If $40 for a stem-adapter - 1" to 1 1/8" - is too pricey, I suggest the one from Profile Design. I have one on my Vintage PUCH. It's excellent:

http://www.cambriabike.com/shopexd.a...STEM+CONVERTER

You can fit any modern 1 1/8th inch stem on them, and 31.8mm handlebars from there. I did.