The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-18
RUSSIAN BONDSDUE
WILL Be DEFAULTED
Issue of S50,0OO,0OO Three
Year Credit Will Not Be
Paid at Maturity.
rGHET EXPECTS PAYMENT
Bankers State They Will Form
Protective Committee in
Holders Interests.

The Imperial Russian Government
$50 0oo, 900 6h per cent three year
credit, which natures to-day, will not
be paid at maturity, according to an
announcement issued last night by tho
bankers who fioated the, bonds in 1915
ane who have formed or are forming.
a protective committee for the holders
Of the bonds.
The bankers who stated that 1--WE are
making arrangements for the formation
o, a protective committee to be in a
position to take any steps which may
Be deemed advisable to conserve the
interests of the Russian bondholders"
we're ]. P. Morgan & Co.. the National
City Bank, the Guaranty Trust Com
psny, Lee. Higginson & Co. and Kidder,
Peabody & Co. They declared that the
ncnpayment OF the principal of the
bcnds was unavoidable, obviously so,
owing 10 the chaotic conditions which
developed in Russia subsequent to the
original issue Of the credit The failure
10 pay the principal of the $4,000, 900
sh per cent. bonds was announced in
tho form Of circular to the bond
holders.
Day IL the FIRST of the Imperial Russian
loans that were foated in this country
10 mature Not only were some of the
per cent ruble rentes OF the Russian
Government sold in this country, but an
issue OF y per cent Russian bonds will
mature in 1921. On the SIS and the
5bs interest payments have been reg
ular since their fotations in the summer
OF 1915. ''f'
Mystery in Interest Payments.
For many months the source of the
payments was mystery. but at the time
OF the last interest payment on June 2.
when bankers forecast that the 6I5
per cent would have to be defaulted at
maturity, 1t was disclosed that the rep
resentatives of Russia had provided the
interest payments out OF the sale Of
stores and other properties held In this
country for the Russian Government
Failure to pay the principal OF the 6l5
per cent. bonds occasions no surprise
in view OF the steps taken by the bankers
about two weeks ago in the direction of
forming a protective committee. The
circular issued last night said in part:
We have recently received the follow
ing communication from s. Ughet,
Charge d'Affaires ad interim OF Russia
and Financial Attache to the Russian
Embassy:
2"On behalf OF the Government Of Rus
Ella / desire to announce that, due to
circumstances beyond control, 1 shall be
unable to provide funds to meet at ma
turity the Imperial Russian Government
s50o0o.00o 6h per cent. three year
credit
81 have been in communication with
the all-Russian Government in Omsk,
under Admiral Kolchak, and while /
have received no reply as yet. the pub
lshed accounts OF Admiral Kolchak's
communication to the allied Governments
clearly state that the external obliga-
tons OF the Russian Government issued
prior to November, 1917. will be recog-
nlzed. l am sure this matter has been
given earnest and serious consideration
and am confident that the holders of
this obligation may reasonably expect
arrangements to be made for the pay
nent Of this debt as soon as the all
Russian Government is formally recog-
niEed'
Situation Was Unavoidable.
This unfortunate situation, while re-
srettable, is obviously unavoidable. due
to the chaotic conditions which developed
- Russia subsequent to the issue of this
credit and we have, therefore, in the
interest OF the holders OF this obligation
taken the matter up with the State De-
partment Of our Government, and for
'our information submit herewith a
statement by the Acting Secretary OF
state OF the United States. Frank L.
Polk
lowing TO the present confusion in
Russia II is not practicable at this time
Tor the State Department to make any
presentation of the legal claims OF Amer
lean citizens against Russia. The people
OF America, however. are now, as they
have been in the past, sympathetic with
me great Russian people and eagerly de-
sire to see them work out for themselves
stable form OF government. and when
that time comes the Stats Department
VIII use its good Offices to call such
claims to the attention of that govern
ment With reference to the $50, 900. 900
credit established by certain banks in
the United States. It will be remembered
that this money was advanced in good
faith when Russia was fighting for her
life and that the credit was primarily
for buying supplies where were sorely
needed by the Russian people for their
military and civilian needs at the time.
Whatever stable government may
ultimately assume control In Russia. 1t is
70 be expected that II will follow the
practice which enlightened governments
have always followed OF recognizing
the legitimate external loans OF prior
governmental
We are making arrangements for the
formation Of a protective committee to
be In position to take any steps which
may be deemed advisable to conserve
your interests"