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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa

Poland,   pp. 525-563 PDF (14.2 MB)

Page 536

Councils are in danger of terminating without agreement as to a
plan of action satisfactory to both parties. The Council has definitely
informed the Mission that it cannot recommend to the favorable
consideration of the bondholders the Polish offer of 35 per cent interest
service,' and in support of its request that a better offer than this be
made it has submitted to the Mission data indicating Poland can
well afford to pay more than 35 per cent.
  (2) The Council has made to the Mission the following counter-
  1. The payment in cash of 50 per cent of the full interest service
provided for in the bond contracts,'9 for a period of 18 months (cover-
ing 3 half-yearly coupons of consecutive maturity) beginning with
the first coupon remaining unpaid in consequence of the suspension
of payments by Poland.
  2. Or in the alternative, at the option of the bondholders, a 20-year
4 per cent funding bond for the full interest service.
  3. The Polish Government shall carry in its budget in the regular
normal manner the full service, interest and sinking fund, on all of
its dollar bond obligations.
  All budget sums not needed to make the 50 per cent cash service
on the original bonds and the full cash service on the funding bonds
shall be held in the Polish Treasury during the operation and until
the end of this temporary plan and then used in accordance with
an arrangement then to be made in consultation with the Council.
  (3) According to data compiled by the Council, payment of full
interest on Polish dollar bonds at present held in the United States
would require transfer of slightly more than 4 million dollars per
annum. The Council contends that payment of 50 per cent of this
amount, or a little more than 2 million dollars annually, is well within
Poland's capacity.
  (4) It is understood that the Polish Mission stated, in reply to the
Council's counter-suggestion, that it already had presented the maxi-
mum offer of the Polish Govermnent (i. e., the offer reported in the
Department's telegram No. 6, February 5, 2 p. m.), that it had re-
peatedly taken up the matter with Warsaw, and that it would be
embarrassing for it to make any further representations to the Polish
Government. The head of the Mission states that he must sail for
Poland on February 20.
"1A non-profit, semi-public organization incorporated on December 18,
formed at the request of the Secretary of State, the Secretary of the Treasury,
and the Chairman of the Federal Trade Commission of the United States for
the protection of the rights and interests of American holders of public
rities of foreign states and other governmental sub-divisions. See Foreign
tions, 1933, vol. I, pp. 934 if.
'8 For text of the Polish offer as published on February 24, 1937, see Foreign
Bondholders Protective Council, Inc., Annual Report, 1936 (New York, 1937),
p. 702.
19 For detailed descriptions of the various issues of Polish bonds referred
here and hereafter, see Annual Report, 1937 (New York, 1938), pp. 580 if.

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