Foreign Relations of the United States, Diplomatic Papers, 1933, General, Volume I

550.S1 Washington/680

Memorandum by Mr. Henry L. Deimel, Jr., of the Division of Near Eastern Affairs, of a Conversation Between American Representatives and the Yugoslav Minister (Pitamic)

[Washington,] May 18, 1933.

Mr. Livesey made the regular explanation to the Yugoslav Minister of the American position with reference to the program of the Conference. As he concluded it with a request that the Yugoslav Minister seek to ascertain his Government’s position with reference to the tariff truce proposal the Under Secretary entered, and the Minister expressed to him his Government’s thanks for the invitation to join in this noble effort to restore prosperity, stabilization and happiness and gave assurances that as in the past Yugoslavia would do everything possible to help. The Under Secretary thanked him and answered that Yugoslavia’s cooperation was needed—that the whole world needs it.

The Minister then said he would like to make some comment in order to indicate his Government’s position on certain points. He said he would inform his Government of the explanation that had been made to him and would ask to be heard again if it were felt that any further points should be taken up, so that today he could only express his Government’s view in general outline. With reference to the items of the Agenda he said:

1. That his Government is particularly interested in the tariff truce proposal;^60a that he hoped soon to know more definitely the exact view of his Government but had no doubt that it would accept in principle, with, however, some necessary reservations which would center on the following points:

(a) That the same truce be accepted by the governments of the countries to which Yugoslavia exports its products; and

(b) that if treaty obligations with any country should terminate and that other country should discriminate against Yugoslav products the Yugoslav Government would not be obliged to apply the terms of the truce in its relations with that country.

2. The other items in which his Government was particularly interested included the subjects of international credits; the war debts which had been left unpaid because no German reparations were received; the artificial barriers against Yugoslav agricultural exports, particularly in the form of tariff duties; and the question of money values and exchanges.

The explanation of Yugoslavia’s position, he stated, rested upon economic conditions. It was to the extent of 80 or 90% an agricultural country. The fall in agricultural prices had seriously affected Government revenues, capital had been withdrawn, and foreign trade had fallen off 50%. Yugoslavia desired to be enabled to resume the export of its produce and so to meet its international obligations again. Its position was affected, and consequently its interest in the Conference aroused, by the general economic crisis in all countries on the one hand and by the agricultural crisis in Yugoslavia on the other. The Yugoslav difficulties were aggravated however by a special set of circumstances. The suffering of the war, including devastations and occupation of Yugoslav territories and the loss of lives, had left the country in a very serious condition. In the early post-war years Yugoslavia had not obtained sufficient foreign loans to pay for the necessary restoration and it had therefore been necessary to finance this out of German reparations. Consequently the relation of Yugoslavia’s reparation receipts to her war debt obligations was quite different from that prevailing in most countries; on the one hand reparations were high because the war-time devastation had been so high, whereas war debts were comparatively low. As a result the moratorium on intergovernmental debts had been a particularly hard blow to Yugoslavia, causing a loss to it of about $16,000,000, and for this reason it could not accept the suspension.⁶¹ Nevertheless the consequences of the suspension were imposed upon it, the Bank of International Settlements and Germany refused to make the prescribed remittances and Yugoslavia thus became, and has since remained, unable to meet its foreign debts. This unique situation was publicly recognized by the Committee of Experts which sat in London in August, 1931.⁶² Furthermore, the Minister desired to lay emphasis on the point that his country’s reparations receipts were not employed for budgetary purposes but to pay interest on the external obligations resulting from the war.

These, he said, were the reasons why it would be legally and economically impossible to meet the annuities last year and for the same reasons Yugoslavia cannot meet them this year. He desired to emphasize, however, that Yugoslavia would make every effort possible to aid in restoring trade and prosperity.

The Under Secretary said he was very glad to have listened to this explanation which he had not had an opportunity to hear from the Minister’s lips before, and withdrew. There was some further discussion of minor points connected with the silver question and the discussions then terminated.

1. Post, p. 605.
61. See note verbale, August 10, 1931, from the Yugoslav Minister, Foreign Relations, 1931, vol. i, p. 233.
62. See Great Britain, Cmd. 3947, Misc. No. 19 (1931): Report of International Committee of Experts Respecting Suspension of Certain Inter-Governmental Debts, pp. 5 ff.; also Foreign Relations, 1931, vol. i, pp. 230–239.