Office of the Historian

800.51W89 U.S.S.R./46a: Telegram

The Secretary of State to the Ambassador in the Soviet Union (Bullitt)

Washington, May 7, 1934—4 p.m.

67. Attorney General on May 5, rendered an opinion,21 concurred in by the Department, upon various questions pertaining to the Johnson Act.

In answer to the question whether the present Soviet Government, as the successor to prior Governments of Russia, is to be regarded as in default, in view of the fact that no payment has been made on the bonds issued to the Government of the United States by the Provisional Government, the Attorney General stated that he regarded the Soviet Government as in default within the contemplation of the statute. He pointed out that the proceedings in the House of Representatives indicated acceptance of the view that our Government regards the Soviet Government as responsible for the obligations incurred by prior Russian Governments and he quoted various authorities to show that the position of our Government in this respect accords with accepted principles of international law.

With regard to the question whether the Soviet Government can be considered in default pending negotiations that are being had with a view to arriving at the amount of indebtedness due from the Soviet Government to the Government of the United States, the Attorney General stated that he was aware of no principle of law under which a previously existing default is waived or overcome because of the mere pendency of negotiations with a view to arriving at the amount of the indebtedness due.

With respect to the question as to the types of transactions to which the Act applied, the Attorney General stated that it appeared to be the purpose of the Act to deal with bonds and securities and other obligations similar to those investigated by the Senate Committee on Finance, that is, obligations such as those which had been sold to the American public to raise money for the purpose of foreign governments issuing them,—not contemplating foreign currency, postal money orders, drafts, checks and other ordinary aids to banking and commercial transactions which are obligations in a broad sense but not in the sense intended. He expressed the opinion that it was obviously not the purpose of Congress to discontinue all commercial relations with the defaulting countries. Mailing full opinion.22

Hull
  1. 37 Op. Atty. Gen. 505.↩
  2. See circular telegram of June 1, to the Ambassador in France, Foreign Relations, 1934, vol. i, p. 556.↩