File No. 861.51/305a

The Secretary of State to the Ambassador in Great Britain ( Page )

[Telegram]

7510. Following for Crosby 1 or Cravath 2 from Secretary of Treasury:

[Page 44]

164. Russian one-year notes to amount of $11,000,000, placed through National City Bank three years ago and which have been renewed twice, mature May 1. Russian Ambassador has funds available for paying interest for six months or one year in case notes are extended, but can not, of course, pay principal. It is very desirable that these notes be extended without protest or attempt on part of note holders to attach any Russian property here which would create a crisis and might force this Government to take over all Russian assets and apply proceeds to credit of Russian obligations. It seems advisable from note-holders’ standpoint to grant extension and not create a situation whereby this Government would be compelled to take an antagonistic position to protect its own interests, leaving little or nothing for note holders. Notes are held by National City Bank and few other large interests, all or substantially all assenting to extension, with exception of $2,500,000, which were purchased by the Russian Corporation in England, of which Holden is president, through proceeds loan from City Bank. City Bank has asked consent of Russian Corporation to grant extension but has demanded payment of its loan or additional collateral. Russian Corporation replied that it could give no additional security, but has indicated its willingness to extend notes, provided City Bank would extend loan without additional security. Am advised that Russian Corporation has other assets and as City Bank has been cooperating satisfactorily in this and other Russian matters, have agreed to use good offices to get additional security, if available, from Russian Corporation. This, of course, is a delicate matter, but British representative suggests advisability of our suggesting that you take matter up unofficially with British Treasury, explaining that apparently nothing would be gained by refusing to extend notes and that City Bank is entitled to additional security.

Lansing
  1. Oscar T. Crosby, delegate of the Treasury to the Inter-Allied Council on War Purchases and Finance.
  2. Paul D. Cravath, advisory counsel of the American mission to the Inter-Allied Council on War Purchases and Finance.