Memorandum by Mr. Robert D. Coe of the Division of European Affairs

In connection with the letter from the Yugoslav Minister to Warren L. Pierson, President of the Export-Import Bank of Washington, in which the Minister asked for further commercial credits for the purchase of cotton and eventually trucks and automobiles, it is necessary to recall the large American investments in Yugoslavia and the failure of that country to live up to its obligations.

The war debt to the United States amounts to over $60,000,000 and on the so-called Blair Loan over $40,000,000 is still owed. The Yugoslav Government has shown no cooperation in the efforts of the Foreign Bondholders Council with regard to the servicing of this and other private loans.

The failure of the Standard Oil Company of New Jersey to obtain a concession for the exploitation of petroleum did not show any particular good will on the part of the Yugoslav Government, but on the other hand the extreme pressure put on the Belgrade authorities by the German Government must be borne in mind. Nevertheless, procrastination and evasion have characterized the Yugoslav Government’s attitude during the negotiations for the concession.

Furthermore, the American-Yugoslav Electric Company, with investments of $2,225,000, has been unable to export its earnings, despite [Page 898] the continued representations made by the American Legation in Belgrade in this direction. The lack of foreign exchange is given as an excuse by the Yugoslav Government. Regarding the balance of trade which, according to the Yugoslav authorities, is favorable to the United States, the Yugoslav Government has failed to take into consideration the large remittances received from the Yugoslavs in the United States. The American Minister in Belgrade has not failed to point out to the Yugoslav Government that the earnings of the American-Yugoslav Electric Company have not been excessive, and, in fact, have amounted to a modest return on the investment.

Discrimination has been practiced against American trade in Yugoslavia by the excessive quotas and importation restrictions. Again it must, however, be said that the German Government has exercised pressure on Belgrade in this respect. Particularly hard-hit were the importers of American automobiles, and finally after protracted negotiations and representations the American Legation succeeded in obtaining a quota for American automobiles and trucks, which, however, was considerably lower than the share due the United States because of its long-established predominance in this market.

In summary it cannot be said that the Yugoslav Government has shown any particular good will to American commercial or financial interests.