The Minister in the Dominican Republic ( Scotten ) to the Secretary of State
[Received August 28—1:56 a.m.]
144. From Wilson. Your 122, August 26, 8 p.m., and previous correspondence. We met this morning with the Dominican negotiators. We have subsequently prepared a text which represents the meeting of minds between the Dominicans and ourselves though they understand, of course, that this is subject to the Department’s approval. A separate telegram is being prepared of commentary on the text.
In order to expedite matters, I suggest that when you have considered the text you advise by cable when you would find it convenient to telephone me to make such suggestions and alterations as you may deem advisable. The text follows:
“Article I. The Government of the United States of America and the Government of the Dominican Republic agree to abrogate the convention entered into between them on December 27, 1924, in order to substitute for the said convention the provisions which are established in this present convention.
Article II. Beginning on the date of the entry into force of the present convention the Dominican Government will collect the customs revenues of the Dominican Republic through its appropriate national officials, and all revenues pertaining to the customs duties. The general receivership of the Dominican [apparent omission] the customs will be closed as from this same date.
All property and funds of the general receivership, as well as the cash and securities in the pension fund of the general receivership, shall be turned over on the same date to the Dominican Government.
The High Contracting Parties undertake that no claim shall be advanced by one against the other on account of any act of the general receivership.
Article III. The Government of the United States of America and the Government of the Dominican Republic, in common accord, shall designate a bank, with establishment in the Dominican Republic, as sole depository of all revenues of the Dominican Government, and agree to designate, also by common accord, an official who shall act in the said bank as representative of the holders of the bonds of the external debt of 1922 and 1926, in all matters that concern the service of the said external debt. If at any time the bank so designated ceases for any reason to function in this capacity, or if either of the high contracting parties deems a change advisable, a successor shall be [Page 809] designated under the procedure outlined above. If the official [who?] shall act in said bank as representative of the holders of the bonds of the external debt of 1922 and 1926 ceases for any reason to serve in such capacity, or if either of the High Contracting Parties deems a change advisable, his successor shall be designated by the same procedure established for the original designee. In the event that it becomes necessary to designate a successor either to the bank or the official representing the holders of the bonds of the external debt of 1922 and 1926, and in the further event that the Government of the United States of America and of the Dominican Republic are unable to reach mutual accord on such designation within a period of 3 months, the Foreign Bondholders Protective Council, Incorporated, shall then nominate said successor, and in the event that the Foreign Bondholders Protective Council, Incorporated, is unwilling to make such nomination, the president or a vice president of the American Bankers Association, or his duly authorized representative shall be requested to make the nomination; provided, however, that a bank and/or official previously rejected by either of the high contracting parties may not be so designated.
In the case of absence, incapacity or death of the representative of the holders of the bonds of the external debt of 1922 and 1926 the manager or acting manager of the bank shall act in that capacity ad interim.
The representative of the holders of the bonds of the external debt of 1922 and 1926 shall have complete access to all the records and books of the depository bank.
During the first 10 days of each calendar month the official thus designated will receive by endorsement and orders of payment which will be issued to the bank by the Dominican Government through the intermediary of the Secretary of State for the Treasury and Commerce, the sum necessary to cover payments as follows:
- First, the payment of interest of all the outstanding bonds;
- Second, the payment of the annual sums designated for the amortization of the said bonds, including the interest of all the bonds which are retained in the sinking fund, which shall be effected in accordance with the agreement concluded between the Dominican Republic and the Foreign Bondholders Protective Council, Incorporated, August 16, 1934.
- Third, the payment of the services of the depository bank in accordance with terms which shall be agreed upon between the bank and the Dominican Government; the payment of the services rendered by the representative of the holders of the bonds of the external debt of 1922 and 1926 in connection with the service of the foreign debt; and the payment of the pensions of those former employees of the general receivership listed in annex A to this convention; provided, however, that the payments referred to in this paragraph may in no case exceed three-fourths of one (1) per cent monthly of the Government revenues so deposited.
Article IV. The Government of the Dominican Government declares that the service of the 1922 and 1926 bonds as well as the expenses connected therewith, as outlined in article III of the present convention, constitute an irrevocable first lien upon all of its revenues.[Page 810]
Article V. On the date of the entry into force of this convention the Government of the Dominican Republic shall issue irrevocable orders to the depository bank not to make any disbursements of any funds of the Dominican Government until the Secretary of State for the Treasury and Commerce has ordered the payments to the order of the representative of the holders of the bonds of the external debt of 1922 and 1926 of the sum necessary to cover the disbursements specified in article III of the present convention.
Article VI. The system of deposit of all revenues of the Dominican Republic will be carried out in accordance with the Dominican laws of accounting and of the Treasury now governing such matters, and these laws as well as the powers which this convention confers upon the representative of the holders of the bonds of the external debt of 1922 and 1926 may not be modified or diminished by the Dominican Government during the life of this convention without the previous consent of both Governments.
Article VII. Controversies arising between the Governments of the United States of America and of the Dominican Republic as a result of the execution of the provisions of the present convention shall, if possible, be settled through diplomatic channels. Upon notification by either the Government of the United States of America or the Government of the Dominican Republic that, in its opinion, possibilities of settlement by this means shall have been exhausted, such controversies shall be settled in accordance with the procedure stipulated in the Inter-American Arbitration Convention signed at Washington, January 5, 1929,14a notwithstanding the provisions of article II(a) thereof.
Article VIII. The exchange of ratifications of this convention will be effected in the City of Washington, D. C., the first day of the month immediately following the last ratification by either of the two countries and from that date the convention signed by the United States of America and the Dominican Republic on December 27, 1924, will cease to have effect; provided, however, that articles I to V inclusive of the said convention of December 27, 1924, shall continue in full force and effect until there have been adopted and executed all the necessary requirements in order that the present convention may enter into effect.
Article IX. The present convention will enter into effect after [apparent omission] have been ratified by the High Contracting Parties in accordance with their respective customs and methods and will continue in full force and effect during the existence of the outstanding external bonds of 1922 and 1926, it being understood that after the redemption or cancellation of the said bonds, the provisions of this convention shall automatically become null and void.
In witness whereof the respective plenipotentiaries have signed the present convention in duplicate, in the English and Spanish languages, both texts being equally authoritative, and have hereunto affixed their seals.
Done in the City of Washington the . . . . . day of . . . . ., 19 . .”