Papers Relating to the Foreign Relations of the United States, 1924, Volume I
839.51/2482
Lee, Higginson & Company to the Department of State
[Received October 31.]
Sirs: At Mr. Greene’s29 request, we take pleasure in enclosing copy of a contract with the Dominican Republic dated September 25, 1924, regarding the issue of $2,500,000 Dominican Republic Two-Year 5½% Collateral Trust Gold Notes. Very truly yours,
Loan Contract and Agreement of Fiscal Agency between the Dominican Republic and Lee, Higginson & Company
1. Lee, Higginson & Company agree to offer and sell for the account of the Dominican Republic its notes to the aggregate principal amount of $2,500,000. at par and interest that has accrued thereon to the date of sale. These notes are to be secured by $3,300,000. par value of the Dominican Republic 5½% bonds of 1922 in denominations of $1000 and $500 pieces, being part of the loan then authorized and as yet unissued. Said $3,300,000. bonds shall be in the same form as the $6,700,000. bonds of 1922 now outstanding, but with such appropriate changes as are made necessary by the difference in the amount of the issue of the bonds, and by the evacuation of the Military Government and the establishing of the permanent government of the Dominican Republic; they shall bear similar statements as to the consent of the Government of the United States to the issue of these bonds and the collection and application of the Customs revenues of the Dominican Republic on which they are a lien; they shall be duly authorized by the Congress of the Dominican Republic and signed by the official or officials designated by law for that purpose; they shall be countersigned and certified in the same manner as the bonds of the Loan of 1922 now outstanding.
[Page 658]Lee, Higginson & Company shall hold said pledged bonds as Trustees for the noteholders under an Indenture containing appropriate provisions for that purpose.
During the term of said notes Lee, Higginson & Company shall retain from the monthly deposits to be made with them by the Dominican Republic for the payment of interest on the pledged bonds in accordance with the provisions thereof, the following sums: From the first of such deposits which shall be made on or before October 20, 1924, two-twelfths (2/12) of the annual interest charge on said notes, and from each of such subsequent monthly deposits one twelfth (1/12) of the annual interest charge on said notes which at the time may be outstanding. The sums so retained shall be applied in payment of interest on said notes and if said notes are not in default the excess of each monthly deposit over the amount so retained shall be placed at the disposal of the Dominican Republic.
2. Said notes are to be duly authorized by the Congress of the Dominican Republic, to be signed by the official or officials designated by law for that purpose. They are to be substantially in the form hereto annexed and marked Exhibit A.30 They are to bear the seal of the Department of Finance and Commerce of the Dominican Republic, and are to be signed for the purpose of identification only by Lee, Higginson & Company as Fiscal Agents for the service of this Loan and as Trustees. They are also to be certified by Farmers’ Loan & Trust Company of New York, Registrar.
3. The notes are to be dated September 1, 1924, and to be payable September 1, 1926. At the option of the Dominican Republic they may be called for redemption as a whole or in part on March 1, 1925, or on any interest day thereafter upon reasonable notice and in accordance with suitable provisions to be set forth in the Trust Indenture at a premium of one-half of one per cent. They are to be in coupon form, in denominations of $1000 and $500 each, in such proportions as Lee, Higginson & Company may designate.
4. They are to bear interest at the rate of five and one-half (5½) per cent, per annum and are to be paid principal and interest in gold coin of the United States of the present standard of weight and fineness at the offices of Lee, Higginson & Company in Boston, New York and Chicago, at the option of the holders. They shall be exempt from any taxes or impositions now or hereafter to be established or levied by or within the Dominican Republic against the notes or the income arising therefrom or the holders thereof.
5. Interest is to be payable semi-annually on the first days of March and September.
[Page 659]6. The notes, bonds and legal instruments connected therewith are to be in form appropriate to carry out the above provisions, and they and the governmental authority therefor are to be satisfactory to counsel of Lee, Higginson & Company. The Dominican Republic agrees to make provision for the payment of these notes, principal and interest, in accordance with their terms, and to have on deposit with Lee, Higginson & Company funds sufficient for the payment of each instalment of interest and of the principal amount at least eleven days before such payment is due.
7. A temporary note or notes and a temporary bond in form satisfactory to counsel for Lee, Higginson & Company, without coupons may be issued in anticipation of the definitive notes and bonds and to be exchanged therefor.
8. Lee, Higginson & Company may associate with themselves in the disposal of these notes, such banks, banking firms, and other agencies as they may in their discretion deem desirable. They may issue their own interim receipts to purchasers of the notes.
9. All expenses in connection with the printing, engraving, and executing of said notes and of said pledged bonds, and all expenses including legal expenses incidental to their preparation shall be paid forthwith as they accrue by the Dominican Republic, but Lee, Higginson & Company and their associates shall bear all expenses in connection with the advertising and sale of said notes.
10. Lee, Higginson & Company are hereby appointed by the Dominican Republic Fiscal Agents for the service of the Loan, and accept said appointment.
11. The Dominican Republic states that its formal intention is to use the proceeds of these notes in connection with its public highways and public works.
12. The proceeds from the sale of these notes by Lee, Higginson & Company, as set forth in paragraph 1. of this contract, shall be credited on the books of Lee, Higginson & Company to the account of the Dominican Republic as of the dates of the sales thereof, less the compensation to be allowed said firm as hereinafter set forth; and until the proceeds of the sale are withdrawn by the Dominican Republic, interest is to be allowed at the same rate as similar balances on deposit with them are receiving at the time.
13. Lee, Higginson & Company shall hold all such deposits at the disposal of the Dominican Republic and subject to its draft or cheque.
14. Lee, Higginson & Company agree that if they have not effected the sale of said notes within ten (10) days after the temporary note duly executed has been delivered to them and the temporary bond and Indenture of Trust duly executed have been delivered to them as [Page 660] trustees, that they will at once purchase all of said notes then remaining unsold at par and accrued interest.
15. Lee, Higginson & Company shall receive as compensation for their services in arranging this Loan and selling said notes a commission of 1½% on the entire issue of $2,500,000.
16. Lee, Higginson & Company shall receive for the authentication and countersignature of receipts and definitive notes and the pledged bonds the sum of twenty-five cents each.
17. Lee, Higginson & Company shall receive one-fourth of one per cent, of the amounts paid out for interest on these notes and one-twentieth of one per cent, on principal. They shall be reimbursed for all expenses incurred in connection with the call and redemption of said notes.
18. All coupons and notes paid shall be cancelled by Lee, Higginson & Company by perforation and then delivered to the Auditor of the Dominican Republic for further cancellation.
19. Lee, Higginson & Company shall allow the Dominican Republic interest on deposits held for the payment of interest and for redemption requirements at a rate of two per cent, less than the rediscount rate of the Federal Reserve Bank of New York, with a minimum of two per cent, and a maximum of four and one-half per cent, while such sums are on deposit with Lee, Higginson & Company.
20. In acting under this agreement, Lee, Higginson & Company may, subject to the provisions of these notes, not [act] in accordance with the written order of the Secretario de Estado de Hacienda y Comercio of the Dominican Republic, and the drafts, cheques or orders of the said Secretario de Estado de Hacienda y Comercio shall be full protection to them for action in accordance therewith.
21. All accounts connected with the service of the Loan shall be kept by Lee, Higginson & Company, either in their office in the City of Boston or in their office in the City of New York, and a statement of such accounts shall be rendered by them to the Auditor of the Dominican Republic within a reasonable time after the maturity of the issue. Unless objection to this statement of account shall be made by said Auditor to them within ninety days, particularly specifying the ground or grounds of such objection or objections, said statement of account shall be deemed to be correct and conclusive between the parties. The Dominican Republic shall have the right at any time to examine and audit the books and accounts of Lee, Higginson & Company in connection with their note as such Fiscal Agents and Trustees.
22. In case any of the notes of this issue shall at any time become mutilated, lost, or destroyed, the Dominican Republic may issue new notes of like amount, tenor and date, and bearing the same serial numbers, and Lee, Higginson & Company, at the request of the Department [Page 661] of Finance and Commerce of the Dominican Republic shall authenticate the same for delivery in exchange for, and upon cancellation of the notes so mutilated, or in lieu of the note so lost or destroyed, but, in case of lost or destroyed notes, only upon receipt by the Dominican Republic and Lee, Higginson & Company of evidence satisfactory to them that such notes were lost or destroyed and upon receipt also of indemnity satisfactory to them in their discretion.
23. All notices, demands or requests from Lee, Higginson & Company to the Dominican Republic in connection with this agreement or the notes shall be sufficiently given if mailed in a securely enclosed postpaid envelope addressed to the Secretario de Estado de Hacienda y Comercio of the Dominican Republic, Santo Domingo City, Dominican Republic, or if given by cable so addressed. All notices, demands or requests from the Dominican Republic to Lee, Higginson & Company may similarly be given addressed to them at 43 Exchange Place, New York, N. Y.
24. This employment of Lee, Higginson & Company as Fiscal Agents is irrevocable, except for good and sufficient cause, but they may resign at any time as such Agents by giving notice of such resignation to the Dominican Republic in the manner provided above, and by publishing such notice at least twice a week for six successive weeks in two daily newspapers published and of general circulation in the City of New York. Such resignation shall take effect upon the expiration of such publication. The appointment of a successor to the Fiscal Agents shall be by mutual agreement between the Dominican Republic and the Fiscal Agents who may be retiring.
25. The provisions of this agreement shall be applicable to said firm of Lee, Higginson & Company as the same now is or may be hereafter constituted. It is agreed between the parties that upon the death or withdrawal of any partner or partners of Lee, Higginson & Company, the remaining partners, with such persons, if any, who have or may become partners of said firm, shall have all the rights and duties and be subject to the obligations conferred or imposed upon said firm by these presents.
26. This agreement for the sale of said notes is conditional upon receipt by Lee, Higginson & Company of assurance satisfactory to their counsel as to the procedure in the issue and execution of said notes and said bonds as security therefor, and upon delivery to said firm of the temporary note or notes herein mentioned, duly executed, and upon delivery of the temporary bond or bonds and Indenture of Trust to Lee, Higginson & Company as Trustees, duly executed on or before September 26th, 1924.
[Page 662]27. It is intended that this note issue be refunded by bonds authorized by a new Convention now under discussion.
28. The provisions of the contract between Lee, Higginson & Company and the Dominican Republic of April 4, 1922, shall apply to the pledged bonds so far as applicable under the changed circumstances of their issue and under the changed conditions of the Dominican Government.
In Witness Whereof the Dominican Republic has caused this Contract to be signed and the seal of its Legation in the United States of America to be affixed by José del Carmen, Ariza, its Envoy Extraordinary and Minister Plenipotentiary, and said Lee, Higginson & Company by Jerome D. Greene, a partner, have hereunto affixed their firm name and seal this Twentyfifth day of September, 1924.
By
E. E. and Minister Plenipotentiary
Lee, Higginson & Co.,
By Jerome D. Greene