Memorandum by Mr. James C. Corliss, Assistant Chief of the Division of Financial Affairs, to Mr. Frederick Livesey, Adviser in the Office of Financial and Development Policy

Mr. Solmensen1 of SEC called me this morning to say he had run down the information regarding the status of this fund,2 which was mentioned by Carl Marks & Co. in a letter to Mr. Rogers3 suggesting that the Council assist in having this fund, now in the Treasury Department, distributed to holders of defaulted dollar bonds issued by the old Czarist Government and repudiated by the Soviet.

Solmensen said that he had talked with Greenberg,4 who handles [Page 816] the fund in Treasury, and Greenberg said that the amount is about $3,000,000, not $7,500,000. It was not deposited by Russia, but represents collections made by the United States Government from American citizens, the collections being of claims against American citizens which Russia assigned, on behalf of herself and her nationals, to the United States Government at the time of the Litvinoff Agreement in 1933,5 in anticipation of a general financial settlement of outstanding issues at that time.6 The assignment was not conditional upon completion of a settlement agreement, in Greenberg’s opinion, but on this point there is a difference of opinion between him and Mr. Yingling7 of LE (see below). One point seems clear, however: the funds were not allocated, assigned, pledged, or otherwise especially destined for payment of the bonds, but were to be part of the total amount which might finally be agreed upon to pay all claims of the United States Government and its citizens against Russia and her nationals.

Solmensen said he had also talked with Mr. English8 and Mr. Yingling, both of LE. They were in agreement with Greenberg’s view on everything except the point whether the funds can be distributed before completion of an agreement on all claims. Whereas Greenberg believes that Congress can distribute the funds now, LE believes that it cannot until an agreement for settlement of all claims between the two Governments is reached.

So far as the Russian Bondholders Committee is concerned, there seems to be no basis for their position that the funds belong to bondholders exclusively.

  1. Probably intended is Kurt A. Solmssen, Assistant Adviser on Foreign Investment, in the Securities and Exchange Commission.
  2. This was a fund held in a special account by the Department of the Treasury.
  3. Letter dated New York, December 4, 1947, from Carl Marks & Company, foreign securities specialists, to Mr. James Grafton Rogers, president of the Foreign Bondholders Protective Council, Inc., New York, N.Y.; not printed.
  4. Joseph Greenberg, Assistant Commissioner, Bureau of Accounts, Department of the Treasury.
  5. For this assignment made on November 16, 1933, by the People’s Commissar for Foreign Affairs, Maxim Maximovich Litvinov, at the time of recognition of the Soviet Union by the United States, see Foreign Relations, The Soviet Union, 1933–1939, p. 35.
  6. For documentation on negotiations to reach a settlement in regard to claims, credits, and other matters, and their failure, see ibid., pp. 63 ff., and pp. 166 ff.
  7. Raymund Thomas Yingling, Assistant Legal Adviser for military affairs and occupied areas.
  8. Benedict Michael English, Assistant Legal Adviser for international claims.