839.51/3522: Telegram
The Chargé in the Dominican Republic ( Stafford ) to the Secretary of State
[Received 10:20 p.m.]
67. For Bundy from Schoenfeld. My telegram No. 66 today. Dunn informs me this afternoon that by direction of the President, Minister [Page 121] of Finance is telegraphing fiscal agents of the Dominican Government at New York today as follows in translation:
“In spite of all our efforts and sacrifices we see no possibility of completing deficiency in quota for September or future months for indefinite period. Customs revenues September amounted only to $196,000 and future prospects even more pessimistic. It is materially impossible for us to pay from other revenues since the latter are insufficient for ordinary requirements of the Government; for this reason we regret to have to tell you formally that we cannot pay entire service our bonds. Since the return of situation is due mainly to burdensome amortization quotas we think it convenient for all to make readjustment thereof by means of exchange of bonds or modification of terms of present contract.
We therefore suggest formation of bondholders committee for our 1926 bonds and possibly for 1922 bonds in order to have a body with which this Government can discuss terms of readjustment, it being understood that any arrangement would be subject to approval of Government of the United States according to Convention of 1924. We would appreciate your help and advice as to the best way of proceeding in this painful situation. Signed Rafael Vidal, Secretary of State for Finance.”
As I have not yet presented my letter of credence I have not discussed any of these matters with any Dominican official other than Dunn. Latter, however, has called upon me repeatedly by direction of the President and has kept me informed of latter’s thought on the subject. Dunn tells me the President has made the decision to declare formal default as above in the expectation that it will clarify and regularize the whole position. I expect to present my letter of credence to the President of the Republic on October 9th. [Schoenfeld.]