839.51/3935
The Minister in the Dominican Republic (Schoenfeld) to the Secretary of State
[Received September 7.]
Sir: I have the honor to enclose for the Department’s strictly confidential information copy of a memorandum of a conversation I had with President Trujillo this morning.40
I invite the Department’s attention especially to those parts of the memorandum dealing with the possibility of the remittance of the Fiscal Agents for Dominican loans, through the General Receiver, of at least a substantial portion of the surplus accumulated in the hands of the Special Emergency Agent under the Emergency Law.
[Page 644]President Trujillo’s attitude throughout our conversation today was cordial and friendly but towards the end of our talk it was evident that my suggestion regarding the remittance of the surplus in the Emergency Fund gave him concern. I have been unable in the short time since my return to my post to ascertain the precise extent of the obligations the Government has undertaken for the proposed construction of public works. These obligations may be greater than would be warranted by the most prudent estimate of the income on which the Government can definitely count in the remaining months of this year and during the ensuing fiscal year beginning January 1, 1934.
I have learned, however, that in the preliminary formulation of the budget for 1934 the estimate of revenue definitely includes a contribution of $1,500,000 into the General Fund from the customs revenue. In other words, it would appear that the Government is counting upon the extension of the Emergency Law in its present form, if not in a form still more advantageous to the Government, for the ensuing fiscal year.
I need not remind the Department that the Emergency Law of October, 1931, expires by limitation at the end of the current fiscal year on December 31 next. I understand that the budget of the Dominican Government for the next fiscal year, 1934, is now receiving final consideration by the Budget Committee. It may be expected, therefore, that the Government will soon show a pressing desire to know whether it will be able, without objection from the bondholders or from the American Government, to include in its estimate of revenue for the General Fund for next year the million and a half dollars received for that purpose through the operation of the Emergency Law in the current and during the last fiscal year. We can not be unmindful, on the other hand, of the substantial extra-budgetary income of the Government derived from such sources of revenue as the 10% deduction from salaries, the consumption taxes on rice and sugar and perhaps other revenue sources. These extra-budgetary items of income are, of course, subject to the direct control of the President of the Republic and though, in some cases, the yield from these sources has been allocated by law to specific purposes such, for instance, as the reduction of the floating debt, they are not subject to public scrutiny and to the control attendant upon knowledge of disbursements from them.
As bearing upon the general financial position, it may be appropriate to report that the appointment, effective yesterday, of the new Secretary of State for Finance, Dr. Tulio M. Cestero, has been received here with satisfaction, not because of any special financial knowledge on the part of Dr. Cestero, who has been mainly employed as a diplomatic [Page 645] representative for some years past, but rather because, as a result of his diplomatic experience, it is thought he will have broader views than his immediate predecessor as to the international aspects of the Dominican Government’s financial problem and will be better able to deal with it in so far as it has a diplomatic character. The Legation shares this opinion and is hopeful that, as the new Minister of Finance becomes acquainted with the details of the problems arising out of the Emergency Law of 1931 and their bearing upon the conventional relations between the United States and the Dominican Republic, any negotiations that may be undertaken in connection with these matters will be facilitated by the new Minister’s personal qualities and experience in the conduct of international affairs.
Respectfully yours,
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