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

No. 433

Sir: With reference to your telegram No. 13, of May 18, 1936, suggesting certain changes in the note enclosed with the Department’s instruction No. 427, of May 12, 1936, there is enclosed herewith a new draft note which you will please substitute for the one enclosed with the Department’s instruction No. 427.

Very truly yours,

For the Secretary of State:
Sumner Welles

Draft of Note To Be Presented to the Dominican Minister for Foreign Affairs (Bonetti Burgos)

I have the honor to inform Your Excellency that I have duly informed my Government of the enactment of Law No. 1096, of April 29, 1936, providing a method for the payment of the floating debt of the Dominican Republic and authorizing the transfer for irrigation purposes of $225,000 from the $600,000 appropriated in the 1936 Dominican budget for the payment of floating debt claims.

My Government has now instructed me to bring to Your Excellency’s attention for the friendly consideration of Your Excellency’s Government the following comments and observations with respect to the floating debt situation and the Law of April 29, 1936.

Since the period preceding the enactment of the Dominican Emergency Law of October 1931, the Government of the United States has given sympathetic consideration and recognition of the difficulties encountered by the Dominican Government, and as a consequence not only refrained at the time the Emergency Law was enacted from invoking the convention of 1924, but thereafter refrained from any representation in respect to the floating debt, although the Government of the United States had noted the Dominican Government’s formal assurances at the time of the enactment of the Emergency Law regarding its intention of liquidating that debt. Subsequently the Government of the United States maintained a very considerate attitude during the period which culminated in the agreement made with respect to the external funded debt with the Foreign Bondholders Protective Council, Incorporated, in August 1934. The Government of the United States has observed the expansion of the Dominican Government’s income and its disbursements in recent years for Governmental purposes. With these considerations in view the Government [Page 465] of the United States desires to bring now to the attention of the Dominican Government, in the most friendly manner, the question of the liquidation of the floating debt, particularly in view of the enactment of the Law of April 29, 1936. In view of the passage of this law, which is obviously intended to liquidate the floating debt, my Government ventures to inquire regarding the period of time within which the Dominican Government now expects to be able to liquidate the floating debt.

In this relation my Government wishes to make the following observations with respect to those features of the Law of April 29, 1936, providing for the submission of claims and the payment thereof. My Government is unable to perceive that the plan contemplated by the Law of April 29, 1936, offers substantial benefits to claimants and considers that, on the other hand, it subjects them to the disadvantage of a probable reduction in their claims by a considerable amount and the further disadvantage of the delay and expense involved in submitting evidence to support the claims which at least in some cases and probably in many cases has heretofore been submitted to the Dominican Government, and, therefore, may not now be available to claimants. The official notice by the Treasury Department dated May 8, 1936, requires that claims be submitted within 180 days and provides that any claims not presented within that period will not be admitted. It would seem that this requirement might be interpreted as designed to bar from payment claims not so presented. At any rate it clearly appears that it is designed to bar such claims from the advantages, if any, of the plan contemplated by the Law.

In view of the foregoing, my Government desires me to state in all frankness that, at least with respect to claims which have already been liquidated by the issuance of certificates or “analyses”, it will not regard failure on the part of an American claimant to submit his claim to the Dominican Government under the Law in question as changing in any way the attitude of his Government with respect to the claim, or as altering the international responsibility of the Dominican Government to deal with such claim without exercising discrimination against it.

With respect to the transfer of funds for irrigation purposes, my Government has also instructed me to call to the attention of the Dominican Government the repeated assurances given this Legation that at least certain floating debt claims of American citizens would be properly provided for and to express to Your Excellency the assumption of my Government that the transfer of the funds in question will in no way interfere with or delay payment of just debts now due American claimants. My Government would appreciate confirmation of this assumption, and also the comment of Your Excellency’s Government with respect to the observations set forth hereinabove.