860h.51/191: Telegram

The Minister in the Kingdom of the Serbs, Croats and Slovenes (Dodge) to the Secretary of State

27. Your 20, June 1, 7 p.m., 21, June 2, 2 p.m.11 In reply to paraphrase of former which I handed to him Minister of Finance sent me letter stating:

  • “1. Proceeds loan not to be used to pay principal or interest indebtedness to other governments.
  • 2. First issue to be 25 to 30 million dollars.
  • 3. Ten million first issue for construction new railways or repair existing lines and rolling stock.
  • 4. From remaining proceeds entire debt Standard Oil to be paid and
  • 5. Remainder to be used: (a) for Government needs and vacation [vacating?] of ministries in order to save rent payments and vacated private premises now causing [sic] house shortage, (b) for retiring, from circulation certain amount of paper money to improve exchange. There is no danger Government will again increase currency circulation since for eight months there has been no issue. Government cannot furnish exact figures these expenditures on account of fluctuating exchange but assures Government of the United States that object of loan is to assist economic revival, increase production and remove effects of war destruction.[”]

In reply to my request for further details regarding expenditure mentioned, 5, Minister of Finance wrote second letter:

“Remainder means that large portion remaining after satisfying necessary and production needs such as construction ministries will be used for retiring largest possible amount of paper money. Cost of public buildings cannot be specified. Regarding money retirement, new issue could not be made without law of Parliament and consent National Bank, both of which unlikely. Strictly speaking, indebtedness of the Jugo-Slav Government to Government of the United States is left without prejudice for World War Debt Commission.[”]

At a subsequent interview Minister of Finance declared emphatically he was unable to furnish more detailed information owing to fluctuating prices and uncertain requirements of government but entire loan would be used for necessary productive purposes in excess of ordinary needs already assured from revenues.

Your 22, June 4, 1 p.m. Hallgarten bid refused and Blair loan contract signed last night conditionally on approval of Government of the United States. Contract also signed simultaneously Railway [Page 1014] and Port Construction Company, Guernsey corporation, represented by Sheldon, Blair agent, and Praportchetovich, regarded as the same loan and construction Adriatic railway. Copies both contracts received from Sheldon who states Blair communicating them to the Department.

[No signature indicated]
  1. No. 21 not printed.