860c.516/38: Telegram

The Chargé in Poland (White) to the Secretary of State

385. Your number 255, June 10 [9], 5 p.m. Attitude of the Minister of Finance in regard to remittance question is in general as follows. The Poles reserve to themselves the right to supervise banking institutions as prescribed by the law of March 23rd. This law did not become effective until June 17th when a ministerial decree giving it force was promulgated. There is no desire on the part of the Polish Government to discriminate against American banks, in proof of which the Minister of Finance announce[s] that numerous Polish exchange bureaus have been closed in Warsaw on account of illicit dealing. Liquidation of American banks has indeed been ordered and postponed until July 15th last for new business and September 15th to close up the old business; but this Polish Government is prepared to permit continuation if they will sign a contract such as would meet the wishes of the Polish authorities. The Polish Government insists that the contract of the American Express Company was not monopolistic and that the provision for especially favored treatment therein contained referred not to other rival institutions but to mail matter, namely to give preference to money order business over ordinary correspondence.

The Minister of Finance is, however, determined so to register the remittance business that the banks engaged in this quasi philanthropic work should have no speculative interest in the Polish exchange. To this end it desires that local branches of American banks should deal in exchange only in Poland and solely with the Polish State Bank and consequently should refrain from intermediate dealing with Vienna, Berlin, Zurich and other points. As a result of a conference held yesterday between the representatives of the American banks and the Minister of Finance, at which the trade commissioner and myself were present, an agreement was virtually reached, which if duly committed to paper, signed and approved by the Department, should almost completely solve the banking aspect of the remittance problem. The American banks spokesmen were the representatives of the Public National Bank of New York and the Cosmopolitan Trust Company of Boston, who are the leaders in the American Bankers Protective Associations in Poland. The Ministry of Finance insists that no arrears now exist It appears, however, that the mails are still slow.

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The agreement will provide that American banks shall submit to such supervision and inspection as the Polish Government may prescribe. The purchase of Polish marks with American dollars in not abnormal quantities and such as are necessary to cover remittances during stated periods will be permitted with the Polish State Bank at a rate to be fixed in conference between said banks and Warsaw banks or branches engaged in the business. This rate to be telegraphed daily to official Polish representatives in New York. This agreement will apply not only to those already in the field but also to newcomers.

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