Lee, Higginson & Company to the Assistant Secretary of State (White)

Dear Sir: Your letter of June 30th informed us that the Department was “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 and the Dominican Republic, [”] and that the Department, therefore, “would not be disposed to be involved in the proposed arrangement for the financial advisor”. You also stated that the Government of the United States desires that its participation in the administration of customs revenues in the Dominican Republic should be terminated as soon as possible and indicated that the Department would be glad if the refunding loan which we recommended should be carried out without reference to the Convention of 1924.

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In a letter dated July 18th Mr. Dunn informed us of the present views of the Dominican Government on these two questions. He stated:

“There are two fundamental points involved in the Government’s financial policy, however, which I fear will not coincide with your own ideas. It has been thought in accord with the wishes of the Dominican people to try to negotiate an eventual refunding issue outside of the 1924 Convention, similar to the arrangement between El Salvador and the Chatham Phenix National Bank, i. e., with this difference, that the bankers will be given actual control of customs collections by means of a private contract. The other point is that the Government is apparently not desirous of granting as strict fiscal control as you have thought necessary in order to insure successful financing. If, however, you would consider further negotiations on this new basis, the President would like to give you the first opportunity to discuss the matter. Please advise me of your wishes in this connection.”

On July 22nd we received the following cablegram from Mr. Dunn:

“Account of urgency situation here please cable whether you are interested proceeding new basis mentioned my letter July 18.”

Since it appeared from your letter of June 30th and from Mr. Dunn’s letter of July 18th that both the Department of State and the Dominican Government now contemplate that any eventual refunding issue should be negotiated outside of the provisions of the 1924 Convention, that the Dominican Government is unwilling to agree to as strict a fiscal control as we have felt necessary, and that the Department of State is not disposed to assume any responsibility in respect of the financial advisorship for the Dominican Government that we have recommended, we decided that we should reply to Mr. Dunn’s cablegram that we were not interested in proceeding on the new basis mentioned in his letter. Accordingly, after informing you of the contents of Mr. Dunn’s letter of July 18th, of his cablegram of July 22nd, and of our proposed reply, we sent Mr. Dunn the following cablegram:

“Replying your todays cablegram Please express our appreciation to President of his courtesy in offering us first opportunity consider financing on new basis outlined your letter eighteenth and inform him we regret that new basis differs so substantially from plan we proposed that we are not interested proceeding further and that he may feel entirely free submit his new plan to other bankers stop. Please add that we should be glad to reopen discussions should President at later date wish reconsider the program we have recommended.”

We greatly appreciate the assistance which you have given us throughout our discussions with the Dominican Government and regret that it has been impossible to reach a satisfactory understanding with that Government. Please be assured that we shall be pleased to cooperate [Page 110] further with the Department at any time you may wish to have us do so.

Very truly yours,

Lee, Higginson & Co.