839.51/4833: Telegram

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

140. From Wilson. Supplementing my telegram No. 139 of August 21, 4 p.m., an analysis of the Dominican proposal shows the following outstanding points: (1) Elimination of the receivership; (2) elimination of the restriction against any additional loans now contained in article III of the 1924 convention; (3) elimination of restriction on changes in the customs tariff.

The essential points of positive nature are: (1) All Government revenues to be deposited in a designated bank and to serve as collateral for the foreign debt; (2) appointment of an official by common accord to whom the Government will remit monthly the service of the debt. The Government undertakes to make no use of any of its funds until monthly service of interest and amortization has been fulfilled.

It seems clear from our conversations that the Government is not disposed to sign a convention which continues the collection of customs by other than its nationals. It is my impression that they would prefer to retain the present situation rather than to enter a new agreement which does not meet their wishes in this respect. Hence I am inviting attention in the first instance to this feature. If you are able to meet the Dominicans in this regard there would seem to be latitude for negotiation on their proposal; if not the hope for success in this negotiation appears remote.

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The omission of provisions, analogous to those contained in article III of the 1924 convention might I think be met by the establishment in the new convention of a specific prior lien in favor of the 1922 and 1926 bonds.

For the sake of brevity I am not reporting the presentation which I made to the Dominican representatives both in the informal talks and official negotiations. I have left them in no doubt, however, as to the limitations under which we are acting in respect to the protection of our bondholders and ratification by the United States Senate. [Wilson.]

Scotten