Memorandum by the Chief of the Division of Near Eastern Affairs Murray) of a Conversation Between the Secretary of State and the Yugoslav Minister (Pitamic)

The Yugoslav Minister called today, by appointment, on the Secretary to deliver a note dated September 10, 1931,34 and to explain [Page 237] orally the Yugoslav Government’s position with respect to the Protocol signed at London on August 1135 for the purpose of giving effect to President Hoover’s debt suspension proposal.

Dr. Pitamic stated that his Government had not found it possible to sign the Protocol in view of the serious economic and financial sacrifices which the President’s proposal entailed for Yugoslavia. These sacrifices, he said, were greater in proportion than those which any other country had been asked to make. Therefore unless the means could be found to accord Yugoslavia the necessary assistance in her present emergency the Yugoslav Government was determined to safeguard its contractual rights by every available means. By way of interpretation of this latter statement, the Minister said his Government would take steps not only to secure its share of German reparations payment but would endeavor to prevent the B. I. S. from disposing of any of the funds paid in by Germany under the London Protocol and intended for transfer to the German railroads, and even from disbursing the payments in respect of Young Plan bonds.

At this point in the conversation the Secretary interrupted the Minister and inquired whether he was to understand that the Yugoslav Government intended not only to get its share of German payments but to deny to other Powers signatory to the London Protocol the right to release Germany from her obligations to those Powers. The Minister answered in the affirmative. The Secretary said he was loath to believe that the Yugoslav authorities really wished to convey to him the information that unless their demands were met they intended to try to pull the house down on their own heads or on the heads of all Europe. Did the Minister think that Yugoslavia would profit by European chaos and anarchy? The Minister had no answer.

The Secretary then reminded the Minister that in the absence of the President’s proposal, Germany would certainly have invoked her right under the Young Plan to a two-year suspension of her conditional payments which would have meant a heavy loss to Yugoslavia (exact figure: $17,483,000); and that if Germany had collapsed both conditional and unconditional payments to Yugoslavia would have ceased (exact figure: $18,776,200).

Continuing, Mr. Stimson reminded Dr. Pitamic that while the President had felt that the debt suspension proposal might properly be made by this Government, since we are making the greatest financial sacrifice, we nevertheless do not and cannot assume the responsibility of seeing that the demands of every interested country are met to its satisfaction. Having made sacrifices ourselves we feel justified [Page 238] in expecting that others do the same for the common good. We should of course be glad if private bankers were prepared to give Yugoslavia whatever financial aid she may request, but we cannot force the bankers to do so and the Government itself cannot of course engage in such operations.

In concluding the Secretary said he would have the suggestions contained in the present note of the Yugoslav Government studied and that he would reply to it as soon as possible.

Wallace Murray
  1. Infra.
  2. Great Britain, Cmd. 3947, Misc. No. 19 (1931), p. 9.