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

No. 964

Sir: I have the honor to refer to the Department’s instruction No. 259 of August 24, 1932 regarding the difficulties experienced by the American firm of General Railway Signal Company in competing with the French firm of Thomson-Houston and suggesting that the Legation make known to the Prime Minister the highly unfavorable impression which the award made to the latter company had created in the State and other departments.

Upon my return from leave, a few days before the receipt of the Department’s above-mentioned instruction, I called upon the Prime Minister and Minister for Foreign Affairs and had said to him practically what was contained in the Department’s instruction. I did not, therefore, feel it necessary to take the matter up with him a second time. He was very apologetic, acknowledged the justice of the Legation’s complaint, and tried to excuse himself by saying that the contract with Thomson-Houston had been signed by the previous cabinet and that therefore he was helpless. I suggested that as there was a Rumanian law providing that in awarding contracts the most favorable offer must be accepted, the present award was illegal according to Rumanian law and could therefore be annulled. I realized, of course, that the Government would never dare to take such a measure against a French company.

A few days after the receipt of the Department’s above-mentioned instruction No. 259, I called upon Mr. Gafencu, the Undersecretary of State for Foreign Affairs, who really runs the Foreign Office. Mr. Gafencu, whom I know well and with whom my personal and official relations are especially cordial, is very friendly to the United States. It is largely, if not chiefly, due to his strong support that the International Telephone and Telegraph Company secured their Rumanian concession. I took with me the Department’s instruction and read to him a translation of the next to the last paragraph, which seemed to make considerable impression. He also acknowledged quite frankly the justice of our complaint of unfair discrimination and expressed regret. He then went on to suggest that some means might and ought to be found to compensate the General Railway Signal Company by giving it another contract. He said that he would speak personally to Mr. Mirto, the Minister of Public Works and Communication, who is an intimate friend of his and who would understand better than his predecessors the justice of the American complaint and the necessity of correcting the fault committed by those [Page 519] predecessors, thus removing the painful impression made upon the American Government. A few days later Mr. Gafencu telephoned me and asked me to tell Mr. Ianculescu, the representative of the General Railway Signal Company, to call on Mr. Mirto. This he did, and had what he seemed to feel was a very satisfactory conversation. The Minister asked him to call again after the close of the parliamentary session when he would be less occupied and to draw up definite plans and offers to submit to him. Mr. Ianculescu at the time of his last visit to the Legation, a few days ago, seemed hopeful that his company would secure an order.

I feel somewhat hopeful that in this special case American interests may obtain some satisfaction, but I am convinced that the French through their predominating political influence will continue by political pressure to secure commercial advantages to the detriment of American and other commercial interests.

With its instruction No. 246 of June 21, 1932, the Department enclosed a memorandum14 of a conversation which the Chief of the Division of Near Eastern Affairs had on May 27, 1932 with the Rumanian Minister in Washington concerning this and other cases of discrimination against American firms in favor of French firms. In spite of Mr. Davila’s statement that he intended to telegraph his Government, I learned that no report on the subject has ever been received at the Foreign Office from him. Mr. Davila arrived in Bucharest a few days ago and he may now take the matter up with his Government. I have as yet had no opportunity to discuss the matter with him. I have, however, discussed it with Mr. Boncescu, the Financial Counselor of the Rumanian Legation at Washington, who is familiar with the matter and told me that he intended to take up the whole question of unfair discrimination through political influence with Mr. Madgearu, Minister of Industry and Commerce, whom he knows very well and who is one of the most influential members of the present Government. In this connection, I have the honor to enclose a translation of an article from the Universul of October 6, 193215 reporting a speech made in Parliament on October 4, 1932 by Mr. Iunian, Minister of Justice in the former Maniu Cabinet, but who has just resigned as Vice-President of the National-Peasant Party and from the membership of the party owing to a difference of opinion with the Government over the modification of the Agricultural Conversion Law recently voted by Parliament (see Legation’s despatch No. 962 of October 12, 193215). In this speech [Page 520] Mr. Iunian takes the Government severely to task for having accepted the French bid for railway signal apparatus instead of the American bid, which was more favorable and cost four million lei less. This decision, Mr. Iunian charges, was due to French pressure exercised on the Government through Mr. Leverve, French Technical Adviser to the Rumanian Railways. This charge, which was previously reported to the Department by the Legation, has, however, always been denied by members of the Government with whom I have talked. It is interesting, therefore, to find it supported by a person of the standing of Mr. Iunian, who at the time he made this charge was a member of the Government party.

The Department will be kept advised of any further developments in this case.

Respectfully yours,

Charles S. Wilson
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