839.51/4852: Telegram

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

129. For Wilson. Your 152, September 2.

Your observation 1. It is not the Department’s view that the matter of the floating debt should be referred to in the convention. The Department agrees that you should endeavor to work out an exchange of notes similar to that you mentioned, in order to make provision for the settlement of this long drawn-out and in the past at times irritating problem.

Your observation 2. On the basis of your recommendation the Department is agreeable to receding on the question of treasury reports to the representative.

Your observation 3. The Department feels that the rate of acceleration may be such as to require but a small sacrifice on the part of the Dominican Government but that it should, nevertheless, be such as to provide increased amortization in years of relative prosperity. Please reconsider the figures you have recommended in the light of this observation and your own comments in the third paragraph at the end of your 145, August 27, 8 p.m.

Your observation 4. The Department likewise does not have any complete factual basis on which to pass on what would be a reasonable charge for the services of the representative and of the depository bank. If a reasonable charge by the depository bank for its services is now considered to be three fourths of 1 per cent of the Government’s total revenues, it would seem necessary, however, that the maximum permissible service payment be greater in order to take care of the salary and reasonable official expenses of the representative. Probably 1 per cent would be adequate to cover the total, but it is suggested that you sound out the Dominicans on inserting one and one quarter per cent as the maximum. It should be emphasized that this in no way sets the actual charges to be paid for the services rendered.

Your observation 5. After reconsidering this point, the Department believes that it would be preferable to indicate in Article III, third numbered paragraph, that the amount of the salary will be fixed in an exchange of notes. The Department believes that the salary to be fixed in an initial exchange of notes on the subject should not exceed $10,000 per annum. Please telegraph draft of text of exchange of notes.

The Department’s draft as to the fixing of the bank’s remuneration is not intended to preclude negotiation and consultation with the bank, but rather to make use of the representative’s close knowledge of the actual services rendered by the bank, to enhance the authority of the [Page 822] representative, and to add to the bondholder’s confidence in the representative. If after you present this point to the Dominicans, they object strenuously, you are authorized in your discretion to revert to the plan suggested in your 144.

Your observation 6. The whole matter of the pensions, including the draft submitted in your 153, September 2, 5 p.m.,22 will be the subject of a separate telegram. In any event the Department believes that the words “except the cash and securities in the pension fund of the General Receivership, which is the subject of an exchange of notes attached hereto” should be stricken out of Article I.

Your observation 7. At the present time we are all thinking of the appointment of an American bank as the depository bank, but at some future time some other institution, perhaps a local one, might be appointed. In such event, it might not be deemed desirable in all cases that the manager and assistant manager of the depository bank be ex officio deputies. The Department’s draft, on the other hand, does not rule out the possibility of the manager of the depository bank being named deputy.

  1. Not printed.