The Secretary of State to the Dominican Minister (Ariza)
Sir: I have the honor to acknowledge the receipt of your note of August 16, 1924, in which you convey additional information with regard to the projected issue of short term notes to the amount of $2,500,000. I understand that these notes are to be issued in accordance with a contract similar to the draft transmitted by you with your note of September 5, 1924,26 and that the proceeds of the sale of the notes are to be used mainly for road construction and port improvements.
You state that you desire to know before concluding the contract with Lee, Higginson and Company whether this Government will consent to the proposed loan, in accordance with the Convention of 1907, and whether it will agree that certain assurances be extended in connection with the five and one-half per cent bonds of 1922 to the amount of $3,300,000 which would be pledged as collateral for the loan. You state that the assurances which you outline are similar to those extended in connection with the bonds issued in 1922 to the amount of $6,700,000 by Executive Order No. 735, dated March 28, 1922.
In reply I have the honor to inform you that the Government of the United States agrees to the issuance by the Dominican Government of the proposed $2,500,000 two year notes. The Government of the United States further agrees that the Dominican Government may issue and pledge as security for these two year notes $3,300,000 of the five and one-half per cent bonds authorized in 1922, being the remainder of the issue of $10,000,000 authorized in that year. It is understood that these bonds are to be in form similar to the $6,700,000 of this issue now outstanding, with such appropriate changes as are made necessary by the difference in the amount of the bonds and the establishment of the Constitutional Government in the Dominican Republic. This note may be regarded as conveying the agreement of the United States Government to the issues specified above, as required in Article III of the Convention of 1907 between the Government of the United States and the Government of the Dominican Republic.[Page 655]
The Government of the United States will interpose no objection should the Government of the Dominican Republic desire to extend the following assurances in connection with the five and one-half per cent bonds of 1922 to the amount of $3,300,000, which are to be pledged as collateral for the two year notes:
- That the Receiver General of Customs of the Dominican Republic, appointed under the Convention of 1907, shall during the life of that Convention make from the customs revenues accruing to the Dominican Government such payments as may be necessary for the service of the bonds pledged as collateral to secure the short term notes now to be issued.
- That, if the Convention of 1907 should expire before the bonds of 1922 are paid in full, the customs revenues shall continue to be collected and applied by an official appointed by the President of the United States in the same form as the present Receiver General of Customs of the Dominican Republic, so long as any of the bonds authorized in 1922 remain outstanding.
- That, after the expiration of the Convention of 1907, the bonds authorized in 1922 to the amount of $10,000,000, or any portion of these bonds which remain unpaid, shall enjoy a first lien on the customs revenues subject to the necessary expenses of collection until these bonds have been paid in full.