800.51W89 Poland/66

The Chargé in Poland (Flack) to the Secretary of State

No. 1508

Sir: With reference to the Department’s cabled instruction No. 16 of April 23, 1 p.m. and to the Embassy’s despatch No. 1481 of April 26, 1932, I have the honor to report that I was able today to secure an official expression of views on the existing situation of the debt settlement agreement with Poland proposed by the Treasury Department.

I was informed by the Foreign Office that Vice-Minister Koc resumed his duties in the Finance Ministry yesterday and that in response to inquiries by the Foreign Office he had stated today that there were certain points in the suggested agreement which required close study by the Finance Ministry. The two points mentioned were: (1), the 4% interest rate mentioned in the agreement, which does not correspond with the 3% provided for in the agreement reached at the London Conference, and (2), the Polish agreement with the United States of 192462 which enables Poland to purchase United States Bonds on the open market and to effect payment of its debt with these, whereas in the suggested agreement, funds comprised in the Hoover Moratorium can only be paid in gold. I was told that these points required further intensive study by the Finance Ministry and that a date could not be fixed when action on the agreement would be taken and that it would probably be necessary to obtain further information from Washington.

In private conversation with the foreign office official who is handling this matter, I was told informally that there was little prospect of Poland taking any action on the agreement until after the Lausanne Conference, which would decide many important matters. While Poland has no very great direct interest in reparations, it is forced through general pressure of European policy to conform to the action of other European Powers. The opinion was expressed that none of the European Powers would sign such an agreement until after the Lausanne Conference. Should any European Powers sign the debt postponement agreement suggested, it was intimated that this might have a favorable effect on Polish action. In case other European Powers do sign the agreement prior to the Lausanne Conference, the Embassy would then be in a position to point this out to the Foreign Office as a reason for expediting Polish action.

I inquired whether it might be useful to seek a direct interview with Vice-Minister of Finance Koc and was informed that while the [Page 633] Foreign Office had no objection to this, my question would undoubtedly be referred back by the Finance Ministry to the Foreign Office, for reply. Therefore, in the absence of specific instructions, I shall not seek an interview with M. Koc on this subject.

Respectfully yours,

Joseph Flack
  1. Combined Annual Reports of the World War Foreign Debt Commission, 1922–1926, p. 156.