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The Ambassador in Russia (Francis) to the Secretary of State

Sir: I was called upon May 18 by Mr. J. J. Korostovetz, member of the Council of Ministers of Foreign Affairs, who told me he had been instructed by M. Sazonoff, Minister of Foreign Affairs, and by M. Bark, Minister of Finance, to make inquiries and submit a report concerning the negotiation of the proposed loan to the Russian Government by some American bankers and financial institutions, headed by the National City Bank of New York.

His first inquiry was whether I, as Ambassador, was disposed to look with favor on such a loan. After making clear to him that our Government could in no way be interested in such a loan, consequently [Page 149]it would in no sense incur any moral obligation in connection therewith,—I explained to him the financial responsibility of the National City Bank and those whom it represented, and furthermore expressed the opinion that such a loan would foster the already friendly relations existing between the two countries and would undoubtedly have the effect of promoting their international trade. He said England had been financing Russia and might not like to see such a loan made without her intermediation, but when I explained to him that there was no occasion for any intermediation whatever and that, in fact, our country had recently loaned $500,000,000 to England and France, he thoroughly concurred with the position I assumed.

Mr. Samuel McRoberts, vice president of the National City Bank, accompanied by another vice president, Mr. Rich, arrived in Petrograd May 15 for the purpose of consummating a loan of $50,000,000., negotiations for which have been pending for three or six months past. M. Sazonoff told me, as I have already advised you, that Russia would not accept the proffered loan because the American bankers demanded specific security in addition to the faith of Russia. Mr. McRoberts assures me that the plan which he has formulated and which he has submitted by special communication—sent by Mr. Young, the Petrograd representative of the National City Bank, who left for America May 17—will meet the objections of the government here. I am rendering all the assistance I consistently can toward the consummation of this loan, as I think it will have a very beneficial effect on the diplomatic, as well as the commercial relations between the two countries.

Respectfully yours,

David R. Francis