839.51/2309
The Secretary of the Navy (Denby) to the Secretary of
State
Washington, April 1,
1922.
Sir: With further reference to the issuance of
bonds of the Dominican Republic, there are forwarded herewith for your
information a copy of the proposed Executive Order to be issued by the
Military Governor of Santo Domingo, and a copy of the proposed bond
itself60 to be issued
by the Military Government of Santo Domingo.
On the reverse of the bonds issued in June, 1921, appeared an extract
from a letter of the State Department dated June 1, 1921,61 giving its assent to the
increase in the public debt of the Dominican Republic, as required by
the 1907 Convention, and indicating the consent of the State Department
to the inclusion in an Executive Order of the Military Governor of Santo
Domingo of a statement regarding the validation and acceptance by any
succeeding Government of Santo Domingo of the acts of the Military
Government and the extension of the duties of the General Receiver of
Dominican Customs to cover the service of that bond issue. It appears
necessary, in order to effect the sale of the present issue of Dominican
bonds, to furnish some similar definite statement although not in the
form of extracts or quotations. I therefore wish to furnish Messrs. Lee,
Higginson & Co., for their files, a copy of your letter of March 25,
1922, LA 839.51/2274, concerning the Dominican loan, with the
understanding that the letter is not to be published in any circular or
statement issued.
It is proposed to print on the reverse of the bonds, statements
substantially as follows, which will not appear as extracts or
quotations
[Page 85]
although they do not
deviate from the language contained in your letter of March 25, 1922,
above referred to:—
The Department of State of the United States has consented to the
issuance by the Dominican Government of a total bond issue of
$10,000,000, of which $6,700,000 are to be issued at once, and
of which the remainder will be issued only after previous
agreement between the two Governments.
The Government of the United States, through the State
Department, has consented that the General Receiver of Dominican
Customs, appointed under the Convention of 1907, shall, during
the life of that Convention, make such payments as are necessary
for the service of the new loan from the revenues accruing to
the Dominican Government, and has further consented to the
giving of assurances by the Military Government of Santo Domingo
acting on behalf of the Dominican Republic—
- 1.
- That the Bond issue now made will be accepted and
validated by any subsequent government of the Dominican
Republic;
- 2.
- That after the expiration of the Convention of 1907,
any subsequent government of the Dominican Republic will
agree that the customs revenues pledged for the service
of the loan shall be collected and applied by an
official appointed by the President of the United States
in the same manner as the present General Receiver of
Customs;
- 3.
- That after the expiration of the Convention of 1907,
the loan now authorized shall have a first lien upon
such customs revenues, after the payment of the
necessary expenses of collection, until all the bonds
thereof are paid in full.
Will you kindly let me know whether or not you have any objection to this
procedure.
Respectfully,
[Enclosure]
Executive Order No. 735 of the Military
Government of Santo Domingo, Providing for a Bond Issue of
$10,000,000
Whereas, it has become necessary to raise
funds for continuance of the program of public works, the settlement
of certain outstanding obligations, the repayment of the six months’
certificate of indebtedness authorized by Executive Order No. 713,
January 23, 1922,62
and for other purposes, in such a manner as not to increase present
annual debt charges (thus requiring the repayment of outstanding
bonds issued under the authority of Executive Order No. 637, June
18, 192162), and,
[Page 86]
Whereas, an increase in the public debt of
the Dominican Republic, by the issuance of bonds to the face value
of $6,700,000.00, has been duly assented to by the Government of the
United States as required by the terms of the American-Dominican
Convention dated February 8, 1907, and assurance has been given that
the United States will consent to the issuance by the Dominican
Government of a total bond issue of $10,000,000.00, of which the
$6,700,000.00 are to be issued at once and of which the remainder
will be issued only after previous agreement between the two
governments.
Now, Therefore, by virtue of the powers
vested in the Military Government of Santo Domingo, the following
Executive Order is hereby promulgated:
- Article 1. The Secretaria de
Estado de Hacienda y Comercio is hereby authorized,
empowered and directed to issue bonds of the Dominican
Republic in the form as herein provided for the amount of
$6,700,000.00 and arrange for the sale thereof on terms
satisfactory to him.
- Article 2. This bond issue shall
be known as the Dominican Republic Twenty-Year Five and
One-half Percent Customs Administration Sinking Fund Gold
Bond Issue.
- Article 3. The bonds shall bear
the signature of the Officer administering the affairs of
the Secretaria de Estado de Hacienda y Comercio, and the
seal of the said Secretaria, shall be countersigned by the
Fiscal Agent of the loan, and shall bear a certificate
executed by a Trust Company in the United States,
authenticating each bond as a bond of this issue. The bonds
shall be printed in the English language. The coupons to be
attached to said bonds shall be in the English language and
shall bear the engraved facsimile signature of the officer
administering the affairs of the Secretaria de Estado de
Hacienda y Comercio. The bonds shall be dated March 1st,
1922, and all bonds not retired by the sinking fund shall be
payable in twenty years from that date with a premium of 1%
on the principal amount of each bond. They may be called for
redemption in whole or in part on the first day of March in
any year or years after 1930 at 101% of the par value of the
bonds so called, and beginning with March 1st, 1930, there
shall be paid as hereinafter provided the sum of at least
$563,916.67 each year into a sinking fund for the purchase
or call of these bonds at not more than the above price.
They shall bear interest at the rate of 5½% per annum
payable semiannually on the first day of each September and
March. They shall be paid principal, premium and interest in
gold coin of the United States of the present standard of
weight and fineness at the Office or offices of the Fiscal
Agent of this loan as may be arranged with the bank or
bankers purchasing this loan. The bonds shall be coupon in
form and registerable
[Page 87]
as to principal. They shall be in denominations of $500
and $1000 each, in such proportions as the bank or bankers
purchasing this, loan may determine.
- Article 4. Said bonds are hereby
declared to be exempt from any taxes or impositions now or
hereafter established or levied by or within the Dominican
Republic against the bonds or the income arising therefrom
or the holders thereof, and shall be payable as well in
times of war as in times of peace and irrespective of the
nationality of the holders thereof.
- Article 5. With the consent of
the Government of the United States of America, the payment
of the principal of these bonds as well as the premium and
interest is secured by and shall constitute a charge upon
all the customs revenues of the Republic collected and to be
collected, after their application to the first three
objects designated in Article 1 of the Convention concluded
February 8, 1907, between the United States of America and
the Dominican Republic and after payments provided for by
Executive orders of the Military Government of Santo Domingo
on prior outstanding bond issues of the Republic have been
made, but before any payment is made to the Treasury of the
Republic. In the event that in any year the customs receipts
of the Republic shall be insufficient to meet the payments
herein provided to be made, the Republic will provide such
sums as may be necessary to complete such payments.
- Article 6. The Republic shall
pay to the Fiscal Agent of the Loan, from March 1 to
December 31, 1930, in ten equal monthly installments,
sufficient funds to retire at least one-twelfth of this
entire bond issue, principal and premium, on or before March
1, 1931. This retirement of bonds shall be accomplished
either by purchase of bonds in the open market at not over
101 percent of the face value plus accrued interest, or by
call of bonds for redemption at 101 percent of face value of
bonds so called plus accrued interest by public drawings by
lot during the week containing January 15, 1931, said latter
bonds thus called to be paid (principal, premium, and
interest) on March 1, 1931. The Republic shall likewise
retire on or before March 1st of each succeeding year at
least one-twelfth of this entire bond issue, principal and
premium, until all bonds of this issue shall have been
redeemed and paid, sufficient funds for this purpose to be
deposited with the Fiscal Agent of the loan in equal monthly
installments on or by the twentieth day of each month
beginning the twentieth day of January, 1931. The Republic
shall also pay to the Fiscal Agent of the loan 2/12ths of
the annual interest charge on this issue on or before April
20th, 1922, and thereafter l/12th of the annual interest
charge on all outstanding bonds of this issue shall be
deposited with the Fiscal Agent on or before the 20th day of
each
[Page 88]
month until all
the bonds and the interest thereon are paid in full. A
formal Contract of Sale and Fiscal Agency Agreement shall be
entered into by the Officer administering the affairs of the
Secretaria de Estado de Hacienda y Comercio, in accordance
with which payments of principal, premium, and interest,
purchases and retirements of bonds, and other similar acts
shall be accomplished. Bonds redeemed shall be cancelled and
shall not be reissued.
- Article 7. The Republic may, in
its discretion, at any time and from time to time make
payments into the sinking fund in addition to those required
to be made as aforesaid, and all such additional sums so
received by the Fiscal Agent of the Loan may be applied as
hereinbefore stated for the purchase of bonds at any time in
the open market or for additional requirements of bonds by
drawings for redemption on March 1, 1931, or on March 1st of
any subsequent years.
- Article 8. The acceptance and
validation of this bond issue by any Government of the
Dominican Republic as a legal, binding and irrevocable
obligation of the Dominican Republic is hereby guaranteed by
the Military Government of Santo Domingo, and, with the
consent of the United States Government, the General
Receiver of Dominican Customs, appointed under the
Convention of 1907, will, during the life of that
Convention, make such payments as are necessary for the
service of the new loan from the revenues accruing to the
Dominican Government. The Military Government further agrees
that after the expiration of the Convention of 1907, such
customs revenues shall be collected and applied by an
official appointed by the President of the United States in
the same manner as the present General Receiver of Customs,
and that the loan now authorized shall have a first lien
upon such customs revenues, subject to necessary expenses of
collection, until all the bonds thereof are paid in full.
The loan herein referred to is the loan of $10,000,000.00
mentioned in the second preliminary paragraph of this
executive order and of which this issue of $6,700,000.00 is
a part.
- Article 9. In accordance with
the above mentioned Convention of February 8, 1907, until
the Republic shall have paid the whole amount of the bond
issue of 1908 and the total amounts outstanding on bond
issues to the service of which extensions of the duties of
the General Receiver of Dominican Customs have been made,
the public debt of the Republic shall not be increased
except by previous agreement between the Republic and the
United States, and a like agreement shall be necessary to
modify the import duties of the Republic.
- Article 10. The Military
Government of Santo Domingo engages that during the term of
this loan, no future bonds of the Republic will be issued,
secured by customs revenues, other than the total authorized
[Page 89]
amount of bonds
of this issue, unless the annual average customs revenues
for the five years immediately preceding amount to at least
1½ times total charges on all obligations secured by customs
revenues, including charges of any new loan, and that the
present customs tariff will not be changed during the life
of this loan without previous agreement between the
Dominican Government and the Government of the United
States. For the purpose of determining the total charges on
all obligations secured by customs revenues, the maximum
annual sinking fund charges for any future year shall be
used in the computation.
- Article 11. For the payment of
the interest on these bonds as it falls due and of the
principal and of the premium as herein provided, the good
faith of the Republic is hereby irrevocably pledged
irrespective of any security, and these bonds and the
obligations created thereby shall not be impaired by any law
or decree which the Government of the Republic, or any
authority thereof, may hereafter enact or issue, or by any
interpretation of any law or decree heretofore or hereafter
enacted or issued, and these bonds shall constitute a legal
and binding obligation of the Republic until properly
redeemed and paid.
- Article 12. The Fiscal Agent of
the Loan shall render accounts to the Auditor of the
Republic covering the periods ending June 30, and December
31, of each year of all receipts, accruals, of interest,
purchases of bonds, and payments and shall surrender with
such statements of accounts all coupons and bonds redeemed
and paid. Upon verification of such the Auditor shall make
entry thereof, allow credit therefor, and control and
destroy the coupons and bonds received, making appropriate
record thereof.
- Article 13. The foregoing
provisions in regard to the payments for the interest and
amortization of the loan shall be deemed to be in the nature
of a continuous appropriation and no further appropriation
for such purpose shall be required. The Auditor of the
Republic is authorized and directed to allow due credit in
accounts therefor.
- Article 14. Such funds as may be
necessary to defray the expense of printing the bonds,
advertising notices relating thereto, and other expense
incidental to the issuance, marketing, registration,
redemption, and cancellation thereof are hereby appropriated
out of any funds in the National Treasury not otherwise
appropriated.
- Article 15. All laws or parts of
laws in conflict herewith are hereby repealed.
S. S. Robison
Rear-Admiral, United States Navy
Military
Governor of Santo Domingo
Santo
Domingo City, March 28, 1922.