800.51 W 89Czechoslovakia/86a

The Secretary of State to the Minister in Czechoslovakia (Einstein)

No. 252

Sir: With reference to previous correspondence regarding the indebtedness of Czechoslovakia to the United States, the Department transmits herewith the text of a note to the Czechoslovak Government which you are instructed to present at the first available opportunity.

Please inform the Department by telegraph of the date of the note which you present pursuant to this instruction.

I am [etc.]

Frank B. Kellogg
[Enclosure]

Text of Note To Be Presented to the Czechoslovak Government

Under instructions from my Government, I have the honor to refer to certain correspondence exchanged in 1919 between a representative of the Government of Czechoslovakia and a representative of the Treasury Department of the United States regarding the conditions under which the Government of the United States was prepared to make further advances to the Government of Czechoslovakia, that is to say, to a letter dated May 19, 1919, from Mr. Norman H. Davis, Finance Commissioner of the United States, to Mr. Edouard Beneš, Minister of Foreign Affairs of Czechoslovakia, and to the reply from Mr. Beneš dated June 26, 1919.

The letter from Mr. Davis, dated May 19, 1919, was as follows:

“The Government of the United States of America has made advances to the Government of your country for relief and reconstruction purposes, and the question of further advances is under consideration.

“The Secretary of the Treasury desires me to express to you his opinion that, in view of the circumstances under which, and the purposes for which, these advances are made, it is proper that your Government should agree not to take any action by way of legislation, concessions, or agreements which might put any of the Allied or Associated [Page 123]Powers or their nationals in a more favorable position than the United States government or its nationals, or which will discriminate against the nationals of the United States.

“I shall be glad to hear from you, so that I may communicate your reply to the Secretary of the Treasury.”

The reply from Mr. Beneš, dated June 26, 1919, was as follows:7

“I beg you to excuse my involuntary delay in replying to you. I sent your letter to Prague, for the information of my colleagues of the Cabinet, especially the Minister of Commerce, and received no immediate reply.

“For my part, I can assure you that our Government wholly shares your point of view on the question of which you spoke in your letter of May 19, 1919. The Czechoslovak Government recognizes with the utmost satisfaction the great services, both financial and economic, rendered it by the Government of the United States. It has no intention whatever of favoring one of our Allies to the detriment of another or of taking measures vis-à-vis one which could be unfavorable to another. It intends to continue the same policy—in the field of economics and finance—that it practiced during the war, namely, of having the same general attitude toward all our allies.

“Please accept, Sir, the expression of my highest sentiments.”

In view of the understanding set forth in the above correspondence regarding the treatment to be accorded to the advances made by the Government of the United States to the Government of Czechoslovakia, it is with no little surprise that the Government of the United States has learned that the Government of Czechoslovakia, although it has made no corresponding proposal to the Government of the United States, has agreed to repay to the Governments of Denmark, France, Great Britain, Holland, Norway, Sweden and Switzerland within five years, with interest at five per cent., the relief indebtedness of Czechoslovakia to those Governments. My Government is also informed that the Government of Czechoslovakia has agreed to pay separately to each of the above-mentioned Governments the amount of interest, if any, calculated at the rate of six per cent, per annum and accumulated semi-annually, which on January 1, 1925, was due and unpaid, and to constitute the payments to be made pursuant to these arrangements a first charge on receipts accruing to the Government of Czechoslovakia by way of compensation, reparation or indemnity from ex-enemy Governments, other than receipts by way of restitution in kind, and subject to any charges already created in respect of previous loans.

The Government of the United States has accorded the most considerate treatment to the Government of Czechoslovakia in connection with the indebtedness of the latter to the United States. [Page 124]Although as early as April 25, 1922, I had the honor to inform the Government of Czechoslovakia of the creation of the World War Foreign Debt Commission and of the desire of that Commission to receive any proposals or representations which the Government of Czechoslovakia might wish to make for the settlement or refunding of its obligations to the Government of the United States,8 it was not until May, 1923, that representatives of the Government of Czechoslovakia commenced negotiations with the World War Foreign Debt Commission in Washington, and although nearly two years have elapsed since the visit of the Czechoslovak Debt Commission,8a no proposals have been received by the World War Foreign Debt Commission for either the settlement or the refunding of the indebtedness of Czechoslovakia to the United States which as of November 15, 1924, amounted to $91,879,671.03 in principal amount and $23,648,768.93 in unpaid interest, a total of $115,528,439.96. With the exception of the sum of $9,376,689.69, the principal amount of the indebtedness of Czechoslovakia to the United States was incurred entirely for relief purposes, including the repatriation of Czechoslovak troops from Siberia, and among the obligations held by the United States Treasury is a relief bond, Series “A” 1920, due January 1, 1925, identical in terms with the relief bonds held by the Governments of Denmark, France, Great Britain, Holland, Norway, Sweden and Switzerland, which were the subject of the recent agreement referred to above.

Under the circumstances, I am therefore instructed to state that the Government of the United States cannot agree that the Government of Czechoslovakia should make no payments to the United States on account of its indebtedness while making payments to other Governments on account of indebtedness to them incurred by Czechoslovakia for similar purposes, and that the Government of the United States will not acquiesce in any discrimination against the United States in favor of other creditor governments either through agreements such as those recently concluded or otherwise. My Government therefore would be pleased if it could receive from the Government of Czechoslovakia an appropriate proposal for the payment or refunding of the obligations of the Czechoslovak Government now held by the United States Treasury which, except for an obligation in the principal sum of $1,962,145.37, maturing June 30, 1925, are all payable on demand either in terms or because over-due.

  1. A translation has been substituted by the editor for the French text which here followed.
  2. See telegram No. 1, Apr. 21, 1922, to the Ambassador in France, Foreign Relations, 1922, vol. i, p. 399.
  3. For appointment of the Commission, see Foreign Relations, 1923, vol. i, pp. 876 ff.