decision not to cancel the war debts of European count
ries, but only to prolong the time of their payment.
In January 1922, in the memorandum of the Re
public of Estonia on USA debts it was announced that by January 1 the debt had grown to USD 15,876,755.71 by virtue of unpaid interest. It was also pointed out that despite the fact that there were three possible dates of debt settlement - June 30, 1922, June 30, 1923 and June 30, 1924 - it would be difficult even during a longer period of time, in particular because of the war debts to other states as well. Since Estonia did not possess any particular national wealth, the rate of taxation would be too high in case Estonia repaid the debt on those terms. The consolidation of the debt for at least 30 years at an interest rate of below 5 per cent was considered the only possible solution, though an onerous one.
It was necessary to cut the state budget because of the foreign debt. Only the Foreign Ministry's budget was reduced by 25,526,900 marks by the State Assembly on March 24, 1922.
The fact that England set its debt to the USA at the beginning of 1923 indicated to the Estonian govern
ment that the USA was not going to cancel the war debts and that the terms of payment would be unfavou
rable. In its explanatory letter to the 1924 budget bill the Government stated that "debts both to the USA go
vernment and to the Relief Administration are a severe burden on us because interest alone which constitutes a relatively big sum /.../ is added every six months to the sum owed". The indebtedness continued to grow.
The first concrete steps to conclude an agreement on the debt settlement were made by Ants Piip, the en
voy accredited to the USA in November 1923. Negotia
tions with the Foreign Debt Commission of the USA began in January 1924.
According to the report on Estonia's foreign debt, drawn up by the loans department of the treasury of the Ministry of Finance, Estonia's debt to the USA, inclu
ding unpaid interest, had grown to USD 18,370,704.81 (6,833,902,189.32 EMK). Estonia had paid neither debt nor interest and the Foreign Minister K. R. Pusta poin
ted out that the sum finally stipulated was unknown.
Official negotiations for the debt settlement between A. Piip and A. Mellon, USA Secretary of the Treasury, began in May 1925. The USA rejected the idea of hol-ding a general conference and preferred to make agree
ments with its partners separately in order to dictate different terms of payment to different countries.
The USA made a proposal to the Estonian govern
ment to conclude an agreement on funding the debt ana
logous to the USA-Polish debt settlement agreement.
According to that agreement, the debt would have to be paid during 62 years.
A. Piip and A. Mellon signed the debt settlement agreement in Washington on October 28, 1925. That was Estonia's last unsettled debt. The negotiations lasted two years and Finally the principal sum was fixed at USD 13,830,000 on December 15, 1922.
The debt of the Republic of Estonia to the United States of America consisted of three parts: 1) In the years 1919-1920, the government of the Republic of Es
tonia received through the Revalis corporation military equipment (estimated finally at USD 2,213,378) from the USA expedition corps depots in France before their liq
uidation. 2) The Food Ministry bought from the Ameri
can Relief Administration (ARA) grain on credit for USD 2,714,600. The term of payment was June 30, 1920 and (USD 1,932,923.45). On concluding the agreement a sum of USD 1,441.88 was repaid and the remaining sum of
The agreement between the Republic of Estonia and the USA on debt settlement was ratified by the State
ment agreement was not concluded analogous to the 1923 USA-Polish agreement which stipulated that Poland could pay its 3 per cent annual interest during 15 years.
Latvia, having equal repayment conditions with Es
tonia, was obliged to pay USD 5,775,000, Lithuania owed to the USA a total of USD 5,041,627.
The magazine "Eesti Majandus" ("Estonian Econo
my") gave quite an objective survey of the factors un situation of the Baltic states. Estonian statesmen them
selves were also eager to draw a more favourable pic
ture of Estonia's economic situation. "Christian Science Monitor" (February 24, 1925) carried an excerpt from
The 1925 agreement provided definite preferential terms of payment before the end of 1930. During that period Estonia managed to repay USD 1,000,000. The interest for that period was funded on November 18, 1931. By that time the debt had grown to USD 16,466,012.82.
When the preferential period expired, Estonia, like other European countries, applied for a moratorium on war
USA Ministry of Finance did not consider the preferen
tial payment of interest acceptable. It was emphasized in the September 1930 report of the consulate on the USA economic situation that there was a great demand for the bonds in the USA and that their prices had risen.
Therefore, Estonia could not make use of USA bonds in repaying the war debts.
On July 5, 1931, the Foreign Ministry of the Re
public of Estonia received through Riga President H. C.
Hoover's June 20 message on prolonging the time of payment of intergovernmental reparation and assistance debts by one year (July 1, 1931 - July 1, 1932). In con
nection with Hoover's moratorium, the British Foreign Office annouced the British government's decision to dec
lare a one-year moratorium on the debts of Poland, Rou-mania, Yugoslavia, Estonia and Latvia. Thus, the payment of over 3.5 million kroons was suspended for a year.
In the spring of 1932, negotiations about the un
paid sums during the period of Hoover's moratorium were conducted between the governments of the USA and England and the European debtor-states. Estonia made a proposal to the USA government that the unpaid sum be equally divided to all the remaining years at an an
nual rate of interest of 3.5 per cent. The proposal was rejected and, under the terms of the special agreement between Estonia and the USA on June 11, 1932, Esto
nia was to repay its debt during 10 years beginning with July 1, 1933 at an annual rate of interest of 4 per cent.
A sum of USD 600,373.06 was not paid during Hoover's moratorium.
On September 2, 1932, the government of the Re
public of Estonia applied for prolonging the time of the payment of the debt by two years as well as the pay
ment of interest. In December 1932, USA Secretary of the Treasury Mills announced that a two-year extension of the debt payment could be granted to Estonia, Lat
via, Poland and other countries, but President F. D. Roo
sevelt did not give his consent to that and the time of payment was not prolonged. It was promised that the debt settlement problems would be discussed separately with all those countries.
On December 10, 1932, the Foreign Ministry of the Republic of Estonia sent a note to the USA govern
ment on prolonging the payment time of the original debt (USD 110,000). On December 13 the government decided not to pay the interest amounting to USD 245,370 to the USA on December 15. Estonia followed the examp
le of France who had stopped repaying its debt. Latvia sent an analogous note. The USA gave a negative ans
wer to both of the notes. Latvia, however, decided to pay the sum due on December 15 and here is what the newspaper "Päevaleht" ("Daily") wrote about it: "/.../ the government should be free to decide whether it is more disadvantageous to lose the above-given sum than to re
sist the political and economic pressure from the USA".
The Ministry of Economics motivated the prolonging of the time of payment with a sharp decline in Estonia's loreign trade turnover caused by a decrease in interna
tional trade resulting from the great depression of the 1930s.
On December 15, 1932, Foreign Minister A. Rei delivered another note to H. Carlson, USA charge d'affaires in Estonia, but received no reply.
England, Italy, Czechoslovakia, Finland, Latvia and Lithuania paid their sums due in time, while France, Belgium, Poland, Hungary and Estonia did not. By Ja
nuary 1, 1933, Estonia's debt to the USA had grown to USD 17,203,743.06, the sum constituting nearly half of the total foreign debt of Estonia. Nevertheless, according to the calculations by Estonia economists, the actual va
lue had dropped from USD 13,831,441 to USD 6,601,706 owing to a fall in market prices.
On March 17, 1933, the Estonian Foreign Minister A. Piip informed the USA charge d'affaires that Esto
nia was not able to pay the sum due in the summer 1933 since Estonia's economic situation had not impro
ved during the depression. In June, the USA responded to that statement with a note to France, Yugoslavia and Estonia pointing out that the above-given states had not paid their sums due on June 15.
On November 29, 1933, Estonian consul K. Kuu
sik delivered the Estonian Foreign Minister's November 16 note to the USA Secretary of State stating that owing to its economic and financial difficulties Estonia would again not be able to pay the necessary sum.
Estonia did not repay its debt to the USA. During the period studied in the present paper a total sum of only USD 1,001,441.88 was transferred and that inclu
ded USD 1,441.88 paid when the agreement was conc
luded. By April 1, 1934, Estonia's debt to the USA had grown to USD 17,787,280. The other debtor-states (with the exception of Finland) did not pay their debts to the USA either. A total of 2.7 thousand million dollars had been repaid to the USA by the year 1933, i. e. the time when repayment actually stopped.
References
Estonian State Archives. Stock 20 (Ministry of Provision).
Stock 73 (Ministry of Commerce and Industry). Stock 80 (State Assembly). Stock 957 (Ministry of Foreign Affairs).
Stock 969 (Ministry of Economics).
Congressional Record. 68th Congress. 2nd Session. House of Representatives. Document N. 467. Washington, 1924.
Congressional Record. 68th Congress. 2nd Session.
Senate. Document N. 810. Washington, 1924.
Eesti lepingud välisriikidega 1925-26 (Estonia's treaties with foreign countries 1925-26). Tallinn, 1926.
Tammer H. Võlalaviin. // "ERK" (Estonian Patriotic Clubs) 1933. Nr. 1.
"Ameerika Eestlane" (The American Estonian) 1925.
"Current History" 1926.
"Eesti Majandus" (Estonian Economy) 1925, 1926.
"Päevaleht" (Daily) 1925, 1926, 1931, 1932, 1933.
"Sõdur" (Soldier) 1925.
"Time" 1924, 1925.
"Vaba Maa" (Free Land) 1933.