File No. 881.51/319

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

No. 8936

Sir: With reference to the Department’s telegraphic instruction No. 7203, of April 10, 1918, 3 p.m., in relation to the policy adopted by the British Government in regard to meeting the interest and principal on Russian obligations, I have the honor to transmit herewith, for the information of the Department, a copy of a note, dated April 27, 1918, together with its enclosure, which I have received [Page 45] from the Foreign Office in response to my representations in the premises.

I have [etc.]

Walter Hines Page
[Enclosure]

The British Secretary of State for Foreign Affairs (Balfour) to the American Ambassador (Page)

No. 71926/W/38

The Secretary of State for Foreign Affairs presents his compliments to the United States Ambassador, and with reference to Mr. Page’s memorandum No. 507 of the 12th instant, enquiring what policy had been adopted by His Majesty’s Government in regard to meeting the interest and principal on Russian obligations, has the honour to say that early in the present year instructions were issued by the Treasury to the banks affected authorising them to cash coupons payable in London on the direct state debt of Russia and on securities having the state guarantee of that country:

(a)
In the case of British subjects on receipt by the banks of a satisfactory guarantee that the coupons and the relative bonds are the property of British subjects whether domiciled in the United Kingdom or not, and were the property of British subjects before the 1st January 1918.
(b)
In the case of Allied and neutral holders, on receipt by the banks of a satisfactory guarantee that the coupons and the relative bonds had both been in physical possession in the United Kingdom before the 1st January 1918.

In the course of time it became necessary however to modify this policy, and on the 28th ultimo an official communiqué on the subject was published by His Majesty’s Government, a copy of which is enclosed herein for the Ambassador’s information. In accordance with the policy therein described, His Majesty’s Government can provide no further funds to meet payments of these coupons, save in the case of overdue coupons payable in London before the 1st instant and otherwise conforming with the regulations detailed above.

[Subenclosure]

Public Statement Issued by the British Government, March 28, 1918

The British Government have up to March 31 provided funds to meet coupons payable in London on the direct state debt of Russia and on securities having the state guarantee of that country. They have taken this course hitherto, though under no obligation to do so, but in view of the present conditions in Russia they can no longer continue this course.

The Chancellor of the Exchequer gives notice, therefore, that, as from April 1, 1918, holders of the securities above specified must no longer look to the British Treasury for the provision of funds to meet interest due to them from Russia. At the same time he publishes the following declaration which has been agreed upon between the British and French Governments, and which will be published on behalf of the French Government in Paris.

“The Imperial Russian Government, at the time when it entered into obligations, was without doubt the representative of Russia and definitely pledged that country and this undertaking cannot be repudiated by the authorities whatever they may be, which hold or may hold power in Russia, without the very foundations of international law being shaken. Otherwise there would no longer be any security in the relations between states, and it would become [Page 46] impossible to enter into any obligation for a long period if this obligation could be questioned.

This would entail the ruin of the credit of states politically as well as financially. A country would no longer be able to borrow on normal conditions if lenders should find that their sole guarantee lay in the maintenance of the constitution in virtue of which the borrowing government, as the representative of its country, made its request for credit. No principle is better established than that by which a nation is responsible for the acts of its government, and no change in the government can affect the obligations previously incurred.

The obligations of Russia continue; they are, and will continue to be, binding upon the new state or group of states by which Russia is or will be represented.”