The Minister in the Dominican Republic (Schoenfeld) to the Secretary of State
[Received November 21.]
Sir: I have the honor to enclose for the Department’s strictly confidential information the Spanish text with translation of a draft [Page 613] note to be addressed by the Dominican Minister at Washington to the Secretary of State27 setting forth the reasons which in the opinion of the Dominican Government require a change in the Emergency Law (No. 206) passed by this Government last year and diverting a part of the customs revenues normally used under the Convention of 1924 for the service of the foreign debt into the Treasury of the Dominican Government for other uses. I also enclose copy with translation of the Spanish draft of an amendment to the Emergency Law, a statement in English regarding the public works budget of the Dominican Government for 1933 with a list of other public works deemed by this Government to be of great urgency and an outline in English of a financial program for the Dominican Republic with explanatory remarks.28 The last three enclosures mentioned are annexes to the proposed note from the Dominican Minister at Washington.
I received these documents today from Mr. William E. Dunn, Financial Adviser to the Dominican Government and Special Agent for the Emergency, who informs me that under the instructions of President Trujillo he expects to proceed to the United States at the end of this week to discuss the comprehensive plan described in the draft note and its enclosures with the Department of State and with others interested in Dominican finances.
It is my understanding that Mr. Dunn expects to secure the approval of the holders of the Dominican foreign debt or representatives of such holders for the plan of re-organization in question. The enclosed documents are self-explanatory and appear to require no special comment by this Legation. In substance they represent a plan whereby the Emergency procedure now in force will be extended with modifications until January 1, 1935. In the meantime, the Dominican Government will continue to pay interest and a nominal amount for sinking fund on its foreign debt but will divert increased funds from the customs revenues for other purposes which are specified in the documents but which appear to be mainly the carrying out of certain public works designed to strengthen the tax paying capacity of the country. After January 1, 1935, the plan contemplates payments into the sinking fund of the foreign debt on a sliding scale adjusted to increases in customs revenues which may develop as a result of improvement in the purchasing power of the Dominican people. It is represented to me that the legislation proposed to be enacted to amend the Emergency Law is not now considered by the Dominican Government as a final form of re-organization of the Dominican foreign debt but, rather, as a pattern to [Page 614] which the Dominican Government will endeavor to adjust such a definitive re-organization by agreement with the holders of Dominican bonds. If a permanent form of agreement satisfactory to the bondholders can be worked out, it is my understanding that the Dominican Government hopes to see it approved by the American Government.