839.51/4859: Telegram

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

157. From Wilson. We made good progress with the Dominicans this afternoon working on your text transmitted in your telegram 128, September 1, 9 a.m.

Article I: Accepted.

Article II: Accepted.

Article III: point 3rd: After the words “attached hereto”, at our suggestion they have accepted the words “shall be given full force and effect as integral parts of the convention”. The Dominicans suggest redrafting the last half of the paragraph referred to, to read as follows: “and the payment of one-twelfth of the annual amount agreed upon between the Dominican Government and the depository bank as compensation for the services of said bank. No disbursements of funds of the Dominican Government shall be made by the [Page 825] depository bank until the payments provided for in this article shall have been made.”

This would eliminate the representative of the bondholders as the medium of negotiation between the bank and Government. The Dominicans explained that they had a very intricate contract with the National City Bank providing for other operations than those associated with the service of foreign debt, and hence were obliged to negotiate with the bank direct. The Department has already indicated that it has no serious objection thereto. As to the suppression of any mention of 1¼% of total revenues, the Dominicans pointed out that under the convention the Dominican Government itself will negotiate with the American Government on salaries and with the bank for services; hence the requirements for a maximum percentage. I consider the point well taken. Despradel did not, however, attach very high importance to its inclusion of [or] suppression.

Article IV: Accepted.

Article V: First half accepted with figures of 10% exceeding $12,500,000 and less than $13,500,000 and 5% additional over $13,500,000. The Dominicans strongly urge the suppression of the second half of the article beginning with the words “the depository bank shall as usual”. They point out that article III, point 2, already covers the right of the representative of the bondholders to receive such excess amortization as may be derived from the operation of the first paragraph of article V. They are willing to add to article VI the type of statement which they previously objected to, designed to reenforce the ability of the representative to obtain full information as to revenues and disbursements. They suggest a text as follows as a second paragraph to article VI: “The Secretary of State, of Treasury and of Commerce will supply monthly to the representative of the holders of the bonds of the loans of 1922 and 1926 complete and detailed reports, duly certified, of all the revenues and disbursements and other fiscal operations of the Dominican Government.”

Despradel argued that under their fiscal law the Comptroller is the only person authorized “to ascertain and certify”, and that the portion in discussion would thus be a violation of existing fiscal law, the modification of which is expressly forbidden under article VII.

Article VI: Accepted but addition suggested as previously outlined under article V.

Article VII: The Dominican Government emphatically objects to the inclusion of words as follows: “nor shall any law inconsistent with the terms of this convention be enacted”. They feel sure this puts them in the humiliating position of undertaking not to violate a convention which they have signed and ratified. Despradel said he felt that the Generalissimo would not permit the signature of a document [Page 826] containing this phrase. They referred to their original text reading as follows: “And these laws as well as the powers which the tenor of this accord confers upon the representative of the holders of the bonds of 1922 and 1926 may not be modified or diminished by the Dominican Government during the life of this agreement without the previous consent of both Governments”. The Dominicans pointed out that they were willing to re-insert this phrase and accept any reinforcement that we might suggest; for instance, if we desire to provide that the functions of the bank as well may not be modified, they would be happy to admit it.

Article VIII: Suppressed.

Article IX: Accepted.

Article X: Accepted with the addition of the following words at the end of the first paragraph: “, and on that date the said convention of December 28, 1924 is abrogated”.

The Dominicans, although not insisting strongly on this point, would, for popular appreciation of this convention, like to use the word “abrogated” in the body thereof.

The text of the communiqué with your changes was approved.26

The note on pensions incorporating your changes in the first paragraph was approved.27

The note on salaries (text in separate telegram No. 15928) was approved after a hard struggle. Despradel felt that a salary of $10,000 was incompatible both with the scale of payments in the Republic to officials of high position, and with the type of work to be performed by the representative of the bondholders. In announcing that he accepted the note he stated that he understood that the phrase “not to exceed $10,000” should not be interpreted as meaning that this must be the salary. This would be discussed by the two Governments at the moment of selecting the representative. [Wilson.]

  1. Drafts not printed. For press release as issued, see Department of State Bulletin, September 7, 1940, p. 209.
  2. Drafts not printed. They provided for continuing life pensions of $200 per month to Messrs. W. E. Pulliam and N. L. Orme, retired officials of the General Receivership of Dominican Customs.
  3. Not printed.