The Minister in Rumania (Wilson) to the Secretary of State

No. 916

Sir: I have the honor to refer to the Legation’s despatch No. 867, of April 11, 1932,8 concerning the difficulties experienced by American firms in securing an equal opportunity in Rumania owing to obstruction on the part of the French Government, and especially to the tender of the General Railway Signal Company, of Rochester, N. Y., for signal installation on a stretch of railway between Fetesti and Cerna-Voda Pod.

In this connection, I now have the honor to report that the Rumanian Ministry of Communications, upon the advice of the Rumanian Railway Administration, has awarded the contract for signal installation to the French firm Thomson-Houston. I am informed by Mr. Ianculescu, local representative of the General Railway Signal Company, that the final offer made by Thomson-Houston was 10,500,000 lei. As stated in the Legation’s despatch No. 893, of May 23, 1932,8 after the second competition for signal installation was declared null and void, the General Railway Signal Company submitted [Page 509] a new offer to the Rumanian Railway Administration in the amount of 7,500,000 lei. The representative of the General Railway Signal Company later informed the Legation that he must make a slight correction and that the amount was in fact 7,650,000 lei.

On June 20, 1932, Mr. Ianculescu called at the Legation and stated that he had been informed that the Rumanian Ministry of Communications was on the point of awarding the contract for signal installation to Thomson-Houston without considering the latest offer of the General Railway Signal Company. He requested the Legaztion’s intervention with a view to securing an equality of opportunity for his firm. I advised Mr. Ianculescu to see the new Minister of Communications, Mr. Perieteanu, first in order to acquaint the latter with the details of the case. Mr. Ianculescu did this on June 22, 1932, and left a letter, dated June 20, 1932, with him, summing up the case. I myself called on Mr. Perieteanu on June 24, 1932, and again explained that I was asking only for an equality of opportunity for the American firm, but that nothing less than complete equality of opportunity would be satisfactory to my Government.

Mr. Perieteanu replied that he was afraid that a contract had already been signed with Thomson-Houston. I said that I hoped this was not so, since there seemed to be an undoubted case of discrimination against an American firm. I then told Mr. Perieteanu what Mr. Ianculescu had told me about the alleged pressure exercised by Mr. Leverve, French Technical Adviser to the Rumanian Railway Administration. Mr. Perieteanu replied that he was not surprised; that he had suspected some sort of intervention. He promised to look into the case thoroughly.

On June 28, 1932, Mr. Ianculescu called at the Legation to report that a contract for signal installation had been signed with Thomson-Houston on June 24th. He said that a mutual friend of Mr. Perieteanu and himself had called on the former and inquired what the real reason was for giving the contract to Thomson-Houston. Mr. Perieteanu replied that a command had come down from the King that for reasons of public policy the order must be given to the French firm. Mr. Ianculescu believes that the final word which was pronounced by the King was due to influence from one of the small circle of corrupt persons who surround the monarch. He thinks that one of this circle was “bought out.”

On July 11, 1932, I called at the Foreign Office and had a long conversation with Mr. Gafencu, the new Under Secretary, in which I outlined the case to him. Mr. Gafencu admitted that French influence had been brought to bear but denied vigorously that Mr. Leverve [Page 510] had used any improper influence. He said that Mr. Puaux, the French Minister, had exerted such strong pressure that the Rumanian Government could not resist. One of the principal arguments employed by Mr. Puaux was that the French Government had been very useful in furnishing loans to Rumania and that French firms expected some compensation. I reiterated that while in the opinion of the United States Government and the Legation there is no connection between loans and a contract of the kind under discussion, it was obviously unfair in the present instance to discriminate against an American company to favor a French company, since American bankers, as well as French bankers, participated in both the Stabilization Loan of 1929 and the Development Loan of 1931. I also pointed out that this discrimination in favor of the French firm had cost the Rumanian Government a sum of about 3,000,000 lei.

The instructions requested in the Legation’s despatch No. 867, of April 11, 1932, are anxiously awaited, as the Legation feels that an important question of principle is involved in this case.

Respectfully yours,

Charles S. Wilson
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