839.51/3428
The Acting Secretary of State to Lee, Higginson & Company
Sirs: In answer to your letters of June 9 and June 20, 1931, regarding Dominican financing, the Department has given most careful consideration to the plan you propose in this connection.
The Department is not disposed to undertake any increased responsibilities vis-à-vis the finances of the Dominican Republic, beyond those set forth in the existing Convention between the United States [Page 107] and the Dominican Republic signed at Washington on December 27, 1924. Therefore the Department would not be disposed to be involved in the proposed arrangement for the Financial Adviser such as is outlined on pages four to seven of your letter of June ninth. There would appear to be no reason why you should not inform the Dominican Government, however, of your views regarding the functions of the Financial Adviser provided that where “the Department of State” is mentioned in your proposal the words “the bankers” be substituted in each instance, except perhaps in paragraph (6) where the words “common agreement” or some other suitable phraseology might be employed. The Department, of course, does not know the views of the Dominican Government concerning such an arrangement, but should that Government desire to enter into an arrangement such as you propose, or some satisfactory modification thereof, this Government would not be disposed to object.
I desire to point out, however, that the requirement in paragraph (1) (c) of your letter of June ninth is likely to bring the Financial Adviser into constant friction with the Dominican Government. Full authority to the Financial Adviser “to prevent waste and inefficiency” in effect makes the Financial Adviser the supreme authority in the Dominican Republic in nearly all Governmental matters and, even should it be acceptable to the Dominican Government, might possibly defeat its own ends on account of the friction which would likely be engendered by the Financial Adviser should he attempt to exercise such broad powers.
The Department also assumes that the wording in paragraph (1) (e) is merely a rough draft and that when put into final form it will contain an appropriate adaptation of the language contained in the document referred to and will not merely cite that document.
With regard to the refunding, it is noted that you contemplate issuing new bonds which will be retired in about thirty-three years. Should these bonds be issued this year, it would mean an extension of this Government’s present connection with the collection of the Dominican customs for a period of twenty-two years beyond the present term of the Convention, which would expire with the retirement of the 1922 bond issue in 1942. This Government desires that its participation in the administration of customs revenues in the Dominican Republic should be terminated as soon as possible and therefore will be glad to have you consider an arrangement between the bankers and the Dominican Government for the refunding of the bonds without reference to the Convention of 1924. In this connection, it is suggested that the loan contract might contain a financial plan agreed to between the bankers and the Dominican Government, carrying the same safeguards and provisions as the Convention of 1924 except that this Government [Page 108] would not be a party thereto. In other words, it would be an arrangement such as the bankers made in 1911, 1917, and 1920 with Nicaragua,21 or that made in 1923 with El Salvador.22 This Government, if desired by both parties, would be disposed to act in the same way as it does in the Nicaraguan arrangement.
Incidentally it may be said, with regard to the statements contained in your letter of June 20 indicating that you are of the opinion that the $25,000,000 refunding loan you have in mind must be covered by all the provisions of the Convention of December 27, 1924, that the Department would appreciate receiving an expression of your opinion as to how this may be properly brought about in its entirety in view of the provisions of Article I of that Convention taken in connection with the language of the Preamble.
The Department would appreciate it if Messrs. Lee, Higginson and Company will acquaint it in advance with the specific proposal which they make to the Dominican Government, including any financial plan to be made a part thereof.
Very truly yours,
Assistant Secretary
- See Foreign Relations, 1912, pp. 1071 ff.; ibid., 1917, pp. 1138 ff.; The United States and Nicaragua, a survey of the relations from 1909 to 1932 (Washington, Government Printing Office, 1932), pp. 33–39.↩
- See Foreign Relations, 1922, vol. ii, pp. 885 ff.↩