871.0443/3
The Minister in Rumania (Jay) to the Secretary of State
[Received July 13.]
Sir: I have the honor to transmit herewith a translation prepared by the Office of the Commercial Attaché, Dr. Van Norman, of a “Law for the Regulation of Commercial Indebtedness” adopted May 30, 1923, and promulgated in the Monitorul Oficial of June 3, 1923.58
It will be seen that Article 13 of this law states that it becomes immediately operative in respect to debts contracted with British creditors, and that the “Office for Special Payments in Foreign Currencies” (provided for in the new law) may request the Council of Ministers to apply the provisions of the law in respect to the creditors of other countries, the currency of which is at least three times higher—with reference to the leu—than the gold parity (pre-war parity approximately 5 lei=l dollar; parity for past three months approximately 200 lei=l dollar), and who have not within the term of three months provided by the so-called “Term of Grace Law”, (promulgated May 14, 1923) concluded separate conventions or agreements with their Rumanian debtors, on the basis of the law of May 30, 1923, herewith communicated. The “Term of Grace” is to allow sufficient time for the negotiation of agreements with other countries. In the meantime, however, all creditors are debarred from taking any action in the Rumanian Courts for the collection of commercial debts owed them.
It follows, therefore, that, if, before the expiration of the three months “Term of Grace” or August 14, 1923, no agreement is concluded between American creditors and their Rumanian debtors, the former will be compelled to accept the conditions imposed by the law of May 30th. This is really the legal confirmation of the agreement concluded between the merchants of Manchester, Bradford, London and Nottingham, who have the largest claims against Rumanian merchants, amounting to a total—according to the Commercial Secretary, Mr. Adams, of the British Legation in Bucharest, of ten million pounds sterling. The terms of the agreement with the British creditors were set forth in Special Report No. 10 of the Commercial Attaché, of March 9, 1923, a copy of which is herewith transmitted.58
In this connection I have the honor to report that the only American creditors whose interests in the matter have been brought to the [Page 649] knowledge of the Legation as being affected by this law are given below:
- First: The claim of the Baldwin Locomotive Works for the payment of the amount due them by the Rumanian Government for locomotives has been the subject of a long correspondence between the Rumanian Government and the Legation (See Legation’s latest telegram No. 39, June 20, 3 p.m.59). Colonel Greble, the Bucharest representative of the Baldwin Locomotive Works, however, insists that his Company’s claim, being based on a special contract with the Rumanian Government, cannot under any conditions come under the purview of this law.
- Second: The Commercial Attaché, Dr. Van Norman, informs the Legation that the International Harvester Company, through its Bucharest representative, Mr. T. Gottwald, has urged him to request the Legation to make a protest against the provisions of this law being applied to American creditors. It is reported by Dr. Van Norman that the International Harvester Company has instituted proceedings in the Rumanian courts for the collection of private debts amounting to, more than $400,000. I might mention in this connection that Mr. Gottwald, who is not an American citizen, but according to the Legation’s best information a German citizen, has never personally nor through any other representative of his Company applied to the Legation for protection. Furthermore, no representative of this Company in Bucharest during my incumbency at this post has ever been a member of, or attended a meeting of the American lunch club, which is a semi-commercial organization and the rendezvous of practically all the Americans engaged in business in Bucharest, and of which I am honorary president.
It is to be noted here that French, Italian, Swiss, and Dutch claims against Rumanian merchants probably greatly exceed for each of these countries the total of similar American claims. For instance, the Italian Commercial Attaché, Dr. Paleani, estimates the loss in principal and interest involved for Italian creditors by the application of this law at more than a billion lira.
Upon receiving a report on this law I immediately took occasion in a personal interview with Mr. Duca, the Minister for Foreign Affairs to lodge a precautionary protest on June 19, 1923, of which he made due note along with those which I understand have been recently made been made [sic] by some of my colleagues. At this time I gave Mr. Duca to understand that the Government of the United States would not feel itself bound to accept the terms of an agreement made by Rumania with respect to English creditors, and that my Government would no doubt, as soon as apprised thereof, give [Page 650] me instructions to make a formal protest against the application of this agreement to American interests.
I should also mention that Mr. Duca, when I discussed the matter with him, alluded to a Rumanian Commission now traveling abroad for the purpose of concluding special arrangements with principal foreign creditors on behalf of local merchants. He asked whether it would not be possible for American creditors to treat with this Commission in Paris or London, and suggested that our Commercial Attaché act as an intermediary, as, he said, was being done by other commercial attaches here. I told Mr. Duca that this would be quite impracticable, pointing out that, aside from anything else, the American Commercial Attaché has not a full list of American creditors of Rumanian merchants nor authority to act on their behalf, our Government’s position on such matters being different from that of certain other Powers.
I shall await the receipt of the Department’s instructions on the subject, while keeping it constantly advised of any new developments or complaints received by the Legation from American citizens with regard to this law.
I have [etc.]