839.51/4401
The Minister in the Dominican Republic (Schoenfeld) to the Secretary of State
[Received June 9.]
Sir: Referring to my despatch No. 3318 of May 20, 1936, reporting the delivery to the Dominican Government of the note enclosed with the Department’s instruction No. 426 of May 12, 1936, regarding the interpretation to be given Article III of the Dominican-American Convention of December 27, 1924, and reporting also a conversation with the Minister for Foreign Affairs on the subject, I have the honor [Page 444] to inform the Department that in conversation yesterday afternoon with the Minister for Foreign Affairs, Señor Bonetti Burgos asked me how our interpretation of the mentioned article of the Convention was to be construed.
I said that our interpretation of this article was set forth in the note which I had delivered under date of May 18, 1936.35a The Minister thereupon inquired, as he said, unofficially, as to my interpretation of the article in question. I answered that I was not authorized to speak on the subject except in the terms used in my note of May 18 but that I had hoped to hear a proposal on behalf of the Dominican Government calculated to meet my Government’s contentions as to the significance of the article. The Minister, nevertheless, asked me whether I could state for his information my personal view of the matter in its relation to the Dominican Government’s fiscal practice. I replied that as I understood Article III of the Convention, it called in effect for the maintenance of a balanced budget by the Dominican Government and seemed to mean that no obligation should be incurred by the Dominican Government looking to expenditures over revenues in sight beyond the end of any given fiscal year unless such proposed excess expenditures were made the subject of consultation in advance with the Government of the United States. I added that, as stated in my note of May 18 and frequently by my Government in the past, my Government was disposed to be liberal in its attitude towards such matters when consulted by the Dominican Government.
It appeared from the Minister’s ensuing statements that, from the Dominican Government’s standpoint, the real issue was not considered to be the question as to what particular proposed expenditures of the Dominican Government required the consent of the United States, but rather the necessity of consultation of the United States at all regarding any of the Dominican Government’s financial matters outside the scope of the external funded debt now outstanding. This aspect of the conversation prompted an inquiry by the Minister for Foreign Affairs as to the prospects for a modification of the Convention. In this relation he said that the Dominican Government had been informed that the Department of State was already engaged in studying such a modification. In response to his pressing inquiry on this topic, I said that it seemed to me difficult to modify the Convention with a view only to its political aspects and, so to speak, in vacuo. I explained that a modification of the Convention might be more easily envisaged as a complement to a financial readjustment which would involve primarily the redemption of the Dominican Government’s external funded debt. At this point, I mentioned the fact that Mr. Joseph E. Davies, counsel to President Trujillo in [Page 445] financial and other matters in the United States, during Mr. Davies’ latest visit in this country, had outlined to me his plans for a financial re-adjustment here (see my despatch No. 3322 of May 22, 193636). I added that, if such plans should materialize, it seemed possible that in relation with their execution some modification of the Convention might be anticipated. I mentioned also that up to this time the Dominican Government, so far as I knew, had not advanced any concrete proposals looking to the modification of the Convention in general nor had it made any suggestion as to finding a rule to govern its consultation of the United States Government regarding proposed increases of its public debt in pursuance of Article III of the Convention. I said to the Minister that if the Dominican Government were disposed to make any concrete proposals regarding these matters I should be very glad to cooperate in considering them with a view to eventual recommendations to the Department regarding them.
The reference made by the Minister for Foreign Affairs yesterday to reports received by the Dominican Government regarding the Department’s pending study of a modification of the Convention of December 27, 1924, was the second such reference made by him in recent conversations, the first having been on June 1 when I had occasion to see Señor Bonetti Burgos at the Foreign Office. I respectfully request to be informed what, if any, foundation there may be for the reports which appear to have reached the Dominican Government in this respect and also whether the language held by me in conversation with the Minister for Foreign Affairs yesterday, as above reported, has the Department’s approval.
Respectfully yours,