The Secretary of State to Vice President Coolidge

My Dear Mr. Vice President: I have received from Mr. Boris Bakhmeteff, the Russian Ambassador, the following statement in regard to the transactions which, it is understood, have recently been brought into question in debate in the Senate:

“The United States Treasury advanced to the Provisional Government of Russia the sum of $187,729,750. Most of that money was spent by the Government before its fall. Following the overthrow of the Government, an arrangement was entered into with the Department of State and the Treasury by which the remainder of funds derived from the United States credits, as well as all other available funds on Russian Government accounts in this country, irrespective of their source or previous destination, were segregated into a special liquidation fund. The purpose of this fund was to liquidate Russian liabilities in the United States. Disbursements of this fund were made with the consent of and in cooperation with the United States Treasury. Complete accounts were rendered to the last penny of the disbursement of this fund. It may not be out of place to recall that the Senator who led the discussion was a member of a Senate Committee which on April 14th, 1920, rendered a report to the [Page 878] Senate on Russian propaganda,91 which report reads in part as follows:

“The Department of State ‘furnished full documentary evidence dealing with the disposition of moneys which had been advanced to earlier Russian Governments from the Treasury of the United States, and with which purchases of war and industrial materials had been made in this country. In this connection Martens, in his testimony, had given the Committee to understand that a misappropriation of American money had taken place. His testimony on this point, however, was of a most cursory and hearsay nature; and the documents furnished by the State Department and contained in the record provide a complete accounting for all these moneys and materials purchased therewith. From these documents it appears, also, that the maintenance of the recognized Russian Embassy in this country, and the carrying on of its related activities are provided for by funds accruing from a loan privately negotiated in this country and in England.’

“In the Senate discussion it was asserted that the Russian people have never received any benefit from any part of this money. The funds were used for the benefit of the Russian people, to maintain the honor and the dignity of the Russian nation by discharging obligations which Russia had incurred to citizens of the United States. As the report of the Senate Committee states, no money was used for the maintenance of the Russian Embassy.

“In the course of the discussion in the Senate it was remarked that money[s] paid for the purchase of materials from the Russian Provisional Government were not credited to the Russian account with the United States. Such moneys were deposited in the liquidation fund, the expenditure of which was under the control of the Treasury Department.

“It was intimated, if not charged, that I improperly used money, derived from United States credits, even to the extent of purchasing real estate, and of fraudulently taking title in the name of a corporation. The Treasury controlled the distribution of funds and naturally would not allow such disbursement. Not only did I not acquire real estate in the City of New York or in the City of Chicago with United States funds but I never acquired any real estate in any city with any funds, neither in my own name or in the name of any corporation, or under any guise whatsoever.

“The reference made to a Greek priest leads me to guess that the matter is probably connected with the Russian Orthodox Church in North America. As it is well known, Russian Church affairs in the United States have been in a deplorable condition since the Bolshevist revolution. Various factions existed within it. Charges and counter-charges were made. Appropriations which in the past came from the Russian Holy Synod having been discontinued, the material condition slided into a state where Church properties were in danger of being lost and the dignity of the Church molested.

“To protect Church properties from foreclosure and from loss a private corporation known as the ‘Russian Church Relief Corporation’ was organized by a group of Russian individuals devoted [Page 879] to Church affairs. The papers of the Corporation were duly filed in public offices. No financial assistance, however, was given to the Corporation from American or any other liquidation funds. In its efforts to conserve Church property the Corporation acquired and became the holder of certain real estate. The Corporation, I am informed, is being conducted solely for the benefit of the Russian Church and for the sole object of conserving its material interests in this country.

“There is also another corporation organised for charitable and humanitarian purposes which is known as the ‘Russian Aid Society’. The papers of the Society are also filed in public offices. The purpose of the Society is to assist Russians who have been left stranded in this country and who find themselves in dire want. I am informed that this corporation holds part of its fund invested in real estate. No financial assistance has been obtained by the Russian Aid Society which in any way derives from United States Treasury funds.

“I have no interest whatsoever in the stock or in the real estate of these corporations. They are entirely private bodies.

“During the discussion much was said about General Semenoff and, unless I misread, an effort was made to make it appear that I am responsible for him in this country; that I sympathize with his activities and plans; and that in some way or other I am associated with him and have given him assistance. Such statements are gratuitous. The State Department knows that I have had no connection with General Semenoff and am not associated with him in any way. As a matter of fact I knew nothing of his intended visit to this country. I knew and know nothing of Semenoff’s plans. It is true that Semenoff called on me. Practically every Russian, other than those who favor the restoration of the old regime or are in sympathy with the Bolshevists, call at the Embassy when they visit Washington. I communicated to the Department of State the circumstances under which I received Semenoff and of the valuable information I obtained from him with respect to conditions in the Far East.

“In the course of the discussion the question was raised of my willingness to state facts. As I have on many occasions indicated to the Department, I am only too glad to give all possible information relating to my activities which the Department might ask me for. I have nothing to conceal. Moreover, in so far as the use of funds is concerned, most detailed and full accounting is on file with the Treasury Department.”

I have [etc.]

Charles E. Hughes
  1. S. Rept. 526, 66th Cong., 2d sess.