The Dominican Envoys Extraordinary on Special Mission (Pastoriza and Henríquez Ureña) to the Secretary of State


Mr. Secretary of State: In your kind note of February 10, 1937, addressed to Minister Pastoriza, Your Excellency, after stating that you are informed of the desire of the Dominican Government to undertake a complete revision of the Dominican-American Convention [Page 443] of 1924, declares that you are disposed to hear the concrete suggestions on the matter that our Government may wish to formulate.

In response to those indications, we have the honor to send to Your Excellency a draft of a protocol containing the ideas of the Dominican Government.

We do not believe it necessary to reiterate our Government’s opinion that the 1924 Convention must be replaced by another instrument more in harmony with the needs of the present time and with the present trend of Pan-American international life. Applying an identical opinion, and taking as a basis the broad and shining “good neighbor” policy, the United States has already modified other treaties of past epochs, such as those which it had made with Haiti,11 Cuba12 and Panama.13

In proposing the modification of the 1924 Convention (which has been in existence for thirty years, strictly speaking, since it was a reproduction, with slight variations, of the 1907 Convention14), the Dominican Government does not propose any stipulation tending to diminish even in the slightest [degree]15 the guarantees of payment offered previously to the holders of bonds of the Dominican public debt. The mechanism established for the payment of the debt differs, undoubtedly, in external details, in order to render it compatible with the idea of Dominican sovereignty, but the guarantees are exactly the same, and provision is still made for reestablishing the procedure provided in the Convention which it is intended to replace, at any period of justified uneasiness, while the causes for such uneasiness last. We believe that such a contingency is outside any probability, not only because conditions in the country are very different from those which prevailed thirty years ago, but also because one of the defects of the two Conventions, the one of 1907 and the one of 1924, was that of establishing terms and conditions for amortization that were beyond the economic capacity of the Republic, and those terms and conditions have been expressly modified by means of an agreement with the bondholders, in such a way that the Dominican Republic will be able to accomplish the service on the debt at all times without difficulties, until its final payment. But although such a contingency may be improbable, we have wished to provide for it expressly, in order to make it impossible for any creditor to think that he does not count on the same guarantees of payment.

[Page 444]

Other points, the modification of which we consider essential, are those referring to the concept of excessive limitation of the sovereign power of the Dominican Republic to change its tariffs and the concept, also too restricted, of what may be considered an increase in its public debt. It is necessary to formulate explanations of both points to avoid difficulties in interpretation in the future.

Our intention of presenting the concrete bases of revision proposed by the Dominican Government with regard to the Convention of 1924 being fulfilled, it remains for us only to mention the second point of Your Excellency’s note: that which refers to the conclusion of a commercial treaty between the United States of America and the Dominican Republic. Your Excellency lays down as a preliminary question the necessity for the Dominican Government to apply the most-favored nation clause to the United States, in connection with the commercial treaty which it has concluded with France. Reserving the right to discuss this point more fully, we take pleasure in advising Your Excellency that the Dominican Government has expressed its juridical opinion on the matter, as a question of doctrine, but has the greatest desire to arrive at an understanding with the Government of the United States as to the application of that principle.

We believe it possible, in conversations on the subject to be held in the near future, to arrive at a satisfactory and harmonious formula, in order to initiate, immediately thereafter, the negotiations for the commercial treaty between the two countries.

We avail ourselves [etc.]

  • Andres Pastoriza
  • Max Henríquez Ureña

Dominican Draft of a Protocol To Replace the Convention of December 27, 1924, Between the United States and the Dominican Republic

Whereas a convention between the Dominican Republic and the United States of America, containing provisions ‘for the aid of the United States in the collection and application of the customs revenues of the Dominican Republic, was concluded and signed by their respective plenipotentiaries in the City of Washington on the twenty-seventh of December, 1924;

Whereas this convention was concluded for the purpose of facilitating the system of payments of the public debt of the Dominican Republic, and subsequently the said debt has been considerably reduced;

[Page 445]

Whereas the Dominican Republic has arrived at an agreement16 with the holders of the bonds of said public debt, who have consented to an extension of the amortization periods, subjecting moreover the capacity of the Republic, to make amortization payments, to a sliding scale in proportion to the increase of the customs revenues, and thus there is no doubt that the Dominican Republic will be in a position to satisfy without difficulty the debt service until its final payment, and all this is set forth in the certificates legally annexed to said bonds under date of January 2 and February 2, 1937;

Whereas experience has demonstrated that certain provisions in the convention of 1924 may hinder the action of the Dominican State intended to develop the natural resources of the country and the progressive extension of its industry and commerce;

Whereas the Dominican Republic has requested the cooperation of the United States of America to put into execution a new protocol which shall take into account these circumstances and the new provisions agreed upon with the bondholders with regard to manner of payment of the public debt; and the United States is disposed to give such cooperation;

The Government of the United States of America, represented by . . . . . . . . . . .; and the Government of the Dominican Republic, represented by . . . . . . . . . . . have agreed upon the following:

Article I

The Dominican Republic shall maintain, as guarantee of the punctual performance of the service of its public debt, its revenues in the form of customs duties, in conformity with the provisions in force with the holders of bonds of the debt; and such guarantee shall be maintained until payment has been made of each and every one of the bonds issued by the Dominican Government, based on the loans referred to by the Convention concluded by the Government of the United States of America on December 27, 1924, and subject to the conditions and limitations accepted by the bondholders in conformity with the agreement made in 1936, which are set forth in the bonds renewed under date of January 2, and February 2, 1937.

Article II

The Dominican Republic undertakes to apply in the order indicated below the proceeds of the customs duties collected in the various customs houses of the Republic;

First, to the payment of the expenses of the office of the Fiscal Representative of the debt; second, to the payment of the interest [Page 446] on pending bonds; third, to the payment of the annual amounts stipulated for the amortization of said bonds, in conformity with the agreements now in force, including the interest on all bonds retained as a sinking fund; fourth, to the purchase and cancellation or retirement and cancellation of any of said bonds, in accordance with the terms thereof, as may be decided by the Dominican Government; fifth, the remainder shall be applied to the general expenses of the nation, in accordance with decisions made by the public authorities of the Dominican Republic.

Article III

The Executive Committee of Dominican Bondholders shall designate, with the previous approval of the President of the United States of America, a Fiscal Representative for the collection of the Dominican public debt, and the Dominican Government shall deliver to said Fiscal Representative, on the 20th of each calendar month, a sum equal to the twelfth part of the annual interest on all bonds issued and of the annual amounts indicated for the amortization of said bonds in accordance with the provisions in force with the bondholders. In his turn, the Fiscal Representative shall deliver said sum to the Fiscal Agent of the loan, on the first day of the calendar month next succeeding.

In the same way, the Dominican Government shall deliver to the Fiscal Representative, against a receipt, signed on the 20th of each calendar month, the amount necessary to pay the expenses of the office of said Fiscal Representative, and of the subordinate officials that he needs for executing the duties of his office. The said amount cannot in any case exceed three percent of the collections of the customs revenues.

Article IV

The Fiscal Representative shall supervise the functioning of the customhouses of the Republic, and shall report to the Secretary of the Treasury of the Dominican Republic any error or deficiency that he notices in the service; he shall, moreover, keep an account of the statistical data of the customs activities and the trade of the Republic with other countries; and shall make an annual report, which shall be submitted to both governments, in the Spanish and English languages.

The employees under the Fiscal Representative shall be appointed by said Fiscal Representative on approval of the President of the Dominican Republic.

Article V

If by reason of a disturbance of public order or because of any other unforeseen force other than a force apart from human will, or a public [Page 447] calamity such as hurricanes, earthquakes, floods, fires or epidemics, the Dominican Government should find it impossible to meet the service on the public debt on the date fixed for payment thereof, the Dominican Government will consent that the Fiscal Representative take charge, before the first day of the following month, of those customhouses the collections from which he considers sufficient to guarantee punctual service on the public debt, and he shall directly collect the customs duties the revenue from which he shall assign, firstly, for meeting the expenses of his office; secondly, for the payment of the interest on all bonds outstanding; thirdly, for the payment of the amounts fixed for the amortization of said bonds; and fourthly, he shall place the remainder at the disposal of the Dominican Government. The payment of the amortization and the interest on the bonds shall be calculated every month by twelfths, and shall be made to the Fiscal Agent for the loan on the first day of each calendar month.

When the causes that brought about the direct intervention of the Fiscal Representative in the customs service have ceased and the situation of the country is considered normalized, the Fiscal Representative shall again turn over the custom houses in which he has intervened to the competent officials of the Dominican Government, and his duties shall again be adjusted to the rules laid down in Articles III and IV. During the whole period that his intervention lasts, the office expenses of the Fiscal Representative may not amount to a sum greater than five percent of the customs revenue.

Article VI

The Dominican Government shall render to the Fiscal Representative and his assistants all the aid and support that may be necessary, as well as the broadest protection in the discharge of their duties and the exercise of the powers granted to them in the foregoing articles, adopting for that purpose such laws and regulations as may be necessary.

Article VII

Until the Dominican Republic has paid off all the bonds of the Joan, its contractual public debt may not be increased, by the contracting of new loans and new bond issues, except by prior agreement between the Dominican Government and the Fiscal Representative and the Fiscal Agent of the loan, the latter representing the bondholders. Notice of this agreement must be given to the United States Government in advance. It is understood that there shall not be considered as contrary to this rule the contracts and financial arrangements made by the Dominican Government for the execution of public works and other services of national interest, provided they be adjusted to the following conditions: firstly, as a guarantee of those contracts or [Page 448] financial arrangements there shall be set aside the revenue from a given impost of the internal revenue service, which therefore does not affect the customs revenue, and the contracting parties must stipulate that they accept that as the sole guarantee for the performance of such obligation; and secondly, the maximum period for the liquidation of any of those contracts may not be greater than four years counting from the date on which the contract goes into effect. The Dominican Government expressly renounces the right that it has to issue new bonds up to the limit of twenty million dollars provided in the 1924 Convention. The Dominican Government may at any time sovereignly dispose of the internal revenues and imposts not set aside for guarantee and payment of the public debt and shall freely dispose of those receipts.

Article VIII

The Dominican Government may change its customs tariffs in accordance with the needs and advantage of its commerce, but pledges itself expressly not to reduce import duties at any time to such a point that, taking as a basis exports and imports of the same extent and the same kind for the two years preceding the year in which it is desired to make such modification, the net total of customs receipts under the tariff so modified would not have amounted, for each of the said two years, to at least one and a half times the sum needed to insure the service of interest and amortization of the public debt.

Nevertheless, there shall not be considered contrary to this rule the advantages and reductions in duties which the Dominican Republic may offer to other nations through commercial treaties or agreements and which do not signify an integral lowering of the import tariff, since they relate only to a given country; provided that such reductions may not mean the risk that customs imports may be reduced more than twenty percent, the computation being made from the imports which took place in the two years previous and the numerical proportion having been established by which the total customs revenue could be diminished, if imports were maintained at the same rate.

Article IX

The Fiscal Representative shall render accounts monthly to the Department of State for Treasury of the Dominican Republic, the Fiscal Agent and the Department of State of the United States, and the said accounts shall be subject to examination and auditing by the competent officials of the Dominican Government.

Article X

Every controversy which may arise between the Contracting Parties in the execution of the stipulations of this Convention shall be settled [Page 449] by arbitration, if the two Governments cannot reach an agreement through diplomatic channels. For the execution of this provision in each special case, the Contracting Parties may, when the necessity for arbitration has once been determined, conclude a special agreement defining clearly the extent of the disagreement, the extent of the powers of the arbitrators and the periods that are to be fixed for the organization of the arbitral tribunal and the various stages in the proceedings. The special agreement providing for arbitration must be signed in all cases within a period of three months from the date on which either of the Contracting Parties notifies the other Contracting Party of its desire to have recourse to arbitration. It is understood that such special agreements shall be made, on the part of the United States, by the President of the United States, by and with the consent of the Senate, and that, on the part of the Dominican Republic, they shall be subject to the procedure required by its Constitution and laws.

Article XI

This agreement shall go into force after being approved by the Contracting Parties in accordance with their respective constitutional methods, but the principles and rules established in its Articles VII and VIII shall take effect immediately, as interpretation of stipulations III and IV of the convention of December twenty-seventh, nineteen hundred twenty-four, now in effect.

When the ratifications of this Protocol have been exchanged, which shall be done as soon as possible, the convention between the United States of America and the Dominican Republic which contains provisions on the aid of the United States in the collection and application of the Dominican customs revenues, signed in the city of Washington on December twenty-seventh, nineteen hundred twenty-four, shall be considered as abrogated.

Done in duplicate, in the English and Spanish languages, in the city of Washington, on . . . . . . . . . . . . . .

  1. Foreign Relations, 1931, vol. ii, p. 505; ibid., 1932, vol. v, p. 699; ibid., 1933, vol. v, p. 755; ibid., 1934, vol. v, p. 305.
  2. Signed May 29, 1934, ibid., p. 183.
  3. Signed March 2, 1936; for text, see Department of State Treaty Series No. 945, or 53 Stat. 1807. For previous correspondence, see Foreign Relations, 1935, vol. iv, pp. 889 ff.
  4. Signed February 8, 1907, ibid., 1907, pt. 1, p. 307.
  5. Brackets appear in the file translation.
  6. See communications of December 15, 1936, exchanged between the Dominican Government and the Foreign Bondholders Protective Council, Inc., published in the Council’s Annual Report 1936 (New York, 1937), pp. 348–352.