The Acting Secretary of State to the Chairman of the Senate Committee on Finance (Harrison)

My Dear Senator Harrison: As requested by your letter of August 21,1 I submit the following report on S. J. Res. 215, a Joint Resolution creating the International Debt Commission to negotiate with foreign countries concerning their indebtedness to the United States, and for other purposes.2

The Joint Resolution provides for the establishment of a Commission of seven members which shall negotiate with each debtor government a refunding agreement subject to limitations and provisos set forth in Section 4 of the Resolution, with further provision that the indebtedness in the amount thus determined shall be evidenced by bearer bonds which may be sold or exchanged by the United States with a guaranty by the United States of the payment of the principal and of the payment of a portion of the interest. The Resolution further provides that if the President does not approve any proposed settlement, such settlement shall not be reported to the Congress but the Commission shall proceed to negotiate another settlement in lieu thereof and report the same to the President, and continue so to do until a settlement satisfactory to the President shall be negotiated, approved by the President, and reported to the Congress.

The Resolution appears to assume that the Commission to be established under it could by visiting the debtor nations negotiate settlements providing for the issuance of bearer bonds of each debtor maturing not over 100 years from date, under arrangements not reducing the total amount of principal and interest payable under existing agreements of each country with the United States, the bonds to bear interest rates such that with a guaranty of a part thereof by the United States they will be marketable and may be sold or exchanged by the United States at par. Apparently, also, all agreements which the Commission would be authorized to negotiate must [Page 857] contain provision for the payment of an annual curtail on the principal amount of the debt beginning not later than five years from the date of enactment of the Resolution.

Without examining into the financial details of the arrangements which the Resolution would authorize the proposed Commission to negotiate, I may call attention to the fact that we periodically remind each debtor government in writing, on the occasion of scheduled payments which fall due once or twice a year, that this Government is fully disposed to discuss, through diplomatic channels, any proposals which the debtor government may desire to put forward in regard to the payment of its indebtedness, and that such proposals would receive careful consideration with a view to eventual submission to the Congress. In reply to these periodic reminders, the respective debtor governments have continued to acknowledge their indebtedness and have taken note of the readiness of the United States Government to discuss any proposals which any debtor may desire to make for the payment of its indebtedness, but have indicated, in varying terms, that they do not believe the time has yet come when they could reopen discussion on the subject under circumstances warranting the hope that a satisfactory result might be reached.

In view of the record I do not perceive what advantages would be obtained by the establishment, at the present time, of the Commission contemplated in the Joint Resolution.

Sincerely yours,

Sumner Welles
  1. Not printed.
  2. Introduced August 20, 1937, by Senator George L. Berry of Tennessee; Congressional Record, vol. 81, pt. 8, p. 9414.