The Acting Secretary of State to the Dominican Minister (Despradel)

Sir: I have the honor to acknowledge the receipt of your note dated August 7, 1934, in which you advise me that after full consultation and discussion with the Foreign Bondholders Protective Council, Incorporated, the Government of the Dominican Republic will voluntarily make to the holders of its foreign dollar bonds a proposal for the future settlement thereof which involves the reestablishment of the full treaty situation under the Convention between the two Governments of December 27, 1924, the payment of the full interest on the outstanding bonds, the making of amortization payments for the current and future years so as to provide a definite plan for the complete amortization of both bond issues, and other undertakings set out in the proposal.

It is with particular pleasure and approval that I have observed your statement that the Government of the Dominican Republic has determined, subject to the terms of the new proposal, immediately to reestablish the full treaty situation, which it modified in 1931; that it will at once repeal the Dominican legislation known as the Emergency Laws inconsistent therewith; and that these measures will bring about the immediate and complete restoration to the general receiver of customs of his full treaty functions in accordance with such proposal. I also observe with satisfaction that the Dominican Government will at no time in the future contend that any act of forbearance heretofore done or exercised by the Government of the United States in relation to the convention between the two countries in connection with the foreign bond control, up to and including the present, has been in fact or shall be in any manner construed by your government to be a waiver by the Government of the United States of any of the terms or obligations of the said convention between the two governments.

I have been much gratified to receive from the Foreign Bondholders Protective Council, Incorporated, a letter20 stating that the Council has carefully studied the proposal of your Government and that it “has reached the conclusion that considering all the facts and circumstances involved, the proposal of the Dominican Government seems to the Council fair to the Dominican Republic and its people and consistent with the broad equities and long-view interests of the bondholders, being indeed, in some respects, distinctly advantageous to them over their present situation”. It is with especial pleasure that I [Page 202] observe this favorable conclusion of the negotiations in which you have engaged.

It seems to me that it should be a matter of great satisfaction and pride to the Dominican people and to your Government that during this period of world depression your Government has maintained prompt payment of full interest on its foreign obligations, and that it now demonstrates its purpose to comply with amortization requirements on bond contracts by making such provision therefor as it feels it is able to make for the protection of the holders of its foreign bonds. In the substantial effort which the Dominican Government is thus making to meet, as far as it feels able, its pledged faith on its financial obligations, the Dominican Government has set an example worthy of emulation.

Accept [etc.]

William Phillips

[For texts of statements issued August 16, 1934, by Mr. Davies and by the Department of State, see Foreign Bondholders Protective Council, Inc., Annual Report, 1934, pages 66–67. For text of statement issued August 17, 1934, by the Bondholders Council, see ibid., page 57. The Dominican law No. 742, August 23, 1934, repealed the emergency legislation; for text of law, see Dominican Republic, Gaceta Oficial, August 25, 1934, page 3.]

  1. For text of letter dated August 15, 1934, see Foreign Bondholders Protective Council, Inc., Annual Report, 1934, p. 62.