839.51/4852: Telegram

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

152. From Wilson.

“Referring to your 128, Sept. 1, 9 a.m., I want to make certain observations:

1. The floating debt and the possibility of incorporating in the convention an exchange of notes thereon was mentioned to me neither in the Department nor in subsequent messages except a reference thereto in your No. 122, Aug. 26, 8 p.m. which left the matter to my discretion. At no time in the negotiations have I mentioned this matter to the Dominicans and I had contemplated before leaving here discussing informally with the Minister the best way of expediting the matter. I cannot feel that we would be justified at this late stage of negotiations in introducing into the convention a subject extraneous to the foreign loans of 1922 and 1926. If it appears well to you I might endeavor to work out an exchange of notes similar to the one included in the Department’s instruction to the Legation No. 190 of May 16, 193921 but I believe that the convention should not bring up this question nor make any reference to it.

2. The last phrase of your article VI. In reply to your question, Bonetti has furnished us an analysis of the laws and we think that the representative of the bondholders can obtain more accurate information [Page 819] as to Dominican collection and disbursement from the records and books of the bank than from any information that would probably be handed him by the treasury. My impression is that to insist on the insertion of this phrase might make the position of the representative an unpalatable one to the Dominicans and serve no practical and useful purpose.

3. I entirely agree to the insertion of a sliding scale as provided in your article V. Article V, however, leaves blank the sums to be inserted in the sliding scale although I proposed figures in my 142, August 25, 5 [4] p.m. Please comment.

4. I learn from Erikson, local manager of the National City Bank, that under its present contract the Dominican Government is paying the bank three-fourths of one percent of the Government’s deposits for its services as a depository. The bank may make some objection to paying from this sum the salary and expenses of the representative of the bondholders. I do not feel competent to pass on whether three-fourths of one percent is a reasonable charge or otherwise, for the services rendered. Perhaps you would desire to telephone National City Bank in this connection.

5. Your article III, point “third” leaves a blank for the salary of the representative. Is it your desire that the salary should be stipulated in the convention and if so what is your suggestion?

The same paragraph provides that the sum to be paid the bank for services as depository is to be negotiated between the representative of the bondholder and the Dominican Government whereas the draft which we submitted (my 144, August 27, 5 p.m.) provided that this sum would be arranged between the bank itself and the Dominican Government. Does the Department believe that it would be appropriate for representative of the bondholders to negotiate with the Dominican Government for the services of the bank? The depository bank might well refuse to carry out such services if it did not make the arrangements itself.

6. Your article I, second paragraph, states “except the cash and securities in the pension fund of the general receivership”. The final paragraph of your 128 provides that the exchange of notes concerning pensions should provide “that the existing cash and securities mentioned in article I should be devoted to that purpose”. The text therefore does not make clear in whose possession these funds would remain. It would seem that the right of the American Government to retain such funds on liquidation of the receivership is dubious. If the Dominican Government undertakes the responsibilities of the receivership it should, I submit, be in possession of the assets of the receivership. The exchange of notes might stipulate that the Dominican Government holds these sums earmarked for the payment of [Page 820] pensions but I would hesitate to recommend this as I believe this might subsequently cause the Dominicans to feel that their responsibility was ended when the sums were exhausted.

Do you feel it indispensable to make reference to the pensions in this convention as provided in your article VIII. I think there is something to the Dominican contention that pensions are a purely domestic responsibility and extraneous to the subject of the convention. The Dominicans themselves offer to state that the exchange of notes constitutes an obligation of the same force and validity as the convention itself (see my 149, Aug. 29, 4 p.m.). The members of the Dominican commission have repeatedly made it clear to me in conversation how deeply [they] feel on this point. I am submitting a proposed exchange of notes in a separate telegram.

7. I note that the final paragraph of your article II rejects the Dominican suggestion as to the deputy being ex officio the manager or the acting manager of the depository bank. While the matter is not of high importance I rather prefer the Dominican suggestion merely because it assures continuity whereas under your text both the representative and the deputy might be absent or incapacitated simultaneously.”

  1. Not printed.