861.51/656: Telegram
The Secretary of State to the Commission to Negotiate Peace
2940. For Polk from Miles:
Answering your 3859, August 23, 2 p.m. July 21 Messrs. Kidder, Peabody and Company informed Department that a group of American bankers were considering the participation with Baring Brothers in a loan of £10,000,000 or the equivalent in dollars to the Kolchak Government based upon a deposit of 105% of the amount of the loan in gold with the Hong Kong Shanghai Bank.
After exhaustive consideration the Department informed Messrs. Kidder, Peabody and its associates as follows:
- First: That the United States has not recognized the Kolchak Government.
- Second: Attention was called to the exchange of notes between Kolchak and the four heads of Governments at Paris which indicated that the United States was convinced it could not assist Russia through dealings with the Bolsheviki and, consequently, was prepared to render assistance through Admiral Kolchak.
- Third: That in view of grave conditions in Siberia reported in generally accurate terms in the press, the Department did not feel it could assume the responsibility of encouraging such negotiations but that, nevertheless, there seemed to be no objection to the loan provided the bankers deemed it advisable to make it.
The Department is advised informally through the Russian Embassy that the loan is going through. The Department understands that the British banks are taking two-fifths and the American banks three-fifths of the loan. It is to be noted that American banks are not subordinated to Baring Brothers but appear to be a separate third party to the negotiations. The Department has an unconfirmed statement that the terms of the loan provide that two-thirds of the amounts advanced respectively by British and American banks are to be expended [Page 421] in Great Britain and the United States, the balance of one-third in each case being free for expenditure wherever the Kolchak Government may desire.