File No. 763.72112/4424

The British Ambassador ( Spring Rice ) to the Secretary of State

No. 249

Sir: It is a matter of the gravest concern to His Majesty’s Government, at the present time, that supplies of monetary credit—one of the most vital forms of all aids—continue to reach the enemy through neutral countries, as it cannot be doubted that aid in this form must prolong the war, and so be the direct cause of further loss of life and unnecessary suffering.

As you are well aware, the enemy has only four possible methods by which he can pay for the supplies of goods and other aids which he [Page 925] obtains from neutral countries. These are (a) to export goods or services; (b) to export gold; (c) to obtain credits from neutrals; (d) to realise his existing investments in neutral countries.

It is obvious that if it is possible to prevent the enemy obtaining credit from neutrals or realising his investments through them, he will be driven, either to export more goods (which will be difficult) or to export gold (which it is unlikely that he will dare to do in sufficient quantity) or finally to decrease or cease his purchases abroad. His Majesty’s Government therefore consider that the moment has come for bringing pressure to bear upon neutrals in order to deter them from rendering financial assistance to the enemy, and they suggest the use for this purpose of the very powerful weapon which the Allies possess in the control of the paramount financial markets of New York, London and Paris, as well as Milan and Petrograd.

His Majesty’s Government propose that a notice should be issued in the neutral European press in the following terms:1

The Governments of France, Great Britain, Italy, Russia and United States have decided that it may become inexpedient for banking houses in their respective territories to continue to have dealings with any banking house in __________ which engages directly or indirectly in:

Granting of any loan, credit or overdraft or increase of any existing loan, credit or overdraft to an enemy of any of those five countries;
The subscription to or purchase of any loan issued after this date by an enemy of any of those five countries;
The purchase from or sale on behalf of an enemy of any of those five countries of any bond or certificate issued by the Government, or by any corporation or company in any of those five countries; or of any dividend warrant or coupon payable in any of those five countries, or of any note, bill of exchange or draft payable in any of those five countries;
The collection, discounting or negotiation on behalf of an enemy of any of those five countries of any bond, note, bill of exchange, cheque, draft, dividend warrant or coupon payable in any of those five countries;
Transmission by any means whatever of any document, letter, message or advice of any kind relating to any of above transactions.

In each and every case “enemy” for this purpose includes not only any enemy government and any person, firm or company domiciled in country of an enemy or in territory occupied by an enemy, but also any person, firm or company wheresoever domiciled with whom the subjects of any of the above-mentioned five countries are forbidden by law to have dealings.

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Governments, therefore, of France, Great Britain, Italy, Russia and the United States hold themselves at liberty to direct their respective subjects to discontinue all intercourse direct or indirect with any banking house in __________ from which an intimation has not been received by (date) to the effect that it will as from that date abstain entirely from participation in any of the above-mentioned transactions.

In order to minimise trouble and expense to individual banking correspondents in the five countries, which the sending of such intimation would entail upon them, banking houses in __________ may intimate their desire to continue relations with subjects of any of those five countries on the above conditions direct to the Secretary, Bankers Clearing House, Post Office Court, Lombard Street, London, E. C. before (date).

It will be sufficient if telegraphic intimation (which should be confirmed by letter) is worded “desire continue relations,” and is addressed __________

An intimation given by head office of a banking house in __________ will be understood to apply to all its branches, which need not therefore send separate telegrams.

A banking house in __________ desiring to continue relations with subjects of any of above-mentioned five countries should send an intimation.

By “banking house” is meant any person, firm or corporation engaged in banking and/or foreign exchange business.

I have the honour, under instructions from His Majesty’s Government, to submit the above proposals for your consideration and to express the earnest hope that the United States Government will see fit to adhere to them.

I shall be obliged if you can let me know your decision as soon as possible, and meanwhile I am at your entire disposal to discuss the proposals with you at any time, if you so wish.

I enclose a copy of this note, for convenience, in case you should wish to transmit it to the Secretary of the Treasury.

I have [etc.]

(For the Ambassador)
Colville Barclay
  1. For the first communication of this proposal, see ante, p. 901.