The Minister in the Dominican Republic ( Young ) to the Secretary of State
[Received 9:20 p.m.]
87. Last evening the President and Minister of Finance called to acquaint me informally with a telegraphic report from Morales that the Department suggests the loan be brought out in series and that it is now prepared to give consent to the sale of bonds to the value of 4 to 5 million dollars.
The President stated that he was very desirous of effecting the sale of the entire 10-million-dollar issue now for the following reasons: (1) He has earnestly labored to put through public-works loan project which the country needs greatly, and both Congress and the public at present strongly favor the loan, and from a political standpoint here the time is very opportune to close the entire transaction. (2) That if only a part of the total amount is now emitted, Congress, which is subject to sudden shifts in political alignments, may, if antagonistic to the President later, cancel the authority to dispose of the unemitted part of the bonds. (3) The present bond market is very favorable.
The President emphasized that if the entire amount is now authorized by the Department, the proceeds will be utilized only as the progress on the works necessitates. In this connection, and as an indication of his good faith, he made the suggestion that the matter be arranged so that funds could be withdrawn from the fiscal agent only upon my personal approval, a suggestion which is, of course, impracticable.
The President indicated further that the law authorizing the loan specifies amounts and purposes, and he added that any change therein would be subject to the Department’s approval.
After carefully considering all phases of the questions involved, I recommend that the Department give its consent to the sale of bonds to the amount of 10 million dollars, conditioned on the assurances of the Dominican Government that after sale of the bonds 3 million dollars be made available to the Dominican Treasury by the fiscal agent, and that the balance be placed on deposit to the credit of the Government of the Dominican Republic, to be drawn against only as the progress of the work on the undertakings mentioned in the authorizing law warrants. It is my belief that such assurances will be promptly given, and at least will be measurably satisfactorily [Page 42] complied with. The suggestion of the Department is without question basically preferable, but in view of the attitude of the Government here, if insisted on, will cause extreme irritation and constitute a serious blow to the prestige of the President.