File No. 861.51/438
The Acting Secretary of State to the Consul at Vladivostok (Caldwell)
Harris3 telegraphs from Omsk that authorities there do not understand situation regarding Russian bank notes shipped on transport Sheridan. The facts which are as follows, you will please transmit at once to him:
Your 2564 to Department undated received via Peking. Provisional Government of Russia placed a large order in 1917 for Russian ruble notes with the American Bank Note Co. to be issued in the name of the Russian State Bank. The order was to be paid for from American credits advanced to the Provisional Government of Russia. Recently [Page 97] the Russian Embassy at Washington informed the Department that the ruble notes were now ready for shipment and asked if they might not be sent to Vladivostok and held there rather than in the United States so as to be more readily available to be put in circulation when circumstances should warrant. The Department consented to secure the shipment of these ruble notes and six hundred cases were arranged to go forward in the transport Sheridan, consigned to August Heid, representative of the War Trade Board, to be held by him in escrow until instructions to release them should be given him. It appears in the meanwhile, that the Russian Embassy here advised the authorities at Omsk that this Government had consented to the delivery of these ruble notes. No such action had been taken or could be taken by this Government as it has not yet recognized that the Omsk authorities have any legal power to undertake obligations for the Russian State Bank. Moreover the United States could not be a party to any arrangement which would assist the circulation of money which had no legal or actual basis of issue. Furthermore, the United States would not take part in any measure to increase or otherwise affect the currency in Siberia without a conference with the Associated Governments as well as with Russian authorities. When it was learned that the Embassy here had conveyed to the Omsk authorities a complete misunderstanding of conditions, the Department telegraphed Mr. Heid not to allow the ruble notes to be moved from the transport. The Department understands that the transport accordingly has left Vladivostok with the rubles which will be held by American authorities until their final disposition has been arranged.
The Department now desires a full report from Mr. Heid as to what measures have been taken to comply with these instructions.