860h.51/204: Telegram

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

29. Your 23 June 8, 5 p.m., immediately communicated to the Minister of Finance who after prolonged discussion and continued pressing finally agreed to send me information desired and has now sent me three letters substantially as follows:

  • First letter:

    “Following figures are evidently approximate owing to great price fluctuations everywhere: in addition to $10,000,000 for the construction Adriatic railway and port another 10,000,000 will be expended as follows:

    Purchase of railway ties 1,000,000;
    Locomotive and car repairs 3,000,000;
    Purchase of bridges for existing railways 2,500,000;
    Enlargement of railway stations 600,000;
    Ministry of Communications buildings 800,000;
    Other ministries buildings 1,500,000;
    Raw materials and necessary spare parts for railway repair shops 600,000.

    Raw materials will be purchased partly in Jugo Slavia, partly wherever most advantageous and will serve principally as material for repairs existing railways.

    $2,000,000 for repaying National Bank, which means dinar redemption, that is, purchase of paper money. It is National Bank for government needs paper money, which Government needs [sic]. Government needs have not increased since December 1921 and law February 1920 is latest law governing matter. Credits provided by it cannot be increased without new law, to which Government does not intend to resort, and consent of National Bank.

    1,700,000 for exchange stabilization.

    Since I have stated Blair contract signed conditionally on approval Government of the United States I seize the opportunity to repeat this. I think Jugo Slav Government acted correctly and has no reason to express regret for act of current usage in international relations.

    It is understood entire Standard Oil debt will be paid as provided by special arrangement concluded for this purpose.[”]

  • Second letter:

    “Department’s telegram mentions 25,000,000 loan while contract provides for 30,000,000 issue. Please so inform your Government so that its approval applies to 30,000,000. If issue 30,000,000 figures first letter would be increased proportionally. Figures mentioned will be stated in law to be voted by Parliament.[”]

  • Third letter:

    “I repeat, no funds from the first isssue of 25,000,000 will be used for payment principal or interest of any debts or loans previously contracted by Yugo Slav Government outside of United States of America.”

Minister of Finance states unable to inform regarding non-American interests companies mentioned last paragraph my 27 but Bénard, as Sheldon now gone, has furnished me following signed statement:

“No foreign interest in loan which is wholly reserved for Blair. Railway and Port Construction Company has capital of £120,000 par value. Blair owns majority stock and has control of and appointment four of seven directors. Remainder of stock owned by Regie Generale of Railways, Bénard Brothers, both French, and Serbia group represented by Praportchetovitch each having appointment one director.”

Bénard states Colonel Poland to be chief engineer and that he has no further data here but that Blair will furnish Department full information.

Minister of Finance states verbally increase in circulation since December, shown my despatch number 1388,13 owing solely to increase notes issued by National Bank on its own account and for which Government is not responsible.

  1. No. 1288, Mar. 16, not printed.