that the most friendly cooperation exist between the Dominican people and the authorities of the United States, In the fourth place it is important that the Department bear in mind the fact that the succession of events leading up to the decision of the company to dispose of its properties originated with a ruling of the Military Government that the company was not exempted from taxation although its original concession granted under a Dominican Government and in accordance with laws passed by a Dominican Congress provided that the company would be exempt from all taxation during the life of its concession.
I have discussed the matter with the President and with the Secretary of the Interior and have urged upon them the advisability of the use by the Provisional Government of all its influence to reach a settlement which will avoid the possibility of a diplomatic claim being presented in the future by the company and I find on the part of both the most earnest wish to do everything within their power to bring about a satisfactory settlement. They both are however unalterably opposed to the purchase of the property by the Government both on the ground that the Provisional Government lacks power to take any such action and also on the grounds that the purchase by the Government of these public utilities would be condemned by the great majority of Dominican citizens.
Granted the interest and helpful attitude of the Provisional Government I believe that a tentative agreement can be reached between the company’s representative and the Secretary of the Interior providing in brief for the purchase by the two municipalities of the plant, etc., for a fair compensation payment to be made by an issue of municipal bonds, the National Government guaranteeing said bonds by taking over the collection of that portion of the municipal revenues necessary to provide for the annual interest and sinking-fund charges of these obligations and offering satisfactory subsidiary guarantee.
Should the Provisional Government and the company reach a satisfactory settlement the former can undoubtedly oblige the municipalities [Page 921] to accept it. Finally, since the obligations incurred by the Provisional Government in the suggested agreement can only be undertaken ad referendum to the National Congress and the future Constitutional President, the unanimous assent of the original members of the Commission should be obtained since one of the members thereof will be the coming President and the next Congress will be controlled by the political members of the Commission.
I trust the Department will give careful attention to these considerations with the hope that it may approve my suggestion as to a possible settlement and that the Legation may be instructed accordingly. The Minister is entirely in accord with the suggestion offered. Time for suggested negotiations has been obtained by the appeal taken by the company’s attorney from decision of court in embargo proceedings.
I am confident that should the Department continue insisting on its earlier proposal the authority and prestige of the Provisional Government would be seriously impaired and public would again become generally hostile to the American authorities, with the result that the carrying out of the entire program of evacuation would become far more difficult.
- Acting chief of the Division of Latin American Affairs; appointed chief of the division on Apr. 14.↩