800.51W89 Lithuania/82

The Minister in Latvia (Skinner)26a to the Secretary of State

No. 361

Sir: I desire to refer to the Department’s Confidential Instruction No. 2, dated April 19, 1932,27 addressed to me as American Minister to Lithuania, to which is annexed a memorandum of a conversation with the Lithuanian Minister in Washington28 which took place on April 13th. Nothing very definite emerged in the course of this conversation beyond the well-known fact that the Lithuanian Government was having its own difficulties of a financial order. The vagueness of this conversation prompted me to make discreet and entirely informal inquiries respecting the intentions of the Kovno Government with regard to the American debt, as a result of which I learned that no budgetary provision had been made for payment of interest upon the expiration of the moratorium. It was furthermore learned that in the view of the Lithuanian Government, the normal payment due to the United States on June 15th is covered by the moratorium. I directed Mr. Stafford to pursue the inquiry, and cannot do better than to transmit his report to me:

“I had an interview today with Mr. Juozas Cerkauskas, Chief of the Loan Division of the Lithuanian Ministry of Finance. I asked him if it were understood that the interest payable on December 15, 1932, was the only amount due during the current calendar year. He answered in the affirmative. I asked about provision for meeting this interest payment. He said no provision had been made in the first draft of the 1932 budget inasmuch as the Lithuanian [Page 597] Government intended to make an effort to obtain from the United States Government an agreement for postponement of the December 15th interest payment. He said the Minister of Finance had requested the Minister for Foreign Affairs29 to authorize the Lithuanian Minister in Washington to proceed with this matter.

“Mr. Cerkauskas explained it was the understanding of the Lithuanian Ministry of Finance that Paragraph 9 of the loan agreement enabled the United States Secretary of the Treasury to grant postponements of interest payments. I told him I was not certain of this, although the word “consent” might be construed as conferring this authority upon the Secretary. It was my opinion, however, that any changes in an agreement which went into force only through an act of Congress could be altered only through an act of Congress unless specific provision to the contrary were included, and that other measures which included such enabling provisions did so in terms more clear than those employed in Paragraph 9. I was careful to explain to him that this was only my personal opinion and that the Minister in Washington could ascertain from our Government whether the Secretary of the Treasury had the authority to grant a postponement. I also pointed out to Mr. Cerkauskas that, according to press news, Congress probably would adjourn in June and would not convene in regular session until December, and if an act of Congress were necessary to a postponement of interest payment due December 15th, there would be little time for it.

“While the proposed budget omits any provision for payment this calendar year, Mr. Cerkauskas stated that there usually was a revision in September or October of each year and that if they did not procure our consent to a postponement of the December 15th payment some provision undoubtedly would be made in the revised draft.

“I do not have reason to believe that there is any intention of defaulting on the next payment, but that the Government is making every possible effort to maintain a balanced budget without the imposition of additional taxes. In this connection it is noted that the Lithuanian Government has just made arrangement, according to confidential information given to me, to remit to Messrs. Lee, Higginson and Company, of New York, as fiscal agents, $120,000 due June 1, 1932, as interest on the Swedish Match Company—Krueger and Toll bonds issued to secure the $4,000,000 lent for the use of the Lithuanian Land Bank.”

In conclusion, I may remark that I gain the impression—it is merely an impression which I am unable to confirm—that the small Governments of Europe have been recommended to abstain from the resumption of payments to the United States, and from making budgetary provision for such payments by the more important Powers, the latter being always hopeful that some general arrangement will be come to amounting to an indefinite extension of the [Page 598] moratorium. At all events I cannot find, as yet, that anyone in the Baltic States is expecting to make payments during the coming year.

Respectfully yours,

Robert P. Skinner
  1. The Minister was accredited to Estonia, Latvia, and Lithuania.
  2. Not printed.
  3. Bronius Kasimir Balutis.
  4. J. Tubelis.