839.51/4035
The Minister in the Dominican Republic (Schoenfeld) to the Acting Secretary of State
[Received January 2, 1934.]
Sir: I have the honor to inform the Department that during a conversation today with the Minister of Foreign Affairs, Lcdo. Logroño [Page 669] told me that, according to advice very recently received by the Dominican Government from Dr. Tulio M. Cestero, Dominican Minister to the Argentine Republic, Brazil, Chile and Uruguay, and lately Dominican Delegate to the Seventh International Conference of American States at Montevideo, Secretary Hull had requested Dr. Cestero to defer further action regarding the readjustment of the external debt of the Dominican Government until Secretary Hull’s return to Washington from the recent conference at Montevideo.
Lcdo. Logroño made this statement in response to the statement that I had been advised that the Central Bondholders Committee had recently advanced its organization and might be expected shortly to organize a sub-committee prepared to devote attention to the Dominican debt problem, with particular reference to reaching an agreement for resuming regular amortization payments on the external debt. Lcdo. Logroño gave me to understand that while the Dominican Government was preparing to submit to the appropriate authority a complete statement of its wishes in relation to the proposed reorganization of the debt service, the negotiations were now being deferred pending the return of the Secretary of State to Washington. Lcdo. Logroño intimated that the Dominican Government expected the negotiations to be greatly facilitated by the promised support of the Secretary of State and Assistant Secretary Moore working, he indicated, in cooperation with Mr. Joseph E. Davies, who was retained last May as Counsel in financial matters to the Dominican Government.
I took the opportunity of this conversation to urge upon the Minister of Foreign Affairs the desirability of making a further remittance at the year-end to the General Receiver for amortization of the foreign debt under the provisions of the Emergency Law. I called his attention to the substantial size of the surplus in the Emergency Fund at the end of last month, and the probability of its being considerably increased at the end of the current month, during which customs receipts are already reported to have been larger than usual. I pointed out to the Minister of Foreign Affairs that a substantial payment from this surplus to the General Receiver for sinking fund could not but be regarded in the United States as an earnest of the Dominican Government’s entire good faith in the forthcoming negotiations and would, to this extent, serve to maintain an atmosphere of confidence which must necessarily redound to the advantage of the Dominican Government. Lcdo. Logroño told me that he would present the matter in this light to the President of the Republic.
The impression left on my mind by my conversation with the Minister of Foreign Affairs on this subject is that, regardless of the accumulating surplus in the Emergency Fund, it has lately become the intention of President Trujillo to make no further remittances for [Page 670] sinking fund pending a final agreement with the bondholders. It is doubtless the aim of the Dominican Government, if possible, to make that agreement on terms that will provide a larger monthly payment to the Government for its General Fund than it now receives through the operation of the Emergency Law.
Nor are indications lacking that President Trujillo is not disposed to be very amenable to the demands of the bondholders, if and when they are consulted. The present attitude of the Dominican Government is revealed with only slight obscurity in President Trujillo’s speech at Santomé on December 20, which was reported to the Department in my despatch No. 1352 of that date.51 Further confirmation of the views now current in Government circles on this subject is afforded in statements made by the Acting Secretary of Finance to the General Receiver of Dominican Customs in a personal conversation between them on December 23. I enclose an excerpt from a memorandum describing this conversation,51 supplied to me by Mr. Pulliam.
Respectfully yours,