New-York tribune., 1919-06-18
Russia Cannot Paw
Loan Obligations
Falling Due To-day
Bankers, Announcing De-
fault, Give Hope to Bond
holders Kolcl1ak Govern
ment Will Meet Debts

Announcing yesterday default on
the Imperial Russian governments $780,
o,o0o External e7a per cent loan, j. p.
Morgan & Co., the National City Bank,
the Guarantee Trust Co., Lee Higgin-
son e. Co. and Kidder Peabody & Co.,
comprising the bank grants that foated
the bonds in this country made public
the following letter from S. Ughet,
charge d'affaires adinterim of Russia
and financial attache to the Russian
Embassy:
con behalf Of the government of
Russia I desire to announce that due
to circumstances beyond control
shall be unable to provide funds to
meet at maturity the imperial Russian
government S5o,oo0,000 6h per cent
three-year credit.
~ have been in communication with
the All-Russian government in Omsk,
under Admiral Kolchak, and, while
have received no reply as yet, the pub
lished accounts of Admiral Kolchak's
communication to the Allied govern
ments clearly state that the external
obligations of the Russian government
issued prior to November, 1917, will
be recognized. I am sure this matter
has been given earnest and serious
consideration and l am confident that
the holders of this obligation may rea-
scnably expect arrangements to be
made for the payment of this debt as
soon as the All-RuHsian government is
formally recognized"
An 'Unfortunate" Situation
The bankers. on their own behalf,
said that "this unfortunate situation,
while regrettable, is obviously un-
avoidable, due to the chaotic condi-
tions which developed in Russia SUBJ
sequent 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 Depart
ment of our government"
The attitude Of the United States
government in the matter Of default of
payment on the Russian government
loan in this market is set forth in the
following statement made by Acting
Secretary of State Frank L. Polk:
lowing to the present confusion in
Russia it Is not practicable at this
time for the State Department to make
ally presentation Oh tu0 l1BA1 ClNlnS
Of American citizens against Russia
The people Of America, however, are
now, as they have been in the past,
most sympathetic with the great Rus
sian people and eagerly desire to sec
them work out for themselves q stable
form Of government, and when that
time comes the State Department will
use its good Offices to call such claims
to the attention of that government
With reference to the $50,000,OOO
credit established by certain banks in
the United States, it viii be remena-
bered that this money was advanced
in good faith when Russia was fighting
for her life, and that the credit was
primarily for buying supplies which
were so1.ety needed by the Russian peo-
pie for their military and civilian needs
at the time.
Default Not Unexpected
''Whatewer stable government may
ultimately assume control in Russia
it is to be expected that 1t viii follow
the practice which enlightened govern
ments have always followed, Of recog~
nizing the legitimate external loans of
prior governments"
1t had been known for many weeks
that the funds to meet the maturity
were not available Several confer
ences of bankers have been held re-
Gently at the Offices of j. P Morgan &
Co. in hopes of finding some way of
getting the funds for the holders Of
the bonds. 1t is known that there are
substantial deposits in the banks here.
to the credit Of the Russian govern
ment, but these are being held by the
individual banks against claims which
they hold against Russia for losses sus-
tained to property there