839.51/2400
The Secretary of State to the Commissioner in the Dominican Republic (Welles)13
Sir: The Department is in receipt of a letter dated February 4, 1924, addressed to the Secretary of State by the Secretary of the Navy, in which Mr. Denby calls Mr. Hughes’s attention to the alleged excessive expenditures of the Provisional Government of the Dominican Republic, which have reduced the surplus of $814,934.03 existing on October 1, 1922, to a deficit on September 30, 1923, of $294,943.57. It is also stated that the Military Governor, in his report for the year ending September 30, 1923, estimates that the deficit on December 31, 1923, will be $660,000. The Secretary of the Navy concludes that “with definite signs of an approaching financial crisis in the Dominican Republic it would appear highly desirable to consider and develop some plan to meet the situation”. A copy of Mr. Denby’s letter is enclosed herewith.14
From information at the disposal of the Department it would appear that the year 1922 began with a deficit of about a million dollars, and that the surplus of $814,934.03 of October 1, 1922, was occasioned by the sale of bonds, amounting in nominal value to $6,700,000, of the 5½ per cent loan of 1922. In other words, the surplus of October 1, 1922, was apparently not produced either by a large income from taxation or other sources, or by a policy of economy on the part of the Military Government. The Department understands, furthermore, that a large part of the expense incurred by the Provisional Government is due to extensive road buildings and the training of the Dominican National Police, both of which, measures have been strongly advocated by the military authorities. It is also reported that the sales of government-owned tobacco, to [Page 646] which reference is made in Mr. Denby’s communication, did not yield as much revenue as had been anticipated when the budget of 1923 was compiled.
Before making a definite reply to the letter of the Secretary of the Navy, the Department would be glad to receive such comments as you may desire to make concerning the statements contained therein.
I am [etc.]