839.51/4356

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

No. 426

Sir: With reference to your despatch No. 3141 of February 24, 1936, transmitting a copy of the note from the Dominican Government containing the views of that Government with respect to the interpretation to be given Article III of the American-Dominican Convention of December 27, 1924, concerning the pledges of future revenues by the Dominican Government, there is transmitted herewith a draft of a note which you will please address to the Minister of Foreign Relations in answer to his note transmitted with your despatch under acknowledgment.

Very truly yours,

For the Secretary of State:
Sumner Welles
[Enclosure]

Draft of Note To Be Addressed to the Dominican Minister for Foreign Affairs (Bonetti Burgos)

Excellency: I have the honor to inform Your Excellency that your note No. 131 of February 21, 1936, containing the views of Your Excellency’s Government regarding the interpretation to be given Article III of the American-Dominican Convention of December 27, 1924, concerning the pledging of future revenues by the Government of the Dominican Republic has been duly transmitted to my Government and I am now instructed to reply as follows:

The Government of the United States as a matter of principle cannot admit the contention of the Dominican Government that the [Page 440] payments stipulated in the contracts entered into by the Dominican Government for the construction of certain bridges, which formed the subject of representations made by this Legation as far back as June 20, 1928, do not involve violation of Article 3 of the Convention of December 27, 1924. It is the well-considered opinion of the Government of the United States that arrangements of the nature involved in these contracts, and likewise the contract for the port development work in the harbor of Santo Domingo, involving as they do a financial liability undertaken by the Dominican Government and to be liquidated at some future date, constitute in fact an increase in the “public debt”, and that, accordingly, they come within the purview of Article III of the Convention of December 27, 1924. Any opinion to the contrary would seem clearly to open the way for the Dominican Government, if it so desired, to avail itself of a method for the financing of projects and undertakings of whatever nature which would be limited only by the willingness of other parties to accept written obligations of the Dominican Government.

The Department of State has gone into this question very carefully and thoroughly. As indicated in the representations made on this subject since June 1928, the Government of the United States desires to give a liberal interpretation to the provisions of the Convention, in order that it need concern itself as little as possible with the fiscal affairs of the Dominican Republic, but it is regretted that it is impossible to interpret Article III of the Convention in such a way as to give a blanket authorization to the Dominican Government to enter into contracts pledging revenues for a period of years in advance. The surplus revenues of any given year are, of course, at the entire disposition of the Dominican Government and it may do with such surplus revenues as it wishes without consulting the Government of the United States, but the pledging in advance of surplus revenues for future years can be looked upon only as an increase in the public debt requiring the consent of the Government of the United States under the terms of Article III of the Convention.

Accept, Excellency, etc.