Memorandum by the Secretary of State

The Hungarian Minister called and told me he came on a very sad errand, that his country had at last been compelled to declare a moratorium on the transfers of its foreign loans. He handed me an aide-mémoire which showed the program (attached hereto as “A”).4 This aide-mémoire shows the payments which will be made and what will be done with the others, as follows: the League of Nations loan will be paid in foreign currency as before; of the other loans, the first category, composed of long term loans secured by special securities including Government Treasury Bonds issued in 1931 and those based on international conventions, will be paid to the extent that foreign currencies are available in Hungary, and the second category, composed of other long term loans, will not be paid in foreign currency but in Hungarian currency and will be deposited in the National Bank [Page 596] of Hungary; the Hungarian National Bank with the advice of the Councilor of the League of Nations will administer these sums; so far as short term loans are concerned, debtors will be provided with foreign currency enough to pay interest on them, and there will be an endeavor to reach a standstill agreement in regard to them for six months.

The Minister seemed very despondent. He said his country had struggled very hard against great difficulties to pull itself out of its troubles since the War and had expected to reach safety, but that now this depression had come along and caused it to fail. He said this was almost entirely due to the depression in wheat as in other respects the country had done pretty well.

H[enry] L. S[timson]
  1. Infra.