871.0443/3
The Secretary of State to the Minister in Rumania (Jay)
Sir: The receipt is acknowledged of your despatch No. 420 of June 21, 1923, enclosing a translation of the Rumanian Law for the Regulation of Commercial Indebtedness, adopted May 30, 1923, promulgated in the Monitorul Oficial of June 3, 1923.
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The Department approves of the action taken by you in the matter.
An examination of the law discloses a number of objectionable features. It provides, in cases where agreements exist for the payment by Rumanian nationals of debts in foreign currencies which have appreciated to a certain extent above the normal exchange value of the lei, for a period of from a minimum of twelve to a maximum of twenty years in which payment can be made. It also fixes an arbitrary rate of interest of from three to four per cent, according to the date on which the debt was incurred, and provides for the payment of an additional percentage for the amortization of the debt.
While it is possible that in some instances Rumanian debtors may not be able to pay debts due in American or other foreign currency, in view of the appreciated value of such currency as compared with [Page 651] Rumanian lei, other Rumanian debtors are undoubtedly amply able to pay the amounts due in foreign currency and should be permitted to do so in accordance with their contracts without governmental interference. Should an extension of time be desirable in any instance, it is within the province of the interested parties to make some arrangement to that effect.
You may again bring the matter to the attention of the Rumanian Foreign Office, pointing out that the law in question is not only discriminatory, in that it does not apply to all debts but merely to those due in certain currencies which have appreciated in value as compared with the lei, but that it seriously impairs the obligation of private contracts entered into in good faith not only by substituting an arbitrary, and, doubtless, in many cases, a lower rate of interest than that which was provided by contracts but also by extending for a long period of years the time in which payment can be made. You may state that the Government of the United States considers that any attempt to impose upon American creditors, without their consent, the law in question, would constitute an improper governmental interference with existing private contracts, and that the Government of the United States cannot agree to the infringement of the rights of its nationals in the manner proposed by the law.
I am [etc.]