[Enclosure]
The Chargé in Estonia (Carlson) to the Minister in Latvia
(Skinner)
Sir: I have the honor to refer to your
letter of May 6, 1932, on the subject of the budgetary
preparations made by Estonia for the resumption after July 1,
1932, of normal payments upon its funded indebtedness to the
United States and to the several preliminary replies which have
already been sent to you in reply thereto.
During the period which has elapsed since your first letter in
this matter was received, I have made a number of guarded
inquiries in order to determine whether or not the Estonian
budget for 1932/1933 makes any provision for the servicing of
the above-mentioned loan. My questions on this subject were at
first addressed to subordinate officials at the Estonian Foreign
Office. It soon became clear to me that these officials did not
wish to commit themselves and that the Foreign Minister himself
would be the
[Page 602]
only
person from whom I might expect to receive a direct reply with
regard thereto. Hence there was nothing to do but to await a
favorable moment for broaching the subject to him.
My opportunity came last Saturday just after he had handed me the
Estonian counter-proposal32 to our
request for legalization of the one year debt postponement
proposal, concerning which information has already been sent to
you. For some reason or other the Foreign Minister made the
delivery of the above document a very formal procedure since it
took place not only in my presence but also in that of the
Assistant Foreign Minister Mr. Hellat and of the Chief of the Foreign Office
political bureau, Mr. Laretei. After the
business of giving me the counter-proposal had been completed, I
took the liberty of bringing up the question of the resumption
of normal debt payments by Estonia. Foreign Minister Tönisson seemed to be willing
enough to discuss the question. After he had pointed out the
fact that both he and Mr. Hellat had been in the Government which had
agreed to the purchase of the war supplies which forms the basis
for the Estonia’s funded indebtedness to the United States, he
told me quite frankly that the Estonian budget for the fiscal
year ending March 31, 1933, did not include provisions for the
making of the payments on the above debt which are to fall due
on December 15, 1932. He also said that Estonia would therefore
be obliged to avail itself of the possibilities afforded by the
funded debt agreement for the postponement of these
payments.
The Foreign Minister was visibly agitated while making these
remarks to me. He said that his Government regretted exceedingly
its inability to live up to the obligations which it had taken
upon itself through the acceptance of the above agreement. The
situation had, however, altered materially since the date of the
signing of the agreement, and he trusted that in passing upon
this matter the United States would take this, as well as the
following matters into consideration. He then proceeded to
present what seemed to me to be a comparatively ardent plea in
favor of the reduction if not the complete cancellation of
Estonia’s funded debt to the United States. The substance of his
remarks was approximately as follows:
Estonia’s obligation to the United States is based upon purchases
of materials from war supplies left by the United States army of
occupation in France. At the time Estonia was engaged in the
fighting of a war against the bolsheviki and it had been obliged
to secure supplies at any cost. There was no time for reflection
or for
[Page 603]
bargaining. It
had to take supplies where it could find them and to leave the
making of settlements therefor to a later date.
Estonia had been told, however, at the time, by the American
agent with which negotiations had been carried on, that there
was a strong possibility that the supplies would be given to it
practically gratis. It was evident that the United States was
not contemplating the return of the supplies to the United
States and that unless purchasers were found they would
eventually have to be given away.
In the second place, the war in which the supplies were used was
not one which concerned Estonia alone. It was true to be sure
that Estonia was fighting to maintain its recently regained
independence. Nevertheless, in addition thereto, it was engaged
in the still greater task of stemming the wave of bolshevism,
and of placing a barrier before the onward rush of this new
danger which was threatening the civilization not only to Europe
but of the entire world.
Nevertheless Estonia had in 1926, entered into negotiations with
the United States for the funding of the debt33
which was brought about through the acquisition of the above
supplies. On this occasion, however, it had by no means been
given as favorable terms as were accorded other countries with
which similar negotiations were conducted. While its total
indebtedness had been reduced by 25%, it had subsequently
learned that other countries had been granted reductions up to
50% and even more.
Estonia had, however, accepted the debt funding agreement and met
all of its obligations thereunder as long as it had been
possible for it to do so. The Hoover moratorium had been of much help to it,
but, nevertheless, the Estonian Government would not, at the
conclusion of the “Hoover
Year,” in view of the continued economic depression, be in a
position to resume the servicing of its funded debt to the
United States. The Foreign Minister hoped, therefore, that the
United States, in judging Estonia’s position on the subject of
debt payments, would give thoughtful consideration to the facts
which he had presented to me with respect thereto.
I assured Mr. Tönisson that
I was certain that the United States appreciated the
difficulties with which Estonia was now faced in the above
matter, and that I would communicate his views thereon to my
Chief, the American Minister at Riga, by whom they would no
doubt be given the utmost consideration. At the same time I took
the liberty of calling his attention to the circumstance that I
had no authority of any kind to act in this matter and that I
was not in a
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position
to discuss any of the questions which he had raised with regard
thereto. The Foreign Minister replied that this was perfectly
clear to him.
With that my conference with Foreign Minister Tönisson ended. As far as I am
concerned, his remarks were of value from one point at least in
that they showed quite clearly the trend of Estonian thought on
the subject of debt payments to the United States.
I have [etc.]
