The Secretary of Commerce ( Hoover ) to the Secretary of State

Dear Mr. Secretary: Please find enclosed memorandum on a transaction that is in progress. So far as I know the Irving National Bank has not asked the State Department for its views in this matter.

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.

Yours faithfully,

Herbert Hoover

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.

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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.

E. D. Durand