File No. 861.00/2353, 2354
The Consul at Moscow (Poole) to the Secretary of State3
[Received July 24, 9.35 p.m.; July 26, 4.30 a.m.]
714. Oil supplies in north Caucasus enormous stocks by the arrivals in Moscow and flax near German lines [sic]. In majority cases purchase of commodities and transportation Archangel for eventual shipment or destruction is impossible. Our plan is rather break up concentrated stocks and distribute beyond power of Germans to recollect. For this we utilize the Central Union of Consumers’ Societies, the only element in Russian commercial and credit apparatus which has survived complete destruction wrought by crude and [Page 133] violent Bolshevik nationalization. For economic and political status of Cooperatives see reports1 of Consulate General latter part of 1917 . . . .
Our method is to finance Central Union as [follows]: In case of textiles, [union,] following failure governmental department, has received monopoly for distribution Moscow stocks among the peasants. The sunflower oil is shipped to factories in interior where converted into soap for wide distribution amongst population. Such economic warfare is effective, humanitarian, and associates us with a powerful permanent democratic force in Russia. Present program contemplates ultimate finance of Rs. 500,000,000, of which America’s share one-third, equals $17,000,000 at rate of 10 [rubles] on the dollar. Six million dollars already granted, but we must have further credit ten million immediately, which beg you urge, remarking that large part of money actually merely loaned on fair security. Furthermore prompt [advantageous realization] cash ruble sums required by secret [means] selling foreign exchange impossible because: (1) absence foreign trade, (2) painful shortage currency, through nationalization of banks, preventing possessors of current accounts drawing them.
However, Central Union is willing accept dollars deposited their account in New York at agreed rate, if possible utilize these immediately for purchases Union [prime] necessities. Accumulation of dollars for speculation or future use not interesting. Again therefore, I earnestly beg that “Goods Exchange” be advised at once through Allied Ambassadors how much tonnage will be assigned Archangel this season. Merchandise and food from the Allies will have tremendous effect here now, accentuating fundamental difference between Allied policy provision and German policy of plunder. Can not emphasize too strongly relapse of economic life of a former great nation to primitive conditions, money has limited use. Head of Cooperatives doubts that prospective good harvest will save Moscow and cities from famine because peasants refuse cede grain without receiving manufactures.