File No. 861.00/3054c
The Acting Secretary of State to the Diplomatic Representatives of Great Britain, France, Italy, Japan, Russia, and China1
In its aide-mémoire dated July 17, 1918,2 handed to the Allied Ambassadors at Washington and in the announcement of the Acting Secretary of State to the press under date of August 3, 1918,3 the United States Government stated that it was its hope and purpose to take advantage of the earliest opportunity to relieve in some measure the immediate economic necessities of the people of Russia but that the execution of its plans in this respect would follow and would not be permitted to embarrass the military assistance to be rendered in the rear of the forces of the Czecho-Slovaks in Siberia and in the districts around Murman and Archangel in northern Russia. The United States Government further expressed the hope and expectation that its associates in the war would lend their active aid in the execution of such plan as it found itself able to propose.
United States military forces having now arrived at Vladivostok and at Archangel, the United States Government is prepared to communicate to its associates in the war a frank and definite statement of the plan which it finds itself able to adopt in order to relieve in some measure the immediate economic necessities of the Russian people. The Government of the United States trusts that the action it proposes to take will commend itself in principle to its associates so that they will be prepared to lend their cooperation in the execution thereof.[Page 148]
The result to be accomplished is to serve Russia and not to make use of her. The economic problem presented may at this time be geographically divided into two parts:
- Economic assistance to the Russian population of northern Russia through the ports of Murman and Archangel;
- Economic assistance to the Russian population via the Trans-Siberian Railroad.
The Government of the United States considers it desirable that any plan adopted to relieve the economic necessities of northern Russia should be fundamentally similar to that adopted for the same purpose in Siberia so that the system established may, if and when communication between these two regions, now separated, is established, fit into each other and lend themselves easily to adoption by any stable Russian government. The importance of this consideration is most apparent in connection with the establishment of a medium of exchange hereafter referred to.
In the judgment of the United States Government economic relief to Russia should be directed so that the Russian people may be assisted while in their present unfortunate condition against selfish aggressive trade practices. It cannot be left wholly to the discretion of private merchants to determine what commodities shall be shipped to Russia and what shall be the priority of shipment. Neither can the distribution in Russia of commodities received from abroad be entirely uncontrolled. Methods which will make possible the fair exchange of such commodities as are sent to Russia from abroad for commodities available in Russia and required abroad cannot be formulated and put into operation except under the guidance of some agency other than those afforded by private enterprise. The United States Government accordingly proposes to permit its merchants to trade with Russia only under such direction on its part as will insure to the Russian people absolute fair dealing and complete protection against exploitation and profiteering.
The United States Government proposes to control the economic relief it offers the Russian people through the instrumentality of the War Trade Board. The War Trade Board charged as it now is with the control of exports from and imports to the United States is peculiarly equipped to take charge of and direct the activities of the United States in this connection. Its representatives in the Allied countries and in the neutral countries of Europe have for many months past been cooperating closely and harmoniously with the representatives of our associates respecting the many questions arising by reason of the control of exports and imports generally.
In the very near future the War Trade Board proposes to make a public announcement to the effect that it is prepared to receive from [Page 149]merchants in the United States applications for licenses for shipments to Russia and that licenses will be granted only under regulations designed to control shipments in conformity with the policy of the United States Government as set forth above. So as to provide the Russian people in certain localities with commodities, which on account of the nature thereof or the risks connected with distribution, or for some other reason, will not be purchased or shipped by private merchants, the President has made available to the War Trade Board the sum of $5,000,000 for utilization as a revolving fund. For the convenient handling of this fund and to promote the accomplishment of the other purposes herein set forth, the War Trade Board proposes to organize a corporation the entire capital of which shall be owned by the United States. The corporation may participate in any plan which may be adopted for the establishment of a medium of exchange to facilitate such sales or purchases.
The views of the United States Government with reference to the establishment of a medium of exchange or currency in Russia necessary for the development of plans for economic relief may be summarized as follows:
The problem in connection with Russian currency both in north Russia and in Siberia is practically identical. In each case it is a question of creating a circulating medium that will be accepted by the people. Probably no circulating medium will generally be accepted at its nominal value unless backed by commodities on the spot so that the purchasing power of the new medium may be demonstrated. It will be an advantage if any new circulating medium should be such as can ultimately be adopted or taken over by a stable Russian government. The ruble originally had a gold value of about 50 cents. It is now selling at from 10 to 15 cents. If a new and distinctive issue of a currency denominated rubles is now put out on the market at what the old rubles are selling, it would probably be necessary, in order to avoid charges of bad faith, ultimately to redeem that ruble at a face value of about 50 cents which would involve considerable and unnecessary losses. The problem, therefore, is to put out a new and international ruble backed by commodities and to put the ruble into circulation at approximately 50 cents. These rubles would by their terms provide for redemption in commodities with proper and elastic provision for conversion, under circumstances and at rates from time to time, into credits in New York, London, Paris, and such other points as may be determined. This can, probably, be done if, as stated above, the international ruble is backed by commodities so that its purchasing power may be at once demonstrated.
The United States Government suggests that if its associates find themselves able to agree in principle with its views as set forth [Page 150]above they each take the necessary steps to establish a similar form of control over their nationals in respect to imports from and exports to Russia as that contemplated by the United States. If this is done and if corporations are set up by the respective governments similar to that proposed by the War Trade Board the Government of the United States further suggests that the Allied representatives at Archangel and Vladivostok confer from time to time so as to coordinate the economic relief provided by the separate governments. It would be through the instrumentality of such Allied representatives that any issue of a medium of exchange or currency would be made. United States and Allied representatives now meet informally in Allied countries and in neutral European countries for the purpose of coordinating the policy of the United States and the Allies in respect to the control of exports and imports generally.
The proposals of the Government of the United States are made with the full realization of the fact that the problem presented is full of difficulties and that probably no plan can be devised in theory which in operation will not necessarily have to be modified to meet practical conditions which cannot be foreseen. In the judgment of the United States Government the plan of action it has, after much consideration, decided upon for itself will allow it effectively to carry out its repeatedly avowed policy of serving the Russian people.
- Substance sent Oct. 11 by the Acting Secretary of State to the diplomatic representatives in Great Britain (No. 1953), France (No. 5885), Italy (No. 1760), Japan, for repetition to Peking and Vladivostok, and Archangel (No. 301). This information was intended for the War Trade Board representatives as well as for the Ambassadors.↩
- Printed in part, ante, p. 134; in full, vol. ii, p. 287.↩
- Vol. ii, p. 328.↩