File No. 861.51/148

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


1415. The Secretary of the Treasury desires you to communicate the following to the Minister of Finance:

The Secretary of the Treasury salutes the Minister of Finance of Russia and begs to inform him that he has, with great pleasure, established to-day a credit in behalf of the Russian Government or $100,000,000. This credit is to bear interest at 3 per cent per annum until converted as hereinafter stated. Interest will begin to run from the date of the respective drafts drawn by the Russian Government against this credit. The same arrangement has been made with regard to this credit as with the credits established by the United States Government in favor of Great Britain, France, and Italy; namely, that the supplies purchased in the United States with the proceeds of such credits shall be made through a commissioner, or a commission of the Treasury Department, whose duty it will be to make such purchases in behalf of and on the requisitions and specifications [Page 10] of the borrowing government, securing the most favorable possible prices and deliveries. The execution of the orders and the inspection of the supplies will be carried out under the supervision and direction of the duly constituted representatives of the Russian Government in the United States. We are proceeding immediately with the negotiations for the 500 locomotives and 10,000 freight cars referred to in your previous cables, keeping at the same time in close touch and cooperation with the representatives of the Russian Government in the United States. The payments for these locomotives and cars will be made out of the $100,000,000 credit established as herein stated.

I should state that if at any time before June 30 any sum is drawn against the present credit to meet payments for supplies purchased the amount will be represented by a short-time certificate of indebtedness maturing on that date, bearing not more than 3½ per cent interest, but it will then be refunded into a longer-time obligation, the rate of interest being always the same rate as that which the United States must pay upon its own obligations issued to provide such credit. Under the act of April 24, 1917, it is provided that if the United States is obliged to borrow money at a higher rate than 3½ per cent during the continuance of the war with Germany, then the obligations of the foreign governments taken by the United States shall be converted by the borrowing governments into new obligations bearing the higher rate of interest paid by the Government of the United States. The object of the law is to give the foreign governments making common cause with the United States against Germany the benefit of the credit of the United States at all times at exactly the same rate that the United States itself has to pay. All credits made under authority of the act of Congress approved April 24, 1917, have in view, as shown by the title and specific text of that act, the prosecution of the existing war. The purposes of the loans made under the authority of this act are correspondingly limited. In case of the discontinuance of war the credits will of course cease to be extended. The commission headed by former Secretary of State Root will, upon its arrival in Petrograd, enter very fully into a discussion with the Russian Government of its financial needs to carry on the war, and every effort will be made by the Government of the United States to extend, within the limits authorized from time to time by the Congress, financial assistance to the Russian Government.

The Secretary of the Treasury expresses the hope that the credit of $100,000,000 now established will be received by the Russian Government and the Russian people as substantial evidence of the friendship of the American people and of their desire to assist the Russian Government in carrying on the war and in concert with the United States and the Allies to establish liberty throughout the world and particularly to assist the Russian people in securing the blessings of self-government and ultimately of a permanent peace.