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

800.51W89 Yugoslavia/155

The Yugoslav Minister (Pitamic) to the Acting Secretary of State

Washington, June 15, 1933.

Sir: Referring to your note of June 9th, 1933, and our conversation of yesterday concerning the payments on War Debts due in 1932 and 1933, I beg to state the views of my Government.

The Royal Yugoslav Government is financially unable to make these payments on account of the following reasons:

1) The chief reason is the non-payment of the German reparations due to Yugoslavia, which have not been paid to us, in spite of the fact that we did not accept the moratorium proposed by President Hoover.⁴² This situation was continued by virtue of the Lausanne Agreement.⁴³ Yugoslavia was inequitably and harder hit than any other country by this moratorium and was placed in quite singular a situation, for if the annuities due by Yugoslavia on her debts are deducted from the reparation payments due to her by Germany, she is a loser to the extent of sixteen millions dollars per annum.

This money was devoted to carrying out the obligations imposed upon the country by the expenses of war and the enemy occupation, such as the payments to war invalids, war damage to property, etc. In addition the reparation money was used for the repayment of the foreign debts contracted for the restoration of the country devastated by war operations and enemy occupation.

The grave consequences of the moratorium for Yugoslavia were recognized publicly by the Committee of Experts in London in August 1931.⁴⁴

In view of the absence of German reparation payments and, consequently, in absence of considerable receipts in cash, the Yugoslav Government finds itself absolutely unable, from a merely budgetary standpoint and also in so far as its capacity of exporting foreign exchange is in question, to meet its obligations concerning War Debts regularly and on time.

2) In addition, this very unfavorable situation has been aggravated by the general world crisis, and particularly by the agricultural crisis under which Yugoslavia, which is chiefly an agricultural country, is particularly suffering. The budgetary consequence thereof is that, on account of the fall of agricultural prices, the revenues of the State are lowered. As additional consequences of this crisis in Central Europe, foreign capital was withdrawn and on account of the dropping of foreign trade, all commerce has to be carried on by making use of the clearing system.

Accept [etc.]

Dr. L. Pitamic

42. See Foreign Relations, 1931, vol. i, pp. 230 ff.
43. Great Britain, Cmd. 4126, Misc. No. 7 (1932): Final Act of the Lausanne Conference, Lausanne, July 9, 1932; see also Foreign Relations, 1932, vol. i, pp. 636 ff.
44. See Great Britain, Cmd. 3947, Misc. No. 19 (1931): Report of International Committee of Experts Respecting Suspension of Certain Inter-Governmental Debts, pp. 5–6.