Papers Relating to the Foreign Relations of the United States, 1918, Supplement 2, The World War
File No. 872.51/29
The Assistant Secretary of the Treasury ( Crosby) to the Secretary of State
[Received June 13.]
My Dear Mr. Secretary: In the absence of McAdoo, I have the honor to send to you, for your information, the inclosed copies of correspondence between the Serbian Minister and this Department, on the subject of a loan to the Serbian Government.
[Page 594]Holding myself entirely at your convenience to furnish you any additional information which you may desire on this matter, I am [etc.]
The Serbian Minister ( Michaïlovitch) to the Secretary of the Treasury ( McAdoo)
Sir: Following my communication to you dated May 19, I beg to present to you now, as the result of conversations had meanwhile, the following request, with explanatory remarks:
The powers given me by my Government for representing it in the negotiations with you are satisfactory, and extend not only to the signing of obligations for my Government, but also to the subsequent expenditures of moneys that may be advanced by you against such obligations.
Concerning such expenditures, I understand that the following conditions are to be observed:
1. All requisitions for supplies for my Government purchasable from the funds that you may lend are to be first presented to an international commission now in course of being established through the cooperation of your Government with others in London or Paris. Such commission will, as I understand the matter, study the needs and priorities of requisitions of various European Governments now at war with Germany, and will, through proper channels, report to your Government its views upon these needs and priorities to the end that as far as possible the American market may not be disturbed by competitive bidding for materials, either as to prices or as to delivery.
Should there be delay tor any cause in the establishment of such international commission, and should there be meanwhile acute need on the part of my Government for any supplies which it might desire to purchase from funds advanced by you, I trust that it would not be found inconvenient if such needs should be presented directly to you. I may suggest that in case you desire to have information concerning the merits of such propositions that your own military attachés in Europe, or your diplomatic representatives, might doubtless inquire into the question and report to you thereon.
2. In respect to the expenditure of any sums for aiding the distressed people who are now in the territory occupied by the Serbian Army, I understand that funds will be disbursable for this purpose only after the establishment by my Government of a satisfactory organization for the distribution of any such supplies, due account being taken of the actual need for giving such relief.
3. In respect to possible expenditures for the civil population or prisoners in Serbian territory now under control of the [Page 595] enemy, I understand that before such expenditures can be made there must be established a capable organization acceptable to you which will be permitted to make the distributions in Serbian territory.
4. In respect to all of the different classes of supplies which may be desired by my Government, I further understand that before they are purchasable from the funds that may be advanced by you, assurance must be obtained, either through our own efforts or the kind assistance of your Government or other governments associated with us in war against Germany, of sufficient transport across the sea, and of railway facilities from the port or ports to which such goods may be delivered to the Serbian territory now under the control of my Government.
5. I further understand that all purchases made from funds that may be advanced as the result of this negotiation shall be viséd by such purchasing agency as may be established in the United States to make or supervise the purchases of foreign governments that may be buying in American markets. I cannot doubt that the regulations which may be indicated by you in respect to this matter will be entirely satisfactory to my Government.
The statements above made of the conditions surrounding the uses of money that may be advanced to my Government indicate clearly enough that there could not be an immediate expenditure from such credit as might thus be established. It remains, however, extremely desirable that a credit should be at once granted, since having that as a foundation to work upon my Government will of course exercise the most constant industry in order to fulfill the conditions above stated and receive the benefit in carrying on the existing war which the credit would thus give it. It is fully understood that no expenditures can be made from the funds which may thus be allocated by you except those which would tend to strengthen the total fighting forces engaged against the enemy.
As to the amount of the credit which my Government asks you to establish in its favour, I beg now to repeat the figure mentioned in my communication of May 19, namely, the sum of $1,000,000 per month during the war and Serbia’s participation in it. This monthly credit of $1,000,000 should be paid out in advance credits of three months. As the needs of my country may develop, I shall take the liberty of placing in your hands a further exposition of those needs and a further request, if it should seem necessary for our common success in the great war which now unites us.
I understand that my Government is to place in your hands its obligations for such amount as may be lent to it, of tenor similar to the obligations which your Government makes to its public in the issue of bonds under the authority of an act of Congress approved April 24, 1917. I am familiar with the requirements of that act, and understand that if any funds should be advanced before your [Page 596] Government is ready to state the exact conditions which should be specified in the long-term obligations of my Government, that I shall cover any such advances by short-term obligations, which in turn shall be redeemed and merged into the proper long-term obligations contemplated by the act in question.
I avail myself [etc.]
The Assistant Secretary of the Treasury ( Crosby) to the Serbian Minister ( Michaïlovitch)
Sir: I have the honor to state, in answer to your communication of June 1, 1917, addressed to the Secretary of the Treasury, that the said communication was considered by Mr. McAdoo before his recent departure from Washington, and in his absence I am authorized to make known to you that a credit of $3,000,000, available from the 15th of June in monthly installments of $1,000,000 each, will be established in favor of your Government under the conditions set forth in your communication, and with the following further understandings, namely:
- (1)
- That the necessary munitions of war, including all direct supplies to your Army, are being supplied to your Government by your European allies, chiefly the Governments of Great Britain and France, and that therefore the credit now being established in favor of your Government will not be charged for those materials and moneys which are now being supplied to you by the above-mentioned Governments.
- (2)
- That any expenditures for the relief of your civil population shall be made with due regard for the best possible military effect, and only during the period when your Government shall be largely deprived of the control of its own territory, which condition now, according to information received from you, leaves your Government substantially without any revenues with which to defray its civil and military expenses.
- (3)
- That any expenditures which may be desired to be made for the relief of your civil population in Serbian territory occupied by the enemy shall be so expended only after arrangements concerning the distribution of the provisions that may thus be desired to be purchased shall have been approved by the Allied Governments engaged in war against Germany.
I need not hestitate to repeat to you the assurances which were made personally to you by Secretary McAdoo of his sympathy with your country by reason of the disasters which have befallen it, and [Page 597] of his desire to be of such service to your Government as may be compatible with the proper exercise of his discretion under the act of Congress approved April 24, 1917, relating to the making of loans to foreign governments. The objective of this statute, as is known to you, is the obtainment of victory in the war in which your country and ours are now associated. If, in the future and after the expenditure of the credit hereby established, it should unhappily befall that your country should still be in need of financial assistance, I have no doubt, from the expressions given to you in your interview with Secretary McAdoo that he will give the most earnest consideration to representations made by your Government concerning the needs it may then have, in addition to those which are met by the present loan.
I am [etc.]