871.51 Rumanian Loan/6
The Minister in Rumania ( Culbertson ) to the Secretary of State
[Received February 24.]
Sir: Referring to my telegrams No. 8 of January 26 and No. 10 of January 28, 1928,16 I have the honor to report further concerning the proposed international loan to Rumania.
Jean Monnet, Director of Blair & Company, Inc., New York, and Pierre Denis (5 Avenue Mozart, Paris), employed by Blair & Company at Paris, have for two weeks been making a careful study of the financial position of the Rumanian Government and Rumanian banks. They have had an office in the Ministry of Finance and apparently have been given every opportunity to examine the records of the government and have been furnished all the information which they have requested from the Rumanian banks.
Mr. Monnet said in his opinion the Rumanian Government will not seek the aid of the Financial Committee of the League of Nations, and added further that if a loan from outside sources is obtained, a control, less obvious than in the case of Poland, would be required. He will submit his report this month and an effort will be made to enlist the cooperation of banks of issue, including the Federal Reserve Bank of New York, the Bank of England, and the Bank of France.
The German Minister has just returned from Berlin where he went to help prepare the way for the visit of Mr. Titulesco. On his return he talked with Mr. Vintila Bratiano and, while he feels that the differences between the German and Rumanian Governments are still very great, he said that Mr. Bratiano is much more reasonable in his attitude than he had ever been before. The minister hopes that Mr. Titulesco will be able to reach a basis of settlement while he is in Berlin with reference to all of those issues which were inherited [Page 817] from the war and which have disturbed the relations between the two countries since that time.
The German Minister said that he understood that the proposition of a German loan through the Disconto Gesellschaft with the cooperation of Dillon Read and Company is still open to the Rumanian Government. In his opinion there will be four stages in the settlement of the financial difficulties of Rumania: (a) a stabilization loan, (b) a settlement with the holders of the Rumanian pre-war bonds, (c) a reorganization of the Rumanian National Bank, and (d) a material loan for the railroad and other industrial enterprises in which, he said, Germany is particularly interested.
Mr. Hughes of the Romano-Americana (subsidiary of the Standard Oil Company of New Jersey) stated that Dillon, Read and Company had definitely requested the cooperation of the Standard Oil Company in making a loan to Rumania. Dillon, Read and Company, he thought, were looking not only for business in Rumania but developing a financial program which would extend to Turkey and ultimately into Russia.
In my telegram No. 8 of January 26 I stated that Mr. Monnet expressed a desire to see all pending cases between the Rumanian and American Governments settled as a condition precedent to a loan, and I suggested to the Department that we seek a removal of the Standard Oil difficulties, a commercial treaty and settlement of bond and other small cases. The Department will realize, I hope, that I had no thought of connecting, in any direct negotiations with the Rumanian Government, a loan in the American market with the settlement of pending issues with the Roumanian Government. In fact, my conversations with Mr. Monnet have been entirely personal and informal. When he suggested that pending issues should be settled, I told him that I could not connect their settlement with the negotiations for the loan. If, however, as a result of the desire of the Rumanian Government for good will in America, it should show a desire to clear up all pending issues, I assume there is no objection to using such a favorable opportunity to obtain justice for American citizens and a stabilization of commercial relations between the two countries.
I mentioned above the bond cases which it is apparently the policy of the Rumanian Government to settle as a condition precedent to an international loan (see despatch No. 535 of February 2, 1928). in the second place, private negotiations are already under way for the adjustment of the Standard Oil difficulties in Rumania (see despatch No. 509 of December 14, 1927).16 The conditions of the oil [Page 818] industry at the present time are extremely bad in Rumania and it is possible that many of the small companies will be forced out of business. Mr. Hughes stated that he would like to see an arrangement between the Romano-Americana, the Astra Romana and the Steaua on the one hand, and the Rumanian Government on the other for the refining of the state royalty crude. At the present time this crude is thrown on the market from time to time and causes considerable embarrassment. He would also like to obtain from the Rumanian Government certain lands for exploration and also drilling contracts with weak nationalized companies which are not now financially able to meet their drilling obligations under the mining law.
I am anxious to stabilize the commercial relations between Rumania and the United States by the negotiations of a commercial treaty. American trade is increasing in this market and the present modus vivendi is from its very nature uncertain.18 The automobile industry, in particular, wishes to have its position in this market made more certain, and in the negotiations of a commercial treaty, I believe, it might be possible to obtain for its guarantees of equal and fair treatment.
The National-Peasant Party has instituted a special campaign throughout the country with the object of forcing the resignation of the present Liberal Government. Their contentions are set forth in the attached statement issued this week by that party (enclosure No. 1).19 They claim that the present government is provisional and that parliamentary government can be reestablished in Rumania only by new free elections. They also attack the right of the present government to contract a large loan abroad.
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