800.51 W 89 Hungary/21: Telegram
The Secretary of State to
the Ambassador in France (Herrick)
Washington, April 29,
1924—3 p.m.
138. L–68 for Logan.3 Refunding agreement signed April 25th by
Hungarian Minister4 provides for
repayment of Hungarian Relief Bond and accrued interest in 62 years by
installments increasing from $9,600 to $75,000 annually with interest at
3 percent to December 15th, 1933 and thereafter at 3% percent per annum.
Sections 7 and 9 of this agreement are as follows:
- “7. Security. The payment of the
principal and interest of all bonds issued or to be issued
hereunder shall be secured in the same manner and to the
same extent as the obligation of Hungary in the principal
amount of $1,685,835.61, described in the preamble to this
Agreement; that is to say, shall be ‘a first charge upon all
the assets and revenues of Hungary and shall have a priority
over costs of reparation under the Treaty of Trianon or
under any treaty or agreement supplementary thereto, or
under arrangements concluded between Hungary and the Allied
and Associated Powers during the armistice signed on
November 3, 1918;’ Provided, however,
That all or any part of such security may be released by the
Secretary of the Treasury of the United States on such terms
and conditions as he may deem necessary or appropriate in
order that the United States may cooperate in any program
whereby Hungary may be able to finance its immediate needs
by the flotation of a loan for reconstruction purposes, if
and when substantially all other creditor nations holding
obligations of Hungary similar to that held by the United
States and described in the preamble to this Agreement, to
wit, Denmark, France, Great Britain, Holland, Norway, Sweden
and Switzerland, shall release to a similar extent the
security enjoyed by such obligations. The Secretary of the
Treasury of the United States shall be authorized to decide
when such action has been substantially taken.”
- “9. Cancellation and Surrender of Relief
Obligation. Upon the execution of this Agreement,
the payment to the United States of cash in the sum of
$753.04 as provided in paragraph 1 of this Agreement and the
delivery to the United States of the $1,939,000 principal
amount of bonds of Hungary first to be issued hereunder,
together with satisfactory evidence of authority for the
execution of the Agreement and the bonds on behalf of
Hungary by its Envoy Extraordinary and Minister
Plenipotentiary at Washington, and of appropriate action by
the Reparation Commission so as to assure by its approval to
the bonds of Hungary to be issued hereunder the same
priority over reparations as that now enjoyed by the
obligation of Hungary in the principal amount of
$1,685,835.61 described in the preamble to this Agreement,
the United States will cancel and surrender to Hungary, at
the Treasury of the United States in Washington, the
obligation of Hungary last described.”
Agreement has been approved by the President and submitted to Congress
and upon approval by that body Secretary of the Treasury will under the
conditions stipulated in Sections 7 and 9 release for the purpose of
Hungary’s reconstruction loan the prior lien enjoyed by the Relief Bond
and retained in favor of the refunding bonds which, however, are to
continue to have priority over reparations both as to security and
payment.
Copy of agreement and other papers are being forwarded to you by
pouch.
As you will note proposed action is conditioned in part upon prior
appropriate action by Reparation Commission to assure by its approval to
the refunding bonds the same priority now enjoyed by the Relief Bond.
The Hungarian Government will present this matter to the Reparation
Commission and you are authorized to cooperate in every proper way with
the Hungarian representatives in their endeavor to obtain Commission’s
approval. Please keep Department fully informed of Commission’s action
and telegraph also any information you may obtain regarding definitive
release of relief bond priorities by other Governments concerned.
Repeat to Amlegation Budapest as Department’s 18 substituting following
for last paragraph:
As you will note this action is conditioned in part upon
presentation of satisfactory evidence of authority for the
execution of the agreement and the bonds on behalf of Hungary by
its Minister. In this connection reference is made to
Department’s 15, April 21st, 5 p.m.5
