Memorandum by the Chief of the Division of Western European Affairs (Boal) of a Conversation Between the Secretary of State and the Yugoslav Minister (Pitamic)

The Yugoslav Minister began by explaining that Yugoslavia had been faced with a reconstruction problem before any arrangements had been made for German payments. Therefore Yugoslavia had been obliged to do her reconstruction by means of private loans which she had gotten from Blair and Company. This was necessary because no Government loan such as the other Powers had been able to obtain were available to Yugoslavia.

The Minister also stated that there was also an internal loan the annuities of which amounted to $3,000,000 which had to be paid to private citizens in Yugoslavia. This the Yugoslav felt should be excepted from the arrangement President Hoover had proposed. The Yugoslav Minister went on to say that they would also expect to except from the plan the sums necessary from Germany’s reparations to pay annuities for the loan used for reconstruction. Finally the Yugoslav Minister said that he thought reparations in kind should be excepted. He said that the Blair loan amounted to $15,000,000 [Page 231] principal and that the annuity for this would have to be continued by Germany. He said that after these exceptions there would, however, be a balance which could be suspended in favor of Germany. He said that if later it was desired that he do so he would ask for figures. The Secretary said it was not necessary for him to ask yet, that he would refer him to Mr. Mills28 when the time for discussion of details came up. The Secretary said that he was only following the larger features of the plan at the moment and the details were in the hands of Mr. Mills. The Yugoslav Minister said that he thought the total amount of the German reparations to Yugoslavia was considerable and the Secretary referring to his chart said that it appeared to be 79,000,000 of Reichsmarks. The Secretary then telephoned to Mr. Mills and said that Mr. Mills stated that questions similar to that which the Yugoslav had raised had been raised by other nations such as Greece, Hungary, Rumania, et cetera. He said that it would be best to take up these details after the plan had been accepted by the larger nations. He said that there was an infinity of small questions and that the Treasury was working on material in connection with them but we would have to wait first to hear from the French, Italian and Belgians whether they accepted the plan and it could go on in operation. The Minister then came back to the acceptance which his Government had in mind. He pointed out that with respect to reparations in kind the bridges over the Danube which were being built as reparations for instance could hardly be stopped halfway completed. Neither the Yugoslavs nor the Germans would wish to do this. The Secretary made it clear that he was not sitting in judgment on such questions or on the attitude of Yugoslavia. He said all nations were in one family in this matter. Everyone’s eyes were on his neighbor. If exceptions were made at this stage they would begin to breed other exceptions until finally no one would be making a sacrifice except the United States. If this came about even those who were now disposed to carry through the plan in full, such as Great Britain, would not find it possible to get their Parliaments to accept. The Yugoslav Minister emphasized that his Government’s views were in no way opposed to the proposal. The Secretary then dictated the following to the Yugoslav Minister:

“We have not yet had a definite answer from France, Italy or Belgium. Until we have answers from them our offer is not yet accepted. When and if we have favorable answers it will be time to go to prompt countries like yours and take up the details. We note with very great pleasure that you approve of the plan and that you will wait for the approval of the others I have mentioned before taking up the details.”

  1. Ogden Mills, Under Secretary of the Treasury.