File No. 861.51/264
The Consul General at Moscow ( Simmers ) to the Secretary of State
[Received January 30, 1918.]
Sir: The Maximalist newspaper Social Democrat has published and commended the [draft of?] decree repudiating foreign loans, and internal loans as far as now owed abroad, as follows:
- 1.
- All foreign loans concluded by Russia, as well as all railway and mortgage loans concluded abroad with the guaranty of the state, are annulled. Payment of interest and amortization charges on these loans is stopped.
- 2.
- All bonds of interior loans of the state and of interior loans guaranteed by the state that are held abroad on the day of the promulgation of this decree are annulled. All the bonds of loans indicated in this paragraph that are held in Russia shall be presented before January 14 to the State Bank, its branches or branches of the State Savings Bank for stamping to this effect. Bonds not so stamped are considered annulled after that date.
The promulgation of this decree was indispensable for various reasons. On these loans, contracted for the most part on account of the war, we should have been obliged to pay foreign capitalists annually Rs. 1,000,000,000 or about Rs. 40 per family. Now there is no reason to pay such tribute to foreign capitalists. Russia has paid enough in blood and suffering on the fields of battle of this war of international capitalism, or in interest and amortization charges in the good old time. What remains the foreign capitalists may charge to profit and loss account, along with their enormous war profits.
The foreign loans of Russia are placed for the most part in England, Germany, and France; therefore the present moment is extremely well chosen for their annulment. The capitalists of these countries are at this moment so enfeebled by the long war and the discontent of the workingmen growing out of it that they will not be in a condition to wage war on Russia for the sole purpose of recovering the amount of the annulled loans.
If we had not annulled the foreign loans we should have been obliged to strip the village of its last egg and its last pound of butter to collect a billion rubles for interest payments. Only the annulment of the loans can ameliorate and equilibrate our balance of trade and augment the vitality, we even say the credit, of our national economy.
The opposition press has had so many protests to make against the course of the Maximalists that it has grown tired. It has not taken the trouble to point out the contradictions in the above references to the enormous war profits and the extreme enfeeblement of international capitalism, but has merely reprinted with approval the indignant comment of the foreign press. Nor has it criticized [Page 30] the political economy of the Maximalist organ, which, moreover, is probably only for “buncombe.”
There is now talk of requiring the deposit in bank, subject to restrictions of withdrawal, of all Russian paper currency, with the proviso that notes not stamped shall be annulled. The majority of the Russian currency notes is supposed to be held by the peasants, who would not be troubled greatly by the restriction of weekly withdrawals from bank to Rs. 150. The bank depositors have shown a tendency to withdraw deposits, partly on account of restrictions imposed, and partly because they fear a levy on accounts exceeding a certain minimum. The requirement of the stamping and registration of bonds and currency, to be followed, as is expected, by taxes or partial confiscation of holdings exceeding the Socialist norm, whatever that may be, would be effective means of sabotage and there is no reason to believe that the Maximalist organization will lack the courage of their convictions, or their policies.
I have [etc.]