Foreign Relations of the United States Diplomatic Papers, 1937, The British Commonwealth, Europe, Near East and Africa, Volume II

860C.51/1268

Memorandum by the Assistant Adviser on International Economic Affairs (Livesey)

[Washington,] November 29, 1937.

I telephoned Mr. Zoltowski at his New York office and told him that Mr. Rucinski on November 26 had informed the Department through the Embassy at London³³ that the Polish Government has decided to offer the British tranche of the Polish stabilization loan the extension of the multiple exchange clause and a minimum guarantee, and indicated that this would be offered as the basis for a long term settlement. I said that this differed from what Mr. Zoltowski had told Mr. Feis on the same day.³⁴

Mr. Zoltowski said that it did, of course, differ. However, what he had told Mr. Feis was what he had been told in a telegram from London which he had received Thursday, November 25. He very much regretted that he had made erroneous statements to Mr. Feis. He said that there must have been some change in the position after the telegram which he received November 25. On receiving it he had immediately telegraphed London that he was leaving for Washington. He supposed therefore that Mr. Rucinski had perhaps gone to the American Embassy to tell them of the changes so that the Department might be informed through the Embassy since it was too late to reach Mr. Zoltowski before he came to the Department.

I told him that the new information destroyed the basis on which we had talked on the 26th.³⁵ In view of it we could only say that we would see with extreme regret any steps taken which would result in less favorable treatment for American bondholders than for non-American bondholders, and withhold all further comment.

Mr. Zoltowski reiterated his regret and his explanation and I said I would make them of record in the Department.

F[rederick] Livesey

33. Mr. Rucinski’s information was contained in telegram No. 737, November 26, 1937, from London (860C.51/1262).
34. Memorandum of conversation not printed. Mr. Zoltowski had then believed that the Polish offer was probably temporary. It would contain the multiple currency provision, allowing payment of interest in several foreign currencies, which might have more favorable exchange rates. The inclusion of a minimum guarantee provision, not contained in the American tranche, would ensure that this currency exchange provision would never work out in effect at less than a 5½ percent payment in sterling. (860C.51/1266. See also Annual Report, 1937, p. 582.)
35. Then assuming that the Polish offer was only temporary, Dr. Feis had said to Mr. Zoltowski that “the Department of State would probably not go so far as to make a public statement” regarding discriminatory treatment of American bondholders (860C.51/1266).