File No. 861.51/134

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


1204. Answering your 1313, April 13, 5 p.m., received 17th. For Secretary of the Treasury:

Minister of Foreign Affairs is much pleased prospect of securing American loan. Learned following from him: Russia’s indebtedness [Page 4] to England for supplies furnished previous to 1917 Rs. 5,000,000,000. Estimated requirements by previous Government of His Majesty made to conference of Allies,1 held here in February, was 8,000,000 tons but reduced by Lords Milner and Revelstoke and associates to 4,200,000 tons, estimated cost thereof Rs. 2,200,000,000. In addition thereto England agreed to furnish Russia $360,000,000 to pay for purchases in America during 1917, such purchases to be made by Russian commission in America but approved by England. France soon after war began extended credit to Russia of Fr. 125,000,000 monthly but that limit never consumed so that Russia’s present indebtedness to France on open account for war supplies is less than Fr. 1,000,000,000. English indebtedness bears 6 per cent, French 5 per cent, and both are due two years after war ends. England and France have both promised to aid Russia in placing bonds to meet this indebtedness.

Plan proposed in my No. 1161 of the 6th was that advances made by us should be repaid one year after treaty of peace signed, which Minister of Finance thinks would probably be two years after war ends.

Minister of Finance appreciates low interest you suggest but desires as long time as we can grant saying would pay advanced rate therefor. Repeats that proceeds of loan be expended in our country. Estimates railroad requirements $220,000,000 for locomotives, cars, rails, and appurtenances, which Russia needs badly.

Says remainder of loan be used for agricultural products and implements and for promoting industrial enterprises in Russia and strengthening country’s gold reserve in event of early termination of war.

Told him no aid whatever would be extended if separate peace concluded of which he said that “there is no possibility.” Minister desires to hold England to furnishing $360,000,000 mentioned above in addition to what we advance Russia. When details of loan arranged we should suggest safeguards concerning expenditure. More to-morrow.