The Secretary of State to the Minister in the Dominican Republic (Curtis)
7. The Department feels that in accordance with its responsibilities under the convention any proposals for Dominican financing should accord with the following definite principles:
- The Department cannot give its definitive approval to any proposal before it is in complete and final form.
- It is believed that financing up to $5,000,000 would be reasonable at this time.
- The Department cannot approve any loan whose terms are so onerous as to constitute improvident borrowing on the part of the Dominican Government. Under existing market conditions this probably precludes long-term financing at this time.
- This Government will require that all advances or disbursements of the proceeds of any loan shall be made under provisions similar to those stated in the note of the American Minister to the Minister for Foreign Affairs of the Dominican Government, answering the note dated March 1, 1913. Reference, 1913 Foreign Relations, page 466, [Page 91] and Volume III Treaties, page 2572. The Department feels that any loan must take care of the floating debt and should include some provision of reserve for assurance of the payment of the sinking fund during at least 1 year.
- Only such construction work should be undertaken as is felt eminently desirable by both Governments.
The Department will inform all American bankers or construction companies who may be interested that any proposals which they may submit must conform to the principles outlined above which in their complete form are embodied in a memorandum handed today to the Dominican Minister.
The Department has informed the Dominican Minister that it is not able to approve in its present form the proposal recently made by the J. G. White Company for a loan of $5,000,000. As submitted, this proposal is too vague and indefinite, and is subject to other criticisms which are set forth in a memorandum handed to the Dominican Minister today.
Mr. Brache said today that he had instructions to go no farther here with financial negotiations. His diminished powers seem to coincide with the arrival of Mr. Lamarche who was with him today.
Detailed instructions follow by an early airmail, and you will receive copies of two memoranda handed today to the Dominican Minister but pending such instructions you are directed to inform President Trujillo of the Department’s views herein expressed both as to the general question of Dominican financing and the action which was taken in regard to the tentative proposal of the J. G. White Company.
The Department has been informed that President Trujillo has appointed an adviser to assist him in considering loan proposals. Please inform the Department by telegram concerning this.