File No. 861.51/446
[Enclosure]
The Russian Financial Attaché
(Ughet) to the
Assistant Secretary of the Treasury (Rathbone)
New
York, December 17,
1918.
Dear Mr. Rathbone:
I beg to acknowledge receipt of your letter of December 11, in
which you state that, in view of the fact that no part of the
interest due on November 15 on the obligations of the Russian
Government held by the United States has been paid, you do not
see how the Treasury Department can consent to the payment of
interest on the obligations of the Russian Government owned
privately in the United States.
While concurring with your opinion that possibly the Treasury
Department, from the formal point of view, is unable to give its
consent under the existing conditions, for this matter is merely
of a political nature, I cannot restrain myself from pointing
out that, under request of the Treasury, the Russian Ambassador
has signed the certificate of indebtedness for the amount of
interest due the 15th of November and it was our belief that
this action would give a possibility to your Department not to
insist on nonfulfilment [sic] of our
other financial obligations.
[Page 55]
I want to add that I shall not fail to take this matter up with
the State Department, this question being rather of a political
nature, as it is stated above, and I dare to express my earnest
hope that the United States Government will find a certain way
not to prevent us from executing this payment on the open
market, especially in view of the fact that this is the first
payment after the declaration of the Omsk government that they
undertake to fulfil all Russian national obligations.
For this payment the funds are provided, and this being indeed
the last payment on our financial program up to the 1st of May
1919 for the credit operations on the open market in this
country, it would be the very greatest pity should all our
efforts to maintain our obligations to private concerns in this
country, as well as the funds expended to meet our liabilities
during the last year, be denied all their purpose should we not
meet our obligation on the 10th of January, while a possibility
still exists to pay this interest.
I consider it my duty to bring to your attention yet another
fact. As you certainly remember on the 1st of May we have to pay
the principal on our $11,000,000 short notes issue, for which a
collateral of approximately Rs. 145,000,000 in 5½ per cent war
loans was deposited. The only way to pay this principal, if some
new credit will not be granted, in the meantime, to Russia, is
the realization of the collateral.
You will understand perfectly well what influence our failure to
pay the interest just before we have to sell our deposit will
have on the market of the Russian loans in this country.
The success of the realization of our war loan will depend very
much, if not mainly, on the attitude of the National City Bank
in this matter and I do not think that they will take great
interest in this transaction if we shall enter in the open
market after a failure to pay the interest on the 10th of
January.
I shall be very glad to take this matter up with you again, or
with any other governmental department, in order to try and
reach a certain common understanding to find the way of meeting
this particular obligation of ours, failure of which, in my most
sincere opinion, will cause the greatest harm to our national
interest.
Believe me [etc.]
