YUGOSLAVIA OBJECTION BY THE DEPARTMENT OF STATE TO FURTHER LOANS BY AMERICAN BANKERS TO YUGOSLAVIA PENDING SETTLEMENT OF YUGOSLAV DEBTS TO THE UNITED STATES GOVERNMENT1 860h.51/539 Blair & Company, Incorporated, to the Secretary of State NEW YORK, March 18, 1925. DEAR SIRS: We have about concluded arrangements to purchase $3,000,000 Six Months 6% Treasury Gold Notes of the Government of the Kingdom of the Serbs, Croats and Slovenes, to be dated as of March 31, 1925. The purpose of this issue is to refund an equal amount of Seven Months 6% Treasury Gold Notes of the Kingdom which we purchased last September, and which will mature on March 31, 1925. Will you kindly advise us at your early convenience if the State Department has any objection to our offering the above-mentioned Note issue. Yours very truly, BLAIR & CO. INC. 860h.51/539 The Secretary of State to Blair & Company, Incorporated WASHINGTON, March 20, 1925. SIRS: In reply to your letter of March 18, 1925, regarding your interest in the purchase of a proposed issue of $3,000,000, Six Months 6% Treasury Gold Notes of the Government of the Kingdom of the Serbs, Croats and Slovenes, to be used to refund an equal amount of Seven Months Notes of the same Government maturing on March 31, 1925, I beg to inform you that in the light of the information before it, the Department of State offers no objection to the flotation of this issue in the American market. I am [etc.] For the Secretary of State: 1 For negotiations concerning settlement of war debts, see vol. 1, pp. 177 ff. 860b. 51/573 Blair & Company, Incorporated, to the Secretary of State NEW YORK, September 12, 1925. DEAR SIRS: We and our associates are conducting negotiations to purchase $3,000,000 Six-Months 6% Treasury Gold Notes of the Government of the Kingdom of the Serbs, Croats and Slovenes, to be dated as of September 30, 1925. The purpose of this issue is to refund an equal amount of SixMonths Treasury Gold Notes of the Kingdom which we purchased last March and which will mature on September 30, 1925. Will you kindly advise us, at your early convenience, if the State Department has any objection to our offering the above-mentioned issue. Yours very truly, BLAIR & CO. INC. 860h. 51/574 Blair & Company, Incorporated, to the Secretary of State NEW YORK, September 17, 1925. DEAR SIRS: We enclose herewith copy of our letter of September 12th to the Department of State la regarding a proposed issue of $3,000,000 Six-Months 6% Treasury Gold Notes of the Government of the Kingdom of the Serbs, Croats and Slovenes, of which we have had as yet no acknowledgment. Supplementing the information contained in said letter of September 12th, we would state that the negotiations contemplate the receiving of an option by the bankers for $2,000,000 additional notes, the proceeds of which in the event the option is exercised, are to be employed, we understand, for railway and road construction. Inasmuch as the negotiations have reached an advanced stage, we would appreciate prompt advice as to the Department's attitude in regard to the issue. Yours very truly, 860h.51/573 The Secretary of State to Blair & Company, Incorporated WASHINGTON, September 18, 1925. SIRS: I beg to acknowledge the receipt of your letter of September 12, 1925, regarding your interest in the purchase of $3,000,000, SixMonths 6% Treasury Gold Notes of the Government of the Kingdom of the Serbs, Croats and Slovenes, for the purpose of refunding an equal amount of Six-Months Notes purchased by you last March and maturing September 30, 1925, and in reply to your inquiry to state that this Government does not view with favor Yugoslav financing at the present time. I am [etc.] For the Secretary of State: JOSEPH C. GREW Under Secretary 860h.51/573 The Secretary of State to Blair & Company, Incorporated WASHINGTON, September 23, 1925. SIRS: I beg to refer to this Department's letter of September 18, 1925, in reply to your inquiry regarding the proposed purchase and sale by you and your associates of $3,000,000, Six Months, 6%, Treasury Gold Notes of the Government of the Kingdom of the Serbs, Croats and Slovenes and to subsequent conversations on this subject with your representative, Mr. Chandler P. Anderson. It appears from the information with which Mr. Anderson has furnished the Department that you and your firm are committed to the Yugoslav Government in respect of the financing in question and that, apart from any other considerations, it is not improbable that if you should withdraw at this time from the transaction, the notes now outstanding would go to default and serious loss would be occasioned to American holders of Yugoslav securities. The Department regrets that the contemplated financing was not brought to its attention sufficiently in advance of your commitment thereto as to permit your decision in the matter to be guided by the Department's views with respect to the extension of credit to the Yugoslav Government. As stated in the Department's letter of September 18, 1925, this Government does not view Yugoslav financing with favor at the present time. The reasons for its attitude were fully explained to Mr. Anderson and are, as you know, due to the failure of that Gov ernment to take steps looking to the refunding of its indebtedness to the United States. In view of your commitment, however, and actuated by a desire to avoid possible embarrassment and loss to American investors, the Department, while maintaining its position as set forth in the above-mentioned letter of September 18, 1925, and without in any sense establishing a precedent, is willing to state that it will interpose no objection to the purchase and sale by you of the $3,000,000, Six Months Notes in question for the purpose of refunding an equal amount of Six Months Notes maturing September 30, 1925. The Department desires it to be understood, however, that objection will be offered to any further renewal of the present credit or to the extension of additional credit until a satisfactory understanding is reached between the Yugoslav Government and the World War Foreign Debt Commission regarding the refunding of the former's indebtedness to the United States. Accordingly it would object to the purchase and sale by you of the $2,000,000 additional notes, referred to in your letter of September 17, 1925. I am [etc.] 860h.51/581 FRANK B. KELLOGG The Minister in the Kingdom of the Serbs, Croats and Slovenes (Dodge) to the Secretary of State No. 2815 BELGRADE, September 25, 1925. SIR Referring to my Despatch No. 2726 of June 26th last,2 relative to the proposed Loan of Messrs. Blair and Company and Messrs. Armstrong, Whitworth and Company to the Yugoslav Government, I have the honor to inform you that since my return here I have renewed my acquaintance with Mr. Nelson O'Shaughnessy, the new representative here of Blair and Company. My despatch above referred to mentioned that the $3,000,000 six months Yugoslav Treasury Notes taken by Blair and Company on October 1st last, and renewed on April 1st last for another six months, would mature on October 1st next. The Yugoslav Government, although professing to have funds on hand sufficient to enable them to pay off these notes at maturity, are anxious to renew them and Blair and Company are also desirous of so doing in order thus to preserve for some time longer their option on the Adriatic Railway contract.3 Mr. O'Shaughnessy has lately shown me two telegrams which he has received from Blair and Company in New York concerning Blair and Company's negotiations with the Department in connection with this note renewal. These telegrams appear to be of sufficient interest for me to quote them as follows: "Sent September 21st. 1925, 4.36 p. m. Received in Belgrade, September 22nd. 1925, 9.30 A. M. Monday No. 27. Deliver the following to the Minister of Finance. 'In response to our enquiry concerning the proposed $3,000,000 note issue, we have been advised by the American State Department United States Government does not view with favour Yugoslav financing at the present time. Presume Minister of Finance will take up matter direct with our Government. Are doing everything possible to secure modifications this decision.' Blair." "Sent from New York September 22nd 4.46 p. m. Received in Belgrade; Sept. 23rd 9.15 a. m. Tuesday No. 28 Communicate the following to the Minister of Finance. 'After bringing pressure to bear on our Government we are informed verbally that our Government reluctantly agreed not to raise objections to issue Six Months Notes to provide for funds for those maturing Sept. 30th. It was intimated that we could not count on any financing being approved either for renewal of the new notes or for other purposes until commission had come to Washington to settle outstanding questions debt owed by your Government to our Minister of Finance.' Blair". Mr. O'Shaughnessy informs me that in view of the second telegram quoted above the renewal of the Yugoslav Treasury Notes for another six months is now practically assured but that further financing on the part of Blair and Company is at a standstill in view of the last sentence in this telegram and in view of the continued absence from Belgrade of the Minister of Finance, Dr. Stojadinovitch. As stated in my Despatch No. 2810 of the 12th instant, in reply to your Instruction No. 575 of July 23rd last, relative to the assurances given by the Yugoslav Government in connection with its debt to the United States, I am proposing to call upon Dr. Stojadinovitch upon his return in order to ascertain his intentions regarding the funding of this debt. I may also mention that I learn strictly confidentially that the relations between Blair and Company and Armstrong, Whitworth and Company, have of late become still further strained and that unless they change for the better, it is unlikely that the British firm will be allowed to participate in further financing by Blair and Company. My Despatch No. 2670 of May 6th last reported complaints made by Blair and Company on account of the attitude in a number of matters of Armstrong, Whitworth and Company. I may add in this connection that a few days ago Messrs. T. L. Addy Taylor and E. P. Thomas of the United States Steel Products 'Not printed. |