Papers Relating to the Foreign Relations of the United States, 1921, Volume II
The Assistant Vice President of the Guaranty Trust Company of New York (De Lima) to the Secretary of State
[Received March 18.]
My Dear Mr. Secretary: We attach, for your information, agreement, signed on the 19th day of February, 1921, between the Republic of Poland and the Guaranty Trust Company of New York.[Page 687]
We would appreciate an acknowledgment of the enclosure at your early convenience.
We have [etc.]
Agreement Made by the Republic of Poland and the Guaranty Trust Company of New York, February 19, 1921
This Agreement, dated February nineteenth, 1921, made by the Republic of Poland (hereinafter termed “Republic”), acting by His Excellency Roman Rybarski, Vice-Minister of Finance, of the Republic of Poland, thereunto duly authorized by law, and Guaranty Trust Company of New York, a corporation having its principal place of business in the City of New York, State of New York, United States of America, (hereinafter termed “Agent”).
Whereas the Republic is desirous of facilitating the remittance of funds from the United States of America to the Republic of Poland; and
Whereas owing to the fact that there has been no government regulation in the Republic covering such remittances and, without such governmental regulation, supervision and assistance, the ordinary banking facilities in the Republic are insufficient to insure prompt and adequate service covering the receipt and payment of such remittances; and
Whereas the Republic has determined to put into effect within ninety days from the date of the agreement rules and regulations covering the receipt of remittances in the Republic of Poland from the United States of America, so that no such remittances may be received and paid unless made on official government forms of the Republic, forwarded to a paying agent appointed by the Republic of Poland, and unless cover against such remittance is placed to the credit of the Republic with an agent of the Republic in the United States of America, and
Whereas Republic has requested Guaranty Trust Company of New York to assist it in establishing and maintaining an adequate system covering remittances from the United States of America to the Republic and has also requested it to act as its agent as hereinafter set forth;
Now, therefore, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:
- First. The Republic agrees to adopt and transmit to the Agent official forms of checks, drafts, or such other remittance forms as may be necessary or advisable, to be used in the remittance of funds from the United States of America to Poland within ninety days after the date of this agreement. Such forms shall be printed in the [Page 688]Polish and English languages, and shall call for payment at the paying agencies of the Republic in Poland appointed as hereinafter set forth. The Republic will appoint a sufficient number of banks and reliable paying agencies in Poland, to act as agents for the payment of such drafts and remittances as may be sent from the United States of America. From time to time the Republic will notify the Agent of the names of such paying agencies in Poland, of new appointments, and of revocations of appointments, so that at all times the Agent shall have a full and correct list thereof.
- Second. The Agent from time to time will compute the rate of exchange (such computations to be submitted to the representative of the Minister of the Republic in the United States of America or of the acting head of the Legation of the Republic in the United States of America for his concurrence and approval) based on which remittances covered by the terms of this agreement are to be settled. The Basic Rate as computed by the Agent shall, after the concurrence of the Minister’s Representative has been received, be reported to the Governor of the Federal Reserve Bank, New York, or to such other person as may be mutually agreed upon by the parties hereto, who shall have power to amend same if in his opinion it is out of proportion with the current market rate. The Governor of the Federal Reserve Bank or such other person as may be mutually agreed upon shall also have authority to compute the Basic Rate should the Agent and the Representative of the Minister fail to agree on same, but shall be under no liability whatsoever for any action taken by him in computing or amending the Basic Rate. This rate of exchange, both for checks and cables, hereinafter called the “Basic Rate” or “Wholesale Rate” shall be based from time to time on current market rates for remittances from other countries to Poland, and shall not be increased unreasonably over such market rates. The Basic Rate of exchange shall be fixed as frequently as variations of the market make necessary. The Agent will use its best efforts to compute the Basic Rate as above set forth, but shall be under no liability for any mistake of judgment so long as it uses good faith in computing the Basic Rate as aforesaid. In case the Minister of the Republic or the acting head of the Legation shall fail to appoint a representative to whom the Agent may submit in New York the computation for the Basic Rate for the concurrence and approval of such representative, the Agent itself may compute and announce such Rate without having the concurrence and approval of any representative of the Republic. The Agent is authorized to make from time to time reasonable rules and regulations covering the computing and announcement of such rate, the distribution of remittance forms, receipt of monies covering remittances, and other matters covered by [Page 689]this Agreement. The “Basic Rate” or “Wholesale Rate” is the rate which shall be charged as hereinafter provided in Article Seventh of this Agreement to banks, bankers and or other institutions having what is known as a “Country Bank Drawing Service”; the rate to be charged all other banks, bankers, financial or other institutions or persons shall be an amount five per cent. (5%) Minimum 25 cents U.S. Currency per remittance in excess of the Basic or Wholesale Rate and shall be known as the “Retail Rate”.
- Third. All banks, bankers and other institutions dealing in exchange shall, upon request, be furnished by the Agent with official remittance forms, notified of the Basic Rate or Retail Rate then in effect, and informed that such remittances may be made by drawing on any designated paying agency of the Republic of Poland, and remitting, at the time such remittances is forwarded, to the Agent in New York City for the account of the Republic an amount of dollars in New York funds calculated upon the Basic Rate or Retail Rate, as the case may be, then in force equal to the amount so remitted. Similar forms shall be furnished upon request, and information given as to the remittances by draft or cable transfer. The dollars so received by the Agent to cover such a remittance or draft or cable transfer shall be held in a special account until the Agent has been notified of the payment in Poland of such draft; after such notification, such dollars, less the Agents remuneration, shall be transferred to the general checking account of the Republic with the Guaranty Trust Company of New York. The Republic agrees that at least 20% of the dollars received and placed to its general account shall be used for the purchase of merchandise and supplies in the United States, or for the payment and discharge of obligations incurred by the Republic in the United States of America.
- Fourth. The Republic hereby appoints Guaranty Trust Company of New York its official agent in the United States of America for the distribution of official remittance forms, the quotation of the Basic Rate and Retail Rate, and the handling of all transactions subject to this agreement and in any way connected with the remittance of money (except United States Post Office Orders) from the United States of America to Poland. Within ninety days after the date of this agreement, the Agent will create and maintain in New York City an adequate department for the handling of all business covered by this agreement. The Agent will also furnish to the Republic advisory assistance for the creation of departments in paying agencies nominated by the Republic in Poland for the handling of such remittances when received in Poland, and the Republic will allow proper facilities in Poland and will provide office accommodations for such representatives as the Agent may employ in Poland. [Page 690]The Agent further agrees to pay the cost for all printing of the official remittance forms and other stationery for such remittance business in the United States of America, for all clerical hire and other expenses in connection with the business in the United States, and will pay the commissions of the Polish banks acting as paying agents for the Republic, provided that such commissions shall be one per cent (1%) of the amounts paid for the cashing of drafts and effecting cable transfers and one three-quarters per cent (1¾%) minimum ten marks of the amounts paid for the effecting of post remittances. The Agent will allow the Republic facilities for the verification of all items in respect to transactions covering the remittance of funds to Poland, and will, if so required, furnish free of charge office space for a reasonable number of Polish government employees for that purpose.
- Fifth. Guaranty Trust Company of New York hereby accepts the appointment of official Agent of the Republic under the terms of this agreement. The Agent may appoint sub-agents in other cities of the United States of America to assist it in the distribution of official remittance forms, quotation of the Basic Rate and Retail Rate, and to receive monies covering the remittance of funds to Poland; but the compensation and expenses of such sub-agents shall be assumed and paid for by the agent, out of the compensation received by it from the Republic.
- Sixth. The Agent will allow interest on all funds of the Republic received from the sale of exchange, pursuant to the terms of this agreement, at a rate not less than the rate fixed by the New York Clearing House for banks and bankers checking account, such interest, however to accrue from the date of the payment of remittances to the beneficiaries thereof and the transfer of such funds from the special account hereinbefore referred to, to the general credit of the Republic. The Agent will also allow interest on all such funds while in such special account at a rate of one per cent, per annum less than the rate so allowed on such funds placed to the general credit of the Republic.
- Seventh. The Republic agrees to keep on deposit with the agent, and in the special account above referred to, an amount in dollars equal to the value of all remittances outstanding and unpaid. As compensation for its services and for the expenses incurred by the Agent under the terms of this agreement, the Republic will pay the Agent a commission of 5% of the amount of all moneys received by the Agent on account of remittances made to the Republic such amount may be charged against and deducted monthly from the special account of the Republic with the Agent. It is agreed that the above remuneration shall be paid out of the dollar cover or, in [Page 691]case such cover shall not be sufficient to provide for the remuneration of the Agent, the Republic will otherwise provide for the payment of such remuneration, and that no charge therefor shall be collected of either the remitter or the payee.
- Eighth. Since certain banks, financial and other institutions in the United States of America are engaged in the business of selling exchange in large amounts, on what might be considered a wholesale basis, and have what is commonly known as a “Country Bank Drawing Service”, the rate at which such banks having such Country Bank Drawing Service, including the American Express Company and C. B. Richard & Co. and other similar concerns, may purchase exchange shall be the Basic Rate in effect from time to time, the rate to all other banks, financial or other institutions not having what is commonly known as a Country Bank Drawing Service shall be the Basic Rate as in effect from time to time plus an increase of not more than five per cent. (5%) minimum 25¢ U.S. Currency per remittance and this latter rate shall be known as the “Retail Rate”. The Agent agrees that it will not sell any exchange on Poland to any bank, banker, financial or other institution, having what is commonly known as “Country Bank Drawing Service”, at a rate less than the Basic Rate, nor will it sell such exchange to any bank, banker, financial or other institution or person, not having a “Country Bank Drawing Service”, at a rate less than the Retail Rate, and all sales by the Agent shall be for the account of the Republic, and the proceeds of such sales when received by the Agent shall be treated by it in the same manner as though such exchange had been sold by a person other than the Agent and the proceeds to cover the exchange so sold had been remitted to the Agent in accordance with the terms of this agreement.
- Ninth. It is agreed that the Agent shall act as Agent only of the Republic and that nothing in this agreement shall be construed as relieving the Polish Banks, the Polish Post Office or any other paying agency in Poland, of any of the duties or responsibilities which they may now or hereafter have under the laws of Poland. It is further agreed that the Republic will indemnify and save harmless the Agent from any claim or liability, which may be incurred by it by reason of the failure of any paying agency of the Republic of Poland to duly and properly pay all moneys remitted on official forms which call for payment on such agent, and from all other claims and liability that the Agent may incur by reason of acting under the terms of this agreement, except only any such claims as may arise against it for its own wilful misconduct. The Agent may advise with counsel and shall be protected in any action taken or suffered by it in good faith and in accordance with the [Page 692]opinion of its counsel. The Agent, being a trust company incorporated under the laws of the State of New York, is subject to the jurisdiction of the Superintendent of Banks of the State of New York. The Agent, accordingly, shall be under no liability for any action which it may take or for refraining to take any action pursuant to the request or direction of the Banking Department of the State of New York or the Government of the United States of America.
- Tenth. The Republic agrees not to make, during the life of this agreement, without the concurrence of the Agent, any contract or agreement with others or effect any transaction which will in any way conflict with or impair any of the terms of this agreement, or prevent or impede the Agent in rendering efficient and adequate service under the terms of this agreement, or which will restrict the powers and duties of the Agent hereunder.
- The purpose of this agreement is to create an adequate means for the remittance of funds from the United States of America to Poland and a free and unrestricted market in the United States of America for Polish exchange. The price of exchange to dealers is to be based upon the current market rates in European countries. The Republic will not restrict the Agent to distributing official forms and quoting the rates in effect from time to time to any special group of dealers in the United States of America but the Agent always shall be permitted to distribute such forms and quote such rates generally. Nor shall the Republic attempt to restrict nor require the Agent to attempt to restrict the price at which exchange bought by dealers or others may be re-sold.
- Eleventh. This agreement shall take effect immediately upon the execution of the same by the Vice-Minister of Finance of the Republic, and shall continue in force for five years thereafter. Provided, however, that the Agent may at any time resign and be discharged from its duties hereunder by mailing written notice of such resignation to the Minister of the Republic in the United States of America or to the Acting Head of the Legation of the Republic in the United States of America, such resignation to take effect on the date specified therein, and in no event less than six months from the date of the mailing of such notice, and provided further that the Republic may terminate this agreement after and not until it has been in full force and effect for a period of eighteen months by mailing written notice of such termination to the Agent at its principal office in the City of New York to take effect on the date specified therein and in no event less than six months from the date of the mailing of such notice. After the date specified in any [Page 693]such notice the Agent shall have no authority to continue to act under the terms of this agreement as the official Agent of the Republic but nevertheless it shall hold the moneys received by it in a special account hereinbefore referred to until notified that the remittances covered by the moneys in the special account have been paid and the moneys in such special account transferred to the general account of the Republic as hereinbefore provided.
- Twelfth. It is understood that where the terms “remittance” and “remittances” occur in this agreement, they shall be held to cover any type of transaction involving the transmission of funds from the United States to Poland, whether by check, draft, cable or post office remittance (other than United States Post Office money Orders) or any other form of transfer.
- Thirteenth. Nothing in this agreement is to be construed as preventing the Agent from maintaining its Country Bank Drawing Service as heretofore, or engaging in the sale of Polish exchange upon the same relative basis as other banks operating a Country Bank Drawing Service, but all such sales, as provided in Article Eighth hereof, shall be for the account of the Republic.
- Fourteenth. It is specifically agreed that the interpretation and construction of this contract shall be exclusively governed by the laws of the State of New York, and though signed in Paris (owing to the temporary presence in that City of the Representative of the Republic of Poland and Mr. Willis H. Booth, Vice-President, representing the Guaranty Trust Company of New York), the French Laws shall in no way apply to this agreement and the French Courts shall have no jurisdiction in any matter relating thereto.
- Fifteenth. Should this agreement, or the execution or carrying out of the same at any time be subject to any registration or other the taxes in the Republic of Poland, the same shall be paid by the said Republic.
In witness whereof this agreement has been duly executed by the parties hereto as of the date first above mentioned.
Guaranty Trust Company of New
By Willis H. Booth, Vice-President
Dr. Jan Adamski