The Soviet Government recognizes very clearly the undesirability of granting concessions to foreigners and is ready to do so only because of necessity. The members of the Government realize that the lifting of the blockade will be illusory unless the Soviet Government is able to establish credits in foreign countries, particularly the United States and England, so that goods may be bought in those countries. For Russia to-day is in a position to export only a little gold, a little platinum, a little hemp, flax, and wood. These exports will be utterly inadequate to pay for the vast quantity of imports which Russia needs. Russia must, therefore, obtain credit at any price. The members of the Soviet Government realize fully that as a preliminary step to the obtaining of credit the payment of foreign debts must be resumed and, therefore, are ready to pay such debts. But even though these debts are paid the members of the Soviet Government believe that they will not be able to borrow money in foreign countries on any mere promise to pay. They believe, therefore, that they will have to grant concessions in Russia to foreigners in order to obtain immediate credit. They desire to avoid this expedient if in any way it shall be possible, but if absolutely necessary they are ready to adopt it in order to begin the restoration of the normal life of the country.

Senator KNOX. To whom did you hand that report?

Mr. BULLITT. I handed copies of this personally to Secretary Lansing, Col. House, Gen. Bliss and Mr. Henry White, and I handed a second copy, for the President, to Mr. Lansing. Secretary Lansing wrote on it, "Urgent and immediate"; put it in an envelope, and I took it up to the President's house.

Senator KNOX. At the same time that you handed in this report, did you hand them the proposal of the Soviet Government?

Mr. BULLITT. The proposal of the Soviet Government is appended to this report.

Senator KNOX. It is a part of the report?

Mr. BULLITT. It is a part of the report which I have already read. There comes first an appendix explaining the statements which I have just read, and giving the evidence I have for them.

Senator KNOX. Was there any formal meeting of the peace conference, or of representatives of the great powers, to act upon this suggestion and upon your report?

Mr. BULLITT. It was acted upon in a very lengthy, long-drawn-out manner.

Immediately on my return I was first asked to appear before the American Commission. First, the night I got back I had a couple of hours with Col. House, in which I went over the whole matter. Col. House was entirely and quite decidedly in favor of making peace, if possible, on the basis of this proposal.

The next morning I was called before the other Commissioners, and I talked with Mr. Lansing, Gen. Bliss, and Mr. Henry White all the morning and most of the afternoon. We had a long discussion, at the end of which it was the sense of the commissioners' meeting that it was highly desirable to attempt to bring about peace on that basis.