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

No. 947

Sir: I have the honor to inform the Department that Mr. Wm. E. Dunn, Financial Adviser to the Dominican Government and Special Agent for the Emergency, is leaving Santo Domingo by air for the United States today.

Prior to Mr. Dunn’s departure from the Capital yesterday for San Pedro de Macoris, where he was to take the regular commercial airplane for Miami, he informed me that in conversation with the Minister of Finance Señor Pichardo had asked him on behalf of President Trujillo to prepare a draft of legislation for consideration by the President providing for the extension of the Emergency Law “for a period of five years”. The Minister of Finance, according to Mr. Dunn, said that advices had been received from the Dominican Minister of Foreign Affairs, Dr. Max Henríquez Ureña, who is now in the United States, to the effect that he was assured there would be no objection on the part of the American Government to such an extension of the Emergency Law.

In response to my inquiry whether it was intended to introduce such legislation in Congress in the immediate future, Mr. Dunn stated that he believed there was no such intention, pending the result of Mr. Dunn’s forthcoming conferences in Washington with Dr. Henríquez Ureña, Mr. Despradel, the Dominican Minister to the United States, and officers of the Department of State. Mr. Dunn said that he explained to Sr. Pichardo that in his opinion there was no need at this time to extend the Emergency Law for five years since, aside from the extreme improbability that the American Government would acquiesce in such legislation, it seemed to the Financial Adviser to be unnecessary for the reason that the negotiations initiated last February by Mr. Dunn with the Fiscal Agents and the Advisory Committee would hardly be protracted to that extent and for the further reason that the efforts of the Dominican Government to modernize its revenue [Page 629] system and thereby increase its income, with due regard to the Government’s obligations in respect of sinking fund on the foreign debt when the latter is re-adjusted, would render unnecessary the continued use of the Emergency Fund for so long a period.

I consider it probable that President Trujillo has indeed given consideration recently to the possibility of securing legislative authority that would permit the Government to continue the enjoyment of the benefits afforded by the Emergency Law for another five years. That period of time would coincide more or less with the next Presidential term. As already reported, General Trujillo has just announced his acceptance of renomination, amounting to re-election, in the Presidential campaign of 1934. It seems at least doubtful, however, that we would be well-advised to acquiesce in an extension of the Emergency Law for a further five years, since such acquiescence and the enactment of legislation to that end at this time would probably remove any incentive the Dominican Government now has for undertaking negotiations with the bondholders looking to the resumption of sinking fund payments on the foreign debt and for a reasonably thorough re-organization of its revenue system in contemplation of the resumption of those payments.

The Dominican Government is now well aware that its enjoyment of the income received through the operation of the Emergency Law has been wholly dependent upon its good faith in endeavoring to put its financial house in order during the emergency period. It seems certain, however, that if we should acquiesce now in legislation that would frankly permit the enjoyment of that income for so long a period as the one suggested, regardless of the consent of the bondholders and of the obligations of the Convention of 1924, a situation would be created in which all semblance of ordered financial and fiscal administration in the Dominican Republic would speedily disappear. The political consequences of such a state of affairs can be easily conjectured, both in the domestic and the international aspects of the question.

Respectfully yours,

H. F. Arthur Schoenfeld