The Minister in the Dominican Republic ( Schoenfeld ) to the Secretary of State

No. 498

Sir: I have the honor to inform the Department that in conversation today with Mr. F. Q. Rickards, Acting Chairman of the Budget Committee, I learn that the President of the Republic is giving serious consideration to the advisability of an early payment into the sinking fund of the foreign debt under the Emergency Law of October, 1931.

As previously reported, the Office of the Special Agent for the Emergency has for some months carried forward increasing amounts of cash in excess of all privileged requirements under the Emergency Law. The customs revenue is expected in the present month to fall considerably below that for recent months of the fiscal year though, [Page 606] of course, final figures will not be available until the end of this month. It appears, however, that the President is of the opinion that an early payment of moderate amount through the General Receiver to the Fiscal Agents for sinking fund would not seriously impair the probability that the Government will receive the $125,000 monthly contemplated in the Emergency Law during the remainder of the fiscal year. In view of the present prices of Dominican bonds on the New York Stock Exchange, this Government feels that any funds remitted to the Fiscal Agents for sinking fund could be used to great advantage, if it can be done without risk to the current budget.

Mr. Rickards informs me that the President is inclined to await the return to Santo Domingo of Mr. W. E. Dunn, Financial Adviser to the Government, before taking action along this line, but that the President is alive to the beneficial effects upon Dominican credit of an early resumption of sinking fund payments by remittances within the present capacity of the Government to the Fiscal Agents for the purchase of bonds in the open market at prices adjusted to current quotations.

As opportunity offered for some time past, I have emphasized the wholesome effect on the Government’s prestige and credit of early and spontaneous compliance with the provisions of the Emergency Law in respect of payment into the sinking fund. I have pointed out that such action on the part of the Government without any pressure from either the American Government or the Fiscal Agents would have much greater value than would be the case if the action now apparently in contemplation were taken at the instance of the Department or of the Fiscal Agents.

Respectfully yours,

H. F. Arthur Schoenfeld