In 1916 my great uncles who were bankers here in Colorado bought $25,000 in 5 year 5 1/2% Russian bonds issued by the Imperial Government of Russia. They were promoted as a means to cash in on Russia's robust trade opportunities, with no mention that they were meant to bolster the fight against Communism.




You can see that some of the coupons were clipped and sent in to collect interest before the whole deal fell apart due to the fall of the Imperial Government.



Last week's guests were from the Ukraine, and I asked them to translate the text of the bonds for me. It turns out I have a document in English that says the same thing, but I didn't know it until someone could translate for me.

My uncles bought the bonds in late 1916, and collected the semi-annual interest until December 1919, when the coupons they sent in were returned like a bad check. From then on, an investors committee was formed to try to collect the $25 million owed to American investors by the Russian government.

In order to participate in the collection efforts, my uncles deposited some of their original bonds with The National City Bank of New York, for which they were given a Certificate of Deposit. This only represents 10 of the $1000 bonds they bought, so there are 15 more unaccounted for.

Every 18 months or so, a letter came from the committee, saying no progress had been made in collecting the debt, and I have all those letters.

A claim was filed with the Department of State in Washington on 6/26/1922. In the 1924 request for yet another extension to the Agreement, the Committee said the U.S. Government 'in all probability' will make honoring these bonds a condition to formally recognizing 'a government in Russia.' It went on to say "The Soviet Government has been recognized by Great Britain, Italy, Norway, and several other Euro countries. There is joint Anglo-Soviet Conference that is discussing among other things settlement of debts from Russian Government to nationals of Great Britain. This possibly indicates a change from previously announced Soviet policy of repudiation of the debts."

In 1933, approximately 60% of the bonds were represented by the committee. The President of the United States announced he had invited a representative of the Soviet Government to explore issues between the countries with a view to recognition of the Soviet Government, and the committee hoped that the repayment of the debt would be one of the conditions enforced by the United States. The President requested formation of a Council of Foreign Security Holders to represent American investors, and the bondholders' committee was hopeful that the Council would be able to help them.

Just imagine all those years with those uncollected bonds lurking in the family consciousness; all those Thanksgiving dinners when it was the elephant in the room. That $25,000 in 1916 is $547,747.57 in 2012 money. It must have represented a large portion of their small-town bank's capitalization.