839.51/3953
Memorandum by the Chief of the Division of Latin American Affairs (Wilson)
| Conversation: | Mr. Oliver P. Newman, Financial Adviser and Special Emergency Agent of the Dominican Republic |
| Mr. Caffery | |
| Mr. Schoenfeld | |
| Mr. E. C. Wilson |
Mr. Newman referred to the fact that the emergency legislation expires December 31, 1933, and expressed the hope that the President might proclaim title II of the Securities Act setting up the Corporation of Foreign Security Holders, so that the Dominicans might take their external bond problem to that organization. In the event of delay in setting up the Corporation, he inquired whether it would be advisable for him, representing the Dominican Government, to sit down with the Department and work out a comprehensive program for dealing with the Dominican situation.
Mr. Caffery said that he felt this would be the wrong approach. The Dominican Government should deal with its bondholders first and come to the Department only after having obtained the bondholders’ consent. Of course if there should be delay in setting up a bondholders representation and we arrived close to the date of January 1 without the Dominicans having been able to deal with the bondholders, then it is conceivable that the Dominican Government might feel it necessary to approach the Department with a proposal, after a showing of absolute necessity, that the present emergency legislation be extended a very short period, say six months or a year, in order to afford opportunity to obtain a bondholders representation and discuss the matter fully with them.
Mr. Caffery called attention to the existence of the large surplus of over $500,000 in the emergency fund and to the provisions of the Emergency Law that any surplus in the fund should be transmitted to the Fiscal Agents for sinking fund purposes. It was mentioned that the Department had received inquiries concerning this matter, and also that the Department had called it to the attention of Mr. Dunn, Mr. Newman’s predecessor. Mr. Newman said that his thought had been to carry on this surplus as a segregated fund until such time as a solution of the Dominican problem, in agreement with the bondholders, had been reached. However, if the Department attached importance to this point, he would take it up with the Dominican Government. Mr. Caffery said that he felt the matter was important, and that it should be considered by the Dominican Government.