The Dominican Minister (Despradel) to the Secretary of State
Excellency: By direction of the Government of the Dominican Republic, the Financial Adviser of that Government has recently been in Washington in order to explain in person the critical situation now prevailing in my country. The seriousness of the present crisis will be apparent if we examine the figures of our public revenues.
In 1929 there were available for the expenditures of the Government approximately $13,859,000; in 1930, $9,879,000; whereas for the current year, 1931, not more than from $7,000,000 to $7,350,000 is anticipated. Our revenues still show a tendency to decline. Confronted [Page 125] with a world wide depression and still suffering from the devastation of a destructive hurricane, our people now find that the difficult situation created by so great a decline in revenues is greatly aggravated by reason of the increased amounts which we are obliged to pay for the annual service of the debt of our foreign loans.
Up to 1930 we had only to pay the annual interest on such loans, amounting to $1,082,619. The first redemption payments, however, became operative in March 1930, and as we had previously paid nothing for amortization, such payments amounted in 1930 to $1,262,499 and have increased $1,841,666 (sic) in the current year, making a total service of approximately $2,890,000. It is impossible to continue longer on this basis.
In order that Your Excellency may realize the efforts made by my Government to effect economies and meet the present emergency, I take the liberty of pointing out here some of the measures which have been taken:
- The Government Departments have been reduced from ten to seven.
- The personnel of the Government offices have been reduced by from fifteen to twenty per cent.
- Salaries of the remaining public employees have been reduced this year by fifteen per cent which amounts to a total reduction of twenty-five per cent since 1929.
- The salary and expense allowances of the President of the Republic have been reduced in proportion.
- General economies in the expenses of all Departments of the Government have been made; the total budgetary reductions since the beginning of 1930 having reached a total of more than $2,500,000 or about twenty-five per cent (25%).
Despite all our efforts, the revenues have become so insufficient that the economic life of the Republic is paralyzed, and the existence of orderly government is in serious danger. Following are some of the main features of the present situation:
- Salaries of the majority of Government employees have remained unpaid for a period of several months, due to lack of funds.
- It has been necessary to reduce the appropriations for health and sanitation, in particular for maintenance of hospitals and charitable institutions, to such an extent that the public health is endangered.
- Many schools have been closed, and the majority of teachers cannot be paid.
- Our national highways, which represent an investment of many millions of dollars, are in a deplorable condition and are rapidly becoming impassable. Long established channels of commerce are, therefore, threatened with disruption.
- The aqueduct of the City of Santo Domingo, the capital of the Republic, is going to ruin on account of lack of funds for its maintenance and operation, constituting a menace to the water supply of the city.
- Our principal port, that of the capital city, is filling up with silt due to the continued suspension of all dredging operations, thus making the entrance of vessels more and more difficult.
- The insufficiency of funds to pay for current supplies has resulted in the impossibility of paying many accounts, thus increasing our floating debt. The inability of the Government to pay accounts of this kind is greatly decreasing the purchasing power of the merchants, the imports of merchandise have been greatly reduced, and customs revenues have decreased in the same proportion.
The amount of revenues with which my Government must be maintained has now fallen to about $225,000 a month. The salary payroll alone, in its reduced form, amounts to more than $250,000 a month; and other current expenses amount to approximately $125,000 a month. The utter inadequacy of the general revenues can, therefore, be fairly perceived. Our customs revenues, which previously sufficed to pay the monthly installments of the debt service, amounting to $242,000 and which still left a balance to provide for general requirements of the Administration, have now dropped to less than $200,000 a month, and show signs of a continued decline.
This situation has brought the Dominican people to a state of pessimism and despair, which in itself constitutes a serious menace to the continuance of a stable and orderly government. Like many other countries of the world, the Dominican Republic imperatively requires a period of internal reconstruction and economic rehabilitation.
In view of the present critical emergency, my Government has decided that it must take immediate action to prevent a complete collapse of our national life. It has, therefore, prepared a bill for submission to the Dominican Congress, which, on the basis of the present level of customs receipts, will place at the disposal of the Government additional revenues which will amount to approximately $100,000 a month. The necessary result of such action will be the suspension on the part of the Dominican Republic of payments of sinking fund charges on our foreign bonds; but we intend to continue faithfully the payment of interest on the said bonds.
In accordance with the plan incorporated in the proposed legislation, a copy of which is enclosed for Your Excellency’s information, the additional funds placed at the disposal of the Government will be paid to an official who will be designated as Special Agent of the Emergency Fund. It is intended to expend this fund in the manner believed to be most beneficial to the entire country, namely, for the payment of the current salaries of Government employees, giving preference to those charged with the maintenance of public order, the financial offices, the public health and other similar services. If any balance remains available, it will be applied to the partial payment of back salaries and to the most urgent part of our floating debt.[Page 127]
Ample safeguards have been provided for the careful expenditure not only of the emergency fund but also of the ordinary government revenues. The enclosed documents show in detail the purposes for which the emergency fund will be applied, as well as the other measures proposed to safeguard the entire plan. Your Excellency will observe that the proposed legislation covers the coming fiscal years, 1932 and 1933. My Government, nevertheless, hopes that the duration of the emergency period will be even shorter and it has, therefore, incorporated in the emergency bill a provision to the effect that whenever the general revenues during any six months’ period of the fiscal years 1932–33 shall have amounted to $2,250,000, the law shall automatically become null and void. It is also the intention of my Government to enact simultaneously with the emergency law the other law, a copy of which is enclosed, whereby our Finance Law is amended, for the purpose of providing due safeguards for handling the emergency fund.
It is with deep regret and full appreciation of the fact that our action is not in accordance with the obligations contracted by the Dominican Republic in the Convention which it concluded with the United States of America in 1924 nor the stipulations contained in the contracts for our foreign loans, that my Government finds itself compelled to take such measures for the purpose of protecting the very life of its people. Resort has been made to them only after the alternative solutions of our financial difficulties were unsuccessfully attempted.
In view of the foregoing statements and explanations I trust that Your Excellency, as well as the Government of the United States of America, will appreciate the reasons on which the adoption of the proposed laws are based and will interpose no objection to the emergency measure which my Government finds itself obliged to take.
I avail myself [etc.]