860C.51/1120: Telegram

The Ambassador in Poland (Cudahy) to the Secretary of State

20. Your telegram No. 9, February 11, 6 p.m. Have just finished meeting with Minister of Finance. He [I] told me [him] that my Government had been informed that negotiations between Polish Financial Mission and Foreign Bondholders Protective Council were in danger of ending without agreement; that offer reported made by Mission was unsatisfactory to Council which had indicated counter suggestions set forth in paragraphs 2 and 3 of your No. 9.

I reiterated importance for credit of Poland to have favorable recommendation by Council and unfortunate effect if Council and Mission could reach no agreement stating my Government would be happy to see settlement satisfactory to both parties.

Minister stated maximum offer he could authorize was interest funding bonds covering a period of 20 years bearing interest at 3%, or payment [of] 35% cash on coupons now due; also on next two coupons as they become due. This offer in either alternative could be accepted at option of bondholders.

The Minister stressed that he had originally intended to offer only funding interest bonds but had been persuaded by Embassy’s attitude (despatch No. 1443, January 7, 193720) to make cash offer. If this were unacceptable Professor Krzyzanowski, head of the Mission, would be instructed to leave for Poland on the 20th. Minister stated foreign exchange would be set aside to make payments required by this offer. Said he could not risk greater commitment and had prevailed upon Council of Ministers against strong opposition in making this offer.

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Embassy does not recommend acceptance or rejection but is convinced this is best offer forthcoming and there is nothing which indicates it will be raised.

  1. Not printed.