Papers Relating to the Foreign Relations of the United States, 1922, Volume II

860h.51/175: Telegram

The Chargé in the Kingdom of the Serbs, Croats and Slovenes ( Boal ) to the Secretary of State

[Paraphrase]

Belgrade , May 16, 1922—7 p.m.
[Received May 18—10:50 a.m.]⁴

16. Department’s telegrams number 12, May 13, 7 p.m., and number 13, 8 p.m.

1. The Prime Minister has gone to the country and is replaced during his absence by the Minister for Parliament, who informed me today that the Blair offer as now made is 86 percent of $20,000,000 [$25,000,000?] cash immediately and 86 percent of $75,000,000 later, both to bear 8 percent interest, and the total debt of the Yugoslav Government to be $100,000,000. He also assured me officially that the Government purposes to use this cash loan installment or any other from an American firm as follows: For railroad construction, $10,000,000, the balance to pay debt to Standard Oil Co.⁵ and the interest due on Yugoslavia’s indebtedness to the United States, the redemption of dinar currency, and constructing Government buildings. Sheldon, representing the Blair Co., is now in Belgrade and is pressing the Government to sign an agreement at once; he states that the terms of the loan as it has been negotiated so far stipulate the same use of the cash installment as that given in paragraph 1 of Department’s telegram number 13 [12?]. He adds that of the $75,000,000, 86 percent will go for railroad construction and 12 percent profit on the purchase of material to go to Blair Co. but that this latter per cent is still under negotiation.

2. The representative here of Bertron, Griscom & Co. and Hall garten & Co. (former Lieutenant Colonel Kratz) states that their offer is 87 percent of $30,000,000 cash at once to be used as set forth in Department’s telegram number 12, paragraph 2, and 87 percent of $70,000,000 cash to be furnished later subject to the necessities of the Government and to the security provided. The Acting Prime Minister confirmed this statement.

3. The Acting Prime Minister assured me that without any further delay he would place my communication, based on the Department’s circular of April 21, noon,⁶ before the Council of Ministers in order that I might as soon as possible be furnished with a statement of the Government’s intentions and proposals in regard to the refunding of its obligations to the Government of the United States and to the sending of representatives at an early date to the United States to negotiate.

4. I have informed the Acting Prime Minister that the Department’s attitude toward competing American firms was that of strict impartiality. Kratz informed me that the following offer was telegraphed the Yugoslav Government this morning by a Belgian firm: 86 percent cash of £20,000,000 at once and to be refunded in 10 years, 86 percent of £10,000,000 for public works later with interest at 8 percent to be refunded in 20 years, the Government’s total indebtedness to be £30,000,000.

The Acting Prime Minister, the Minister of Finance, and the Minister of the Interior are in favor of the Blair offer; the remainder of the Cabinet favor Hallgarten and associates. The Parliament is also divided and its ratification of the Cabinet’s signature with either the Blair or the Hallgarten interests would be uncertain.

Boal

4. Text printed from corrected copy received May 24.
5. In the spring and summer of 1919, the Standard Oil Co. of New York sold to the Yugoslav Government about $3,160,000 of refined petroleum, for which the company later accepted that Government’s treasury bond for the full amount of the invoices. This treasury note matured on Nov. 2, 1919. About one half the amount of the bond had been paid when payments ceased in August 1920. The Standard Oil Co. requested the Department to instruct the American Legation at Belgrade to assist in expediting the payment of the balance of the defaulted treasury note; as a result of the Legation’s representations, another $400,000 was remitted to the company in March 1921. (File nos. 360h.115 St. 2/5 and 12.)
6. Vol. i, p. 398.