File No. 861.00/2568

The British Embassy to the Department of State

[A copy of the following paraphrase of a telegram was left at the Department of State on July 26, 1918:]

The British Secretary of State for Foreign Affairs (Balfour) to the Ambassador at Washington (Reading)

The general scheme of mission proposed by the United States Government has our warm approval and we should be glad to cooperate in such a mission in any way that may be required.

It is most important that we should learn as soon as possible exactly along what lines Americans are working and how we can best consult with them about the general form and details of organization. Will you please ascertain this? The following is a rough summary of our views as to the best method of supplying goods to relieve the present necessities of the Siberian population. We fully realize that considerations of geographical neighbourhood, economy of tonnage and available supplies make it inevitable that the main task of supply [Page 135]shall be performed by American and Japanese agency. We feel, however, that it is highly desirable to give the supply scheme as fully an inter-Allied character as is practicable in the circumstances. We have accordingly examined, in consultation with experts, the possibility of cooperating by furnishing a contingent of British goods, and taking part in any inter-Allied organization for their distribution. It is found that a considerable amount of goods suitable for the purpose can probably be made available from stocks of British goods already lying at Vladivostok and Khabarovsk, and a certain amount of goods of certain classes are available in Canada and others are procurable from there and other parts of the British Empire, though the quantity that could be furnished direct from the United Kingdom is restricted.

An inter-departmental committee has been formed in London to deal with the matter on behalf of His Majesty’s Government and an official commissioner is being appointed at Vladivostok to supervise all local arrangements on their behalf and to represent His Majesty’s Government on the inter-Allied commission which they hope will be established to coordinate Allied action with regard to such matters as tonnage, transport facilities, currency exchange and principles and methods of local distribution. Probably this commissioner will be Mr. Henry Sly, C. M. G., His Majesty’s Consul at Harbin, and I should be glad to know at the earliest possible moment who will deal with the question on the spot for the United States Government, in order that our representative may put himself in touch with him without delay.

As regards the actual business operations of supply, we are in close consultation with the representatives of merchants already trading in the Far East, and we hope to enlist the services of some of these firms to act as agents for His Majesty’s Government for this purpose. Any such firms would act strictly as the agents for the Government, and not for private profit in the supply and distribution of Government goods, being paid a fixed remuneration for their services.

The object of utilizing their services is to take advantage of their business and local experience, to ensure efficiency and economy of management, and to secure that relief scheme shall be so operated as to promote rather than to retard economic rehabilitation of the country. It is understood that the principal firms consulted may form a joint committee of organization to cooperate with the Government and to avoid confusion and overlapping. His Majesty’s Government also learn that the Hong Kong-Shanghai Bank may be prepared to establish an agency in Vladivostok, and they are inclined to encourage this step, which will, no doubt, facilitate the measures for the improvement of currency arrangements.

Difficult questions are likely to arise with regard to the terms on which any goods supplied by the Governments should be disposed of to Siberian consumers, and it seems highly desirable that all the Allied Governments taking part in the scheme should pursue the same policy in this matter. His Majesty’s Government suggest that this question should be referred to the proposed inter-Allied commission, to be determined on the spot, in the light of their knowledge of local circumstances. They suggest that the two guiding principles should be:

To make the whole transaction, as far as possible, self-supporting and not eleemosynary (except in so far as the commission may find it necessary to authorize the departure from this principle in particular cases). This seems to be the only way of limiting abuses certain to arise out of a widespread relief scheme, such as exploitation of actual consumers by Chinese and other middlemen, who obtain possession of goods at less than cost price.
To exclude altogether the element of profit-making from the supply and distribution of goods sent for the purpose of relief, and make it clear that the object is to benefit the local population, and to avoid any suspicion that the Allies are aiming at exploiting economic necessities of Siberia, for private gain. Possibly it may be found advisable to operate on the lines of the Commission for Relief in Belgium, i. e., to sell at a small profit to comparatively well-to-do sections of the population, and to employ this margin of profit for relief distribution of the necessities of life, either free or below cost, to destitute sections of the population in towns and elsewhere.

His Majesty’s Government contemplate that the above regime should be purely temporary, pending the establishment of such conditions in Siberia as may permit of a general resumption of commercial intercourse on a more normal footing. They suggest that the inter-Allied commission should be authorized and directed to watch the situation carefully from this point of view, and to report to their Governments from time to time.

I propose in a separate telegram to enumerate the classes of goods which, so far as our present information extends, are most in demand in Siberia, and to give some indication of the kind of goods which can be made available for the purpose from British sources. I shall be glad to receive corresponding information from the United States Government.

We are, I need not say, most anxious to work in constant and complete harmony with the United States, in this somewhat difficult and complicated undertaking.