Memorandum by the Chief of the Division of Latin American Affairs (Wilson)

Mr. Dunn came in again. He spoke at some length about his “dilemma.” This consists in the fact that the small committee in New York on which Munro and Cumberland are willing to serve, will not go ahead with its work until it has been recognized by President Trujillo. Trujillo, in a desire to do nothing which might offend the new administration in this country, is unwilling to recognize the committee until he has some assurance that this will be unobjectionable to the United States Government. The affair is on a dead center and the budget for 1934 must be introduced in Congress when it meets in August of this year. The Emergency Law expires this year and Mr. Dunn said it is obviously impossible for the Dominican Republic to begin paying two million dollars in sinking fund next year. Therefore provision for sinking fund on the external debt will have to be omitted from the budget and legislation introduced shortly providing for an extension of the Emergency Law. Mr. Dunn said that if it [Page 631] had been possible to proceed along the lines of the plan laid down in the Dominican Finance Minister’s communication of December 24, 1932, to the Fiscal Agents, the informal committee in New York would have been constituted and would have gone ahead with its work, and doubtless would have rendered a report by this time to the bondholders pointing out the obvious impossibility for the Dominican Republic to resume sinking fund payments next year. However, President Trujillo, in his desire not to move until assured that there was no objection from the new administration, had held matters up. Dunn hoped that when he returned to Santo Domingo he would be able to get Trujillo to recognize the committee, but this would still take some time and he felt it would probably be necessary to introduce legislation for an extension of the Emergency Law before the committee had rendered a report on the situation. There was talk in the Dominican Republic of extending the emergency for five years, but Dunn had argued against this and had urged that it be not extended beyond one year.

I told Mr. Dunn that I appreciated his difficulties. However, there was nothing I could add to what I had said in our conversation on May 1. The Dominican Legation on December 24, 1932, had transmitted to the Department a copy of the Government’s letter to the Fiscal Agents setting out the program it was proposed to follow; the Department had acknowledged receipt of this communication but had made no comment on it one way or the other. As for the attitude of the new administration, as I told him before, no consideration has yet been given by officials of the new administration to this situation.

Mr. Dunn spoke of his new contract with Trujillo under which he would receive a bonus if the negotiations with the bondholders resulted successfully. He said he understood there had been some criticism as to the propriety of such a clause and that he proposed to abandon it. I said that I was very glad to hear this.

Mr. Dunn said that he wished very much that he could get some expression from the Secretary regarding the Dominican Government’s program and inquired if I would have any objection if he tried to see the Secretary personally. I said that I had not the slightest objection.

E[dwin] C. W[ilson]