File No. 841.51/874

The Secretary of the Treasury ( McAdoo) to the Secretary of State

Sir: I have the honor to enclose herewith identical communications addressed by me to the British, French, Russian and Italian Ambassadors, and to the Ministers of Belgium and Servia, and to request that you be good enough to transmit them.1

It is my judgment that these communications, having now been approved by the President, should be presented as early as possible to the representatives of the Governments above mentioned.

A like communication should with propriety be addressed to the Roumanian Government, but, understanding that there is no Roumanian diplomatic representative in Washington, I beg that you take such steps as you think wise to have the matter laid before that Government.

Cordially yours,

Wm. G. McAdoo

The Secretary of the Treasury ( McAdoo) to the British Ambassador ( Spring Rice)2

My Dear Mr. Ambassador: I have the honor to state that, having in mind the experiences of the last two months in the matter of determining loans to various European Governments engaged in war against the Imperial Government of Germany, according to the discretion reposed in me, subject to the approval of the President, by the act of Congress approved April 24, 1917, I have come to the conclusion, which is approved by the President, that for the further satisfactory conduct of the business between your Government and the Government of the United States in respect to such loans it is desirable that a council be established in Europe for the execution of the following functions:

Such council, made up of representatives of the various European Governments at war with Germany, or at least of the larger powers among such Governments, should consider and report to a purchasing commission in America, established pursuant [Page 547] to some such arrangement as is contemplated by the memorandum hereto attached marked “A,”1 the needs of each such Government in respect to the purchase of material of all kinds, including food supplies as well as munitions, in the United States;
They should likewise consider and similarly report concerning the transportation requirements connected with the movement of such supplies and the means of satisfying these transportation requirements;
They should consider and similarly report concerning the priorities that ought to be observed with a view to the wise conduct of the war in respect to the purchase of materials and transportation of the same, in so far as limitations of the American market and of the transportation available for the purposes in question may impose the necessity of giving preference to one or another of the several needs of the belligerent powers.
Assuming at any given time the availability of a given sum of money distributable as loans by the United States Government to various Allied powers in question, it is desirable that the said council recommend to me the proportions in which such sums should be, if possible, made available to each such power. In this connection, it would be desirable that forecasts should be made, let us say, for periods of three months, six months and twelve months, respectively, on the supposition, of course, that for such periods as may be covered by the forecasts there should be a continuance of the existing war against Germany.

In respect to the division of a loanable fund, indicated in paragraph 4, I have in mind that such a council should report its conclusions as recommendations to me, in order that I may be thus aided in the discharge of the responsibility imposed on me by the statute in question, to make the necessary determinations in regard to the division of the fund in question. It should, however, be understood that I can not be bound to accept such recommendations, inasmuch as, under the act of Congress, the responsibility is placed upon me, subject to the approval of the President, to exercise my own discretion in respect to such loans or credits.

It is doubtless also known to you that the amount thus placed at the discretion of the Secretary of the Treasury by the act in question is fixed at $3,000,000,000. Of this amount, in round figures, there has now been allocated in various loans and credits the sum of approximately $1,600,000,000. At this writing, therefore, there remains to be disposed of the sum of approximately $1,400,000,000. It is obvious that any loans that may be desired in excess of the total thus remaining would require additional legislation by the Congress of [Page 548] the United States. While this fact is now actually controlling in respect to any further positive action on my part in the matter of making loans, it would not be objectionable if the council should, in making its forecasts, formulate and indicate to me the requests of the various Governments represented for sums which might total a larger amount than the $1,400,000,000 above mentioned. In making this statement, however, I do not desire to be understood as in any way committing the Government of the United States to any action whatever. The thought is presented to you merely because it may assist the Government of the United States, whether in the executive or the legislative branch, in the making of determinations, if any should be undertaken, concerning loans to foreign governments exceeding the amount now set in the statute.

I shall not in this communication undertake to suggest the organization of such council as is here proposed, since that obviously must be left to the Allied Governments concerned in the matter. I may add, however, that while the United States Government does not now propose that it shall have a representation in such council, it nevertheless reserves the right of proposing, at a later date, that representatives of the United States should be associated with the council in a manner hereafter to be determined, in order to give and receive such information as may be germane to its objects.

So important do I consider immediate action with respect to the objects above defined, that I should be glad if you would inform your Government at once that I consider the establishment of such council as one of those “arrangements” indicated in the above mentioned act of Congress as both “necessary and desirable” in connection with the granting of further credits for the Governments in question. I would, therefore, suggest that, while the determinations of loans or credits for the month of August, 1917, may be made before these arrangements are perfected, I feel it my duty to say that such arrangements should be completed and made operative before August 15, 1917, as a condition precedent to the determination after said date of any further loans or credits.

I am [etc.]

Wm. G. McAdoo
  1. These communications were transmitted July 19. (File No. 800.51/18a.)
  2. Based on a draft dated June 1, referred to the Acting Secretary of State, July 9, and returned by him with suggested changes, July 14. (File No. 800.24/39.)
  3. Not printed; for the final form of memorandum creating the purchasing commission, see enclosure to the letter from the Assistant Secretary of the Treasury, Aug. 31, post, p. 565.