The Minister in Yugoslavia ( Lane ) to the Secretary of State
[Received 6:20 p.m.]
162. In the course of an informal conversation yesterday with the Assistant Minister for Foreign Affairs18 latter referred to conversations which have taken place in Paris between Ambassador Bullitt and Yugoslav Minister relative to securing credits in the United States for purchase of cotton and armaments. I indicated that I had already been apprised of these conversations but that I could not understand, despite the explanations made regarding lack of secrecy of our codes, why the Yugoslav Government had not discussed the matter with me. I said that the Prince Regent and the Prime Minister had spoken to me on several occasions regarding Yugoslavia’s needs but that nothing concrete had ever been brought up except by the Minister of Finance, with whom I am now negotiating regarding credits for the purchase of cotton. I referred to the express desire of the Prince, the present Prime Minister, and the former Prime Minister to augment Yugoslav trade with the United States and the difficulties which have been experienced with Mr. Pilja19 whenever any practical question came up for settlement. I said that I had finally reached the position where I would take no further action until the Yugoslav Government showed something more than an expressed willingness to improve the economic and commercial relations between the two countries. Specifically I referred to the difficulties of the Socony Vacuum Oil Company and the American Yugoslav Electric Company in exporting earnings from Yugoslavia; to the inability of the Standard Oil Company of New Jersey in obtaining a concession which had been promised; and to our failure in securing quotas for products other than automobiles and trucks which are on the import control list.[Page 892]
Smiljanic appeared to be much impressed by my statements and because of his silence when I mentioned Pilja’s obstructionism I gather that he is in agreement with my views as is also the Minister of Finance. Smiljanic said that the economic situation of Yugoslavia at the present moment is really desperate but that she had been able until now successfully to resist German pressure: Prince Paul had ceded nothing in Berlin and would give away no political rights. He added that Yugoslavia’s policy is similar to that of the United States; it wishes to keep out of war and it will never be on the side of Germany and Italy; eventually it may be on the side of Great Britain and France.
The temper of the country is so anti-German that the feeling against the Prince Regent is no longer concealed as the result of his visit to Berlin. I shall report further after having seen the Prince and the Minister for Foreign Affairs.