860C.51/1219: Telegram

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

117. Your 67, September 18, 1 p.m.; my [113,] September 25, noon.24 Following new developments with respect to Polish currency obligations have just come to my attention.

Immediately after my call on Friday,25 the British Ambassador saw Acting Minister of Foreign Affairs and left on behalf of his Government a strong memorandum insisting that British holders of Polish obligations be accorded on October 15 next as favorable treatment as bondholders of any other nationality.
These representations, together with my own, have evidently aroused the serious concern of the Polish authorities who called conferences of all interested Polish agencies to consider the situation.
Ambassador Potocki, who was consulted with respect to my representations, informed me that the Polish Government is planning to authorize a representative in the United States to issue in the near future a reassuring statement addressed to American bonds holders.
Representatives of the Standard Car Finance Corporation have just signed contract with Ministry of Finance providing for full payment [Page 540] with interest rate reduced to 4¼%.26 Payment including defaulted interest to be resumed this fall and extended for 15 years in all. Settlement apparently based on Ulen27 and Swedish settlements.28
  1. Latter not printed.
  2. September 24.
  3. The Standard Car Finance Corporation, with principal offices in Wilmington, Delaware, by agreements of December 6, 1929, and February 5, 1930, had acquired from the Society of Mechanical Plants “Lilpop, Rau and Loewenstein, Ltd.,” of Warsaw, the notes of the Treasury of the State of Poland, in excess of a principal amount of 10 million dollars, issued as rental for the construction and use of a large number of freight and passenger railroad cars. Beginning with October 1, 1936, the Polish Treasury had defaulted in the payments on account of principal and interest at 7 percent due on these notes. Definitive legislation, effective on July 26, 1938, for the agreement here mentioned, provided for the issuance and delivery of 4¼ percent certificates of the Polish State Treasury in the principal amount of $5,669,036.98, their payment to be completed by October 1, 1951. (860C.51/1199, 1227, 1361)
  4. Ulen and Company, of New York City, owned 8 percent Sinking Fund Gold Bonds in two issues (1925 and 1926) of the National Economic Bank of Poland, unconditionally guaranteed by the Polish Government. These bonds had been received in payment for extensive public works undertaken by the Company in 10 different cities of Poland. Defaults began on these issues in 1936. For the text of the full provisions of the two Extension Agreements of May 26, 1937, by which interest was reduced to 3 percent and maturity prolonged to 1967, see Annual Report, 1937, pp. 639 ff., and 653 ff.
  5. This temporary plan concerned the 6½ percent External Secured Sinking Fund Gold Bonds of 1930, issued by the Republic of Poland to the Swedish Match Interests, pursuant to a match monopoly agreement. According to the permanent plan of December 7, 1938, interest was to be paid at the rate of 4¼ percent, and sinking fund payments were to be resumed on April 1, 1939. It was believed that none of these bonds was held within the United States. See Annual Report, 1938, p. 847.