The Proposal in this memorandum, of course, deals outside of the limits
of governmental action and we are faced with the old quandary as to
whether we have a moral responsibility of protection to the American
public.
[Enclosure]
Memorandum by the Chief of the Eastern European
Division, Department of Commerce (Durand)
Sale of Polish Land Mortgage Bonds
in U. S.
The Polish Land Bank is a long established institution somewhat
similar to the Federal Land Bank. It issues collateral bonds against
mortgages, especially on the large Polish estates. Its credit is
undoubtedly good and although the division of the large estates,
which is likely to take place in the future, may complicate the
credit situation somewhat, it is very probable that the bonds will
be good.
This organization proposes to sell these bonds, expressed in terms of
Polish marks, in the United States, thru the Irving National Bank,
and the Union Bank of Co-operative Societies.
Unlike more or less fraudulent schemes for selling foreign bonds at
far above the current rate of exchange, they propose to sell the
bonds at the Polish price (now somewhat below par), converted to
dollars at the current rate of exchange.
[Page 765]
Nevertheless, the buyer runs the risk that when the bonds are paid
for, the Polish currency will be worth less than at present.
Although the Polish finances are improving, it is rather likely that
the mark will gradually fall and if later on any re-valuation is
made, it may very readily be at a lower basis than the present rate
of exchange.
Under these circumstances, it is hardly in the interests of the
American Poles, to whom it is proposed chiefly to sell these bonds,
that they should be offered. There is, of course, no way of
preventing their sale but it may be that a hint to the Irving
National Bank that the Government does not approve the transaction
might be effective. Also it might be possible for Commercial Attaché
Smith to suggest verbally to the Polish Land Bank itself that we
should prefer not to see these bonds offered. I should be glad to
have your instructions in the matter.
