800.51W89 Hungary/158
The Secretary of State to President Roosevelt
My Dear Mr. President: I submit herewith a note from the Hungarian Chargé d’Affaires, a reply drafted for my signature, and a draft press release,11 regarding an offer of the Hungarian Government to make payments during the next three years on account of its indebtedness to the United States Government.
The proposed payments of a little less than $10,000 every six months are small but are about twenty-five percent of the amounts falling due semi-annually. The United States Government loan had originally a first lien on all the assets and revenues of Hungary, but was subordinated in 1924 to the Hungarian Reconstruction Loan issued that year, on which Hungary has for some years paid fifty percent and will hereafter pay sixty percent of the face value of the coupons. There are some $30,000,000 of Hungarian Treasury bills of 1930 and 1931 outstanding in the United States and other countries on which Hungary proposes for the next three years to pay one and one-half percent interest and one and one-half percent sinking fund to be used only when the Treasury bills can be bought below forty-five. There are also prewar obligations, the capital amount of which was reduced to twenty-seven or thirty-two percent of original amounts some years ago and Hungary proposes to pay interest of one and one-fourth percent on these amounts. Other adjustments cover the whole field [Page 851] of Hungarian private debts to foreigners. Together they provisionally liquidate the Hungarian transfer moratorium. The Hungarian proposals to other creditors are to be in full satisfaction of the creditors’ claims during the next three years. The proposal to the United States Government is for payments on account. The Hungarian proposals to other creditors have all been announced and may be regarded as having been accepted by the creditors in general and being now in effect.
As stated in the draft press release, the payments which would be received under the Hungarian proposals would represent the first resumption of payment or partial payment by any Government which has entirely suspended payment of its funded indebtedness to the United States. If you approve,12 it is proposed to issue the correspondence to the press with the explanatory press release.
The Acting Secretary of the Treasury, Mr. Taylor, is ready to offer any further information you may wish on the matter.
Faithfully yours,