The Minister in the Dominican Republic (Schoenfeld) to the Secretary of State

No. 3422

Sir: Referring further to my despatch No. 3413 of July 14, 1936, reporting that I had submitted to President Trujillo at his request a formula designed to govern the Dominican Government’s action, in pursuance of Article III of the Convention of December 27, 1924, in consulting the American Government regarding proposed financial obligations to be incurred by the former, I have the honor to report that, in conversation this morning with the Minister for Foreign Affairs, Señor Bonetti Burgos said that, without special authorization from the President of the Republic, he desired personally and unofficially to make a suggestion which he believed would facilitate agreement on the procedure to be followed in carrying out Article III. The Minister reminded me that, as President Trujillo had already stated to me, the President was favorably disposed to accept my suggested formula, as he was to cooperate fully at all times in adjusting this and any other issues between our Governments with a view to strengthening friendly relations. The Minister said that, although the President had not advised him of a final decision with regard to accepting the suggested formula respecting Article III, he (the Minister) believed final acceptance would be facilitated if I could indicate more precisely the manner in which the Department would deal with the communications proposed in my formula to be made by the Dominican [Page 454] Government to our Government in compliance with Article III of the Convention.

I said to the Minister that I thought it was important to bear in mind the limited nature of the procedure contemplated in my suggested formula for compliance with Article III of the Convention. The formula had reference only to the procedure which the Dominican Government might wish to follow in making its communications to the American Government regarding financial obligations proposed to be undertaken. The Dominican Government would presumably not desire to be placed in the position of requesting express approval of such proposed obligations, especially in view of the assurances we had repeatedly given of our desire not to interfere unduly in the administrative operations of the Dominican Government. Accordingly, I said to the Minister, I felt it would be difficult for the Department to express itself in advance regarding its possible attitude towards hypothetical financial obligations of the Dominican Government proposed to be incurred by the latter and communicated to our Government in pursuance of my suggested formula. I expressed the personal opinion that if, upon receipt of any future Dominican communication of this kind, my Government should feel that it desired to make any comment to the Dominican Government regarding such proposed obligations, this comment would probably not take the form of an expression of approval or disapproval but would more probably have reference to my Government’s view of the possible effects of the particular obligation proposed to be incurred upon the Dominican Government’s public debt.

The Minister then asked me what our understanding of the term “public debt” included. I answered that, while I could not speak authoritatively on this point, I understood the significance of the phrase “public debt” had been considered and adjudicated by American courts and it seemed to include all financial obligations assumed by a government and requiring revenue to meet them, regardless of the form in which such obligations might be evidenced.

I said to the Minister that I would gladly communicate his personal inquiry to the Department but that I foresaw some difficulty in obtaining from the Department a statement as to its possible action in the hypothetical situation to which he had referred. I offered to telegraph the Department but the Minister indicated that he preferred I should communicate with the Department more fully than would be possible by telegraph.

I venture to suggest that I be authorized, in response to the inquiry of the Minister for Foreign Affairs above outlined, to make a statement to him on behalf of the Department as to the procedure it would contemplate following in the event that the Department should hereafter receive written communications from the Dominican [Page 455] Government, in pursuance of Article III of the Convention, regarding certain financial obligations proposed to be incurred by the Dominican Government. I respectfully submit that such a statement might take the form of advising the Dominican Government that, should it communicate to our Government hereafter the details of any financial obligation the Dominican Government proposed to incur looking to expenditures in excess of fiscal revenues receivable in any current fiscal year, our Government would give such communcation the most benevolent consideration within the limits clearly established by the Convention itself and with due regard to the then existing financial obligations of the Dominican Government. A statement on behalf of the Department along these lines may serve to minimize further discussion regarding this point with the Minister of Foreign Affairs, who may have brought it up at this time in order to defer President Trujillo’s acceptance of the formula submitted by me to the President on July 14, to which, as I have reason to believe, the Minister is opposed.

Respectfully yours,

H. F. Arthur Schoenfeld