The Secretary of War ( Baker ) to the Acting Secretary of State

My Dear Mr. Secretary: Through the medium of the Official Gazette of Santo Domingo the Bureau of Insular Affairs has been made acquainted with the provisions of certain Executive Orders issued by the Military Governor of Santo Domingo: namely,

  • Order No. 193, dated August 2, 1918, providing for the payment of the awards to be made by the Dominican Claims Commission of 1917 by means of bonds of the Dominican Republic dated January 1, 1918, payable January 1, 1938.33
  • Order No. 225, dated November 6, 1918, providing for the payment of cash in lieu of bonds of Series L of the denomination of $50.00 authorized to be issued under the provisions of Executive Order No. 193.34
  • Order No. 272, dated March 13, 1919, providing that of the one-half of the excess of customs collections over $3,000,000 to which the Dominican Government is entitled annually under the Convention of February 8, 1907, 60% shall be applied to the purchase and retirement of the bonds of January 1, 1918.35

Also the Acting Secretary of State has furnished the Bureau of Insular Affairs a copy of your Department’s letter of July 19, 1918, to the Secretary of Navy constituting the consent of the United States to the increase in the debt of Santo Domingo.36

An examination of the Executive Orders of the Military Governor of Santo Domingo above enumerated shows that certain duties are thereby placed upon the General Receiver of Dominican Customs.

As you are aware, the duties of the General Receiver of Customs of Santo Domingo are laid down in the Convention of 1907, and the general regulations for the guidance of the Receivership in pursuance of the Convention are contained in Presidential decree of July 25, 1907.37 This latter document places the immediate supervision and control of the Receivership in the Bureau of Insular Affairs and provides that the accounts of the General Receiver shall [Page 156] be referred for examination and verification to that Bureau. The procedure in the only precedent—that of the issue of $1,500,000 bonds to meet an exigent condition—is shown in a letter from the Secretary of State, dated March 10, 1913,38 and, for ready reference, a copy is enclosed. However the practice of the Military Government’s issuing orders direct to the Receivership may have developed—whether in the desire to expedite public business, or for whatever cause—it is a question whether such method of issuing orders is not establishing a practice which under different mutual relations might prove embarrassing. If this view be accepted, would it not be wise to take such action as would effectually dispose of the force of the precedent already established by the Military Government?

To prevent any delay in the carrying out of the plan outlined in the Executive Orders above referred to, the Bureau of Insular Affairs has today issued to the General Receiver of Customs at Santo Domingo instructions to proceed in accordance with the Orders in question.

In placing under the Receivership any further duties as to segregation of funds in addition to those provided for in the Convention, it is well to keep in mind that the funds so segregated shall be controlled by the Receivership, or the agencies through which they are controlled shall be fully known—in being, authority and responsibility—to the Receivership, and it shall be kept fully informed of the handling of such additional segregated funds. It is submitted that in no other way should the fact of its agency in the transaction be given out as a responsible part of the machinery to guarantee the payment of any Santo Domingan debt. The procedure in the liquidation of the loan of $1,500,000 referred to above is shown in Appendix “F”, page 55, of the sixth annual report of the Dominican Customs Receivership—this being the only precedent—a copy of which, for convenient reference, is inclosed.39

When available, it is requested that the Bureau of Insular Affairs be advised as to the exact amount of the present floating debt of the Republic as determined by the Claims Commission of 1917. There is also some doubt as to the precise date on which the segregation of funds for the service of this bond issue should be commenced by the Receivership; also whether segregations should be made on the basis of the total amount of the floating debt as finally determined by the Claims Commission, or on the basis of the debt as the same may, from time to time, be settled with the several claimants.

Very sincerely,

Newton D. Baker