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these expenditures form the war burden in the same way as the equipment of the army, or the providing of arms and ammunitions. For securing the victory it is as important to make sure of the morale of the warriors, of the sentiments of their families and in general of the population as it is to provide good guns and plentiful ammunition. The morale side of the question is perhaps to-day the more important one.

In this respect Serbia has been left almost entirely to the care of good people and relief societies, which is absolutely insufficient. Whereas in France, in England and Italy the generosity of United States has encouraged greatly the morale of the people, the Serbian soldiers are wondering who is going to take care of their families, and the people who remained in the invaded Serbia are losing faith in their future. On the other hand, the Serbian Army and people must continue to fight and to sacrifice—and, to be enabled to do so, they should be supported.

The Serbian people hope (1) that the United States will offer Serbia help in the same way as to the Allied Powers, in granting her at once a small loan for the said purpose. The way in which the help would be sent to the people in the invaded provinces, to the prisoners of war and interned, and the distribution of same, is a less important technical question that would be easily solved by the Governments of the United States, Serbia and Allies; (2) that this great and generous Republic will help the rebuilding of devastated Serbia.

The Serbian people hope that United States will help them and believe that their benefactor will find moral and political reasons to do so—which could be important in the near future, and for which action it is now the best moment. The Slav element in Russia, the Balkans and in both Americas would greet with enthusiasm such a noble action of United States, and their relatively small effort would have a great effect on a whole race.

To insure opportunity to a small people to develop in freedom, is a doctrine of the present-day democracies, and to assist them in joining soon the ranks of civilised peoples, is a noble and humane effort which could now be assumed only by the great Republic of the United States.

File No. 872.51/25
The Serbian Minister (Michaïlovitch) to the Secretary of State
No. 270

WASHINGTON, May 19, 1917.

[Received May 21.] EXCELLENCY: In connection with my previous memorandum and duly authorized by my Government I have the honour to submit to Your Excellency this memorandum which I trust will receive favourable consideration. It is relative to the needs of the Serbian Government and Army for which the Serbian Government hope they will receive financial support similar to the help extended to our allies, England, France, Italy and Belgium.

* Copy transmitted to the Secretary of the Treasury on May 22.

England and France as allies of Serbia are giving whole-hearted support for the maintenance of the Serbian Army at the front as well as for the other needs of Serbian Government. It is owing to their energy and generosity that the Serbian Army is actually able to continue to fight for the liberation of Serbia and that the Serbian Government is enabled to work on as the representative of the Serbian people. But England and France, besides their own enormous expenditures, are helping Russia, Italy, Rumania, Belgium and Portugal, and therefore are unable to meet some of the Serbian war needs.

1. The Serbian Headquarters on the Salonica front made out a list of all railroad requisites: machines, wagons, other materials necessary to the quick and regular communications there, but up to now it has been impossible to obtain this material in Europe, which is handicapping the military operations. The money needed for these supplies is calculated at $4,000,000.

2. Notwithstanding the good will of the English and French authorities there is a great lack of technical requisites and tools necessary for the construction and keeping up of roads, hospitals, sanitary and other materials.

3. The enemy have ruined Serbia's territory. In their present retreat they are demolishing everything, taking away all food and live stock and deporting all men fit for work. It is necessary to supply the Serbian population in these regions with food, clothes, medicines as well as seeds and agricultural implements. The Ser'bian Government should have all these in stock at Salonica in order to be able, following the progress of our Army, to supply the population with them and to facilitate the further military operations.

4. The Serbian Government has no means of extending help: to the military invalids and maimed soldiers in the country, or abroad, to the families of the only sons who were supporting their families and are always on the front, as well as to the prisoners and those interned in the enemy countries. The Serbian people who are remaining in the invaded territory are in a desperate condion, especially those under Bulgarian cccupation because the Bulgarian Government refuses to allow any help on behalf of the Serbian Government to be sent to the hungry population.

If the United States Government could send some help to all these distressed populations they would render the greatest help to a small people that is being systematically annihilated by its enemies.

These are the needs which should be met besides the regular help already given, in order to preserve the health and the morale of the Serbian Army up to the time of the final victory over the enemy. and such aid can be obtained only from the United States.

The Serbian Government is of the opinion that the most urgent needs could be met if a modest credit of $1,000,000 monthly were extended them to be forwarded every three months in advance. From this sum all necessary expenses could be met. After the exhaustion of this credit the Serbian Government would present an account of the expenditures.

In terminating this memorandum I beg to inform Your Excellency that the news of your Government's taking into favourable consideration my previous memorandum of this subject has strengthened the Serbian people's hope in a better future, and they believe this friendly solicitude of the great Republic to be a guaranty for its existence and progress.

While the Serbian Army is actually fighting in a desperate way against the common enemy, the Serbian people are looking with much concern into the near future, when after the victory, they will go back to their devastated homes where the enemy have destroyed everything that they could. After the victory there will begin the work of the restoration of the Serbian territories and the Serbian Government is already turning its looks toward the United States in order to obtain help for that work. The Serbian people hope that the redeemed liberty and the union of the Serbian race will be achieved with the help of the free and mighty Republic of the United States which will soon repair all the frightfulness of the present war and help it to join the ranks of democratic and progressive countries. I avail myself [etc.]

L. MICHAÏLOVITCH

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File No. 872.51/29
The Assistant Secretary of the Treasury (Crosby) to the Secretary

of State

WASHINGTON, June 11, 1917.

[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.

59665-33-38

Holding myself entirely at your convenience to furnish you any additional information which you may desire on this matter, I am [etc.]

OSCAR T. CROSBY

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[Enclosure 1] The Serbian Minister (Michailovitch) to the Secretary of the

Treasury (McAdoo) No. 296

WASHINGTON, June 1, 1917. 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 for 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 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.

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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

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