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.]

L. MICHAILOVITCH

[Enclosure 2]

The Assistant Secretary of the Treasury (Crosby) to the Serbian Minister (Michailovitch)

WASHINGTON, June 7, 1917.

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

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.]

OSCAR T. CROSBY

File No. 872.51/33

The Acting Secretary of State to the Special Agent in Corfu

(Dodge)
[Telegram]

From Secretary of the Treasury:

WASHINGTON, August 4, 1917.

The proceeds, in francs, of $1,000,000 lent to the Serbian Government here is to be transferred by the Serbian Minister to Paris, where it is to be made available to the Serbian Government as follows: A portion of this sum is to be expended by the Dutch or Swiss Red Cross organizations, under the direction of the Serbian Red Cross, for the relief of Serbian subjects either interned in enemy territory or held as prisoners of war in Serbian territory now occupied by the enemy. The remainder of the $1,000,000 referred to is to be placed at the disposal of the Serbian Government for the relief of Serbian soldiers and their families who may be in portions of Serbia still under the control of that Government.

The Secretary of the Treasury requests that you confer with the Serbian Government as to these latter expenditures and visé the accounts rendered by them.

In addition to these funds, the American Red Cross will receive certain funds from the Government of the United States, to be added to their own allocations for relief in Serbia, and will administer these combined funds. We will ask them also to confer with you so that you may have a general knowledge of all these operations.

POLK

File No. 872.51/34

The Special Agent in Corfu (Dodge) to the Secretary of State1

[Telegram]

CORFU, August 9, 1917, 2 p. m.

[Received August 11, 10.10 a. m.]

Your 4th communicated to Minister for Foreign Affairs who wishes to know whether the entire $1,000,000 mentioned could not be made available to the Servian Government as follows: A portion at their discretion to be expended by the Dutch or preferably Swiss Red Cross under the direction Servian Red Cross, the latter being better situated geographically for the relief of Servian prisoners of war and interned civilians held in enemy territory or in Servian territory occupied by the enemy, the remainder to be at the disposal of Servian Government for the relief, wherever they may be found, (1) of families of soldiers, (2) of needy persons of the liberal professions and their families, and (3) of war invalids and their families, persons of these three categories having the greatest need of relief. Minister for Foreign Affairs believes one million dollars is sufficient when distributing organizations complete to furnish this relief during approximately two months. Unless before then further funds for the same purpose can be advanced, he would prefer that the other million dollars to be advanced for purchase of material, according to telegram received from the Servian Minister at Washington, also should be made available wholly for relief of same categories as first million. No need for soldiers as they are supported by British and French Governments. Minister for Foreign Affairs states that need of funds is immediate and that he desires to conform entirely to the view of the United States regarding their expenditure. He will gladly confer with me regarding expenditure, sending me accounts for visa. I shall be very glad to be kept informed regarding relief in Servia of American Red Cross. Recent reports received by the Servian Government show very bad situation of Servian prisoners and interned.

DODGE

File No. 872.51/37

The Secretary of State to the Special Agent in Corfu (Dodge)

[Telegram]

WASHINGTON, August 23, 1917.

Your August 9. Following from Secretary of the Treasury for your further information:

1

1 Copy transmitted to the Secretary of the Treasury on Aug. 14.

A credit of $3,000,000 has been established in favor of Serbian Government to be made available upon fulfillment by it of certain conditions with respect to its disbursement and to cover a period of approximately three months. One million dollars of this amount, which has been advanced and which is the sum referred to in our previous despatches, is for relief purposes, the exact details of which the Treasury is quite willing to leave to Serbian Government with your cooperation and visé, the American Minister at Berne cooperating in a similar manner as to that portion to be expended in territory occupied by enemy, through Switzerland. The second $1,000,000 is to be made available for purchase of food and sanitary materials by American Red Cross to be distributed by American, Serbian, and Swiss Red Cross for relief of interned Serbians and Serbian prisoners of war. The third $1,000,000 will be advanced for purchase of telegraphic and railway materials when details for these needs shall have been laid before the Department. This despatch has been communicated to Serbian Minister here.

LANSING

File No. 763.72114/3056

The Serbian Minister (Michailovitch) to the Secretary of State

No. 1005

WASHINGTON, November 21, 1917. EXCELLENCY: On account of the grave situation of the Serbian prisoners of war in enemy countries, owing to the inability of the Serbian Government to give them sufficient aid and help whilst the other Allied Governments furnished their own prisoners with all necessities, the Serbian Government had contemplated offering the enemy to exchange sound prisoners, perhaps with the provision that they be interned, deeming this the only alternative to save the Serbian prisoners from continual starvation. The Serbian Government would, in this regard, assume a great responsibility before the Parliament, should it not make every endeavour to equalise the situation of the Serbian prisoners with that of the prisoners of the other Allies. Up to the present day, Serbia has lost in the war one-fourth of her entire population, and therefore, her greatest care lies in the preservation of every one of her citizens.

The British Government, in an exchange of views regarding this question with the Serbian Government, suggested that it would be best if the American Red Cross would assume the whole care of the Serbian prisoners through its organisations, and communicated this plan to the Ambassador of the United States in London.

The Serbian Government would gladly agree to, and highly appreciate it, if the United States Government would approve that the American Red Cross take completely into its own hands the provisioning of the Serbian prisoners in Germany, Austria-Hungary and Bulgaria, so that, in this respect, they may be placed on an even basis with the prisoners of our allies. Of course, the monetary means necessary for this purpose would be placed at the organisation's disposal by the Serbian Government.

In communicating the above to you, I have the honour to beg that you give this matter your favourable consideration, and that you use your influence that the Government of the United States decide it in a satisfactory manner.

I beg to renew [etc.]

L. MICHAÏLOVITCH

File No. 763.72114/3056

The Secretary of State to the Serbian Minister (Michailovitch)

No. 65

WASHINGTON, November 30, 1917. SIR: I have the honor to acknowledge receipt of your note of November 21, 1917, concerning the amelioration of the condition of Serbian prisoners of war in Germany, Austria-Hungary, and Bulgaria, copy of which has been sent to the American National Red Cross for its consideration. You therein state that the Serbian Government has contemplated offering the enemy an exchange of sound prisoners, perhaps with the provision that they be interned, deeming this the only alternative to save the Serbian prisoners from continual starvation. You state further that your Government would highly appreciate it if the United States Government would approve the proposal that the American Red Cross take completely into its hands the provisioning of Serbian prisoners in the countries mentioned above.

With regard to the contemplated exchange of sound prisoners of war by the Serbian Government and its enemies, I have the honor to inform you that this Government, in principle, cannot view with approval any augmentation of the enemy forces which such an exchange would effect. With regard, however, to the request that the American Red Cross entirely provision Serbian prisoners in enemy countries, I beg to state that the Red Cross, as well as this Government, is most sympathetic to the proposal and I may assure you that if practical details can be solved the request of your Government will have my support.

Accept [etc.]

ROBERT LANSING