File No. 861.50/29

The Acting Secretary of State to the Ambassador in Japan (Morris), temporarily at Vladivostok


For Heid1 from War Trade Board:

This is our cable No. 1; subsequent cables will be numbered serially and in cabling us you should similarly number your cables serially. Your official cables to us should all be transmitted through an American Consulate to the State Department.

We appreciate your spirit of service as evidenced by your willingness to represent us at Vladivostok. We are taking up the details of your appointment with the State Department and will shortly cable you in regard thereto.
The President has just approved of a provisional plan for rendering economic aid to Russia, the carrying out of which plan is entrusted to the War Trade Board. Under this plan supplies required [Page 151] by the Russian civilians will be licensed for export to Vladivostok and perhaps other ports for distribution and sale in Russia under control of the War Trade Board.
The goods to be shipped will be supplied from two sources: (1) private capital; and (2) a fund of $5,000,000 which the President has appropriated for use by the War Trade Board as a revolving fund to purchase and sell supplies supplementing those which will be made available by private capital.
There are large amounts of goods in the United States manufactured for export to Russia and we are aware of many exporters who desire to procure and ship goods to Russia. In order to ascertain the character and amounts of goods which will thus be made available by private interests, the War Trade Board will at once issue a public statement to the effect that applications to export goods to Siberia will now be considered. We believe that this announcement will lead to a very large number of applications, through which we will ascertain the character and amount of goods which may be available for shipment to Siberia on private account. As soon as this information becomes available, we will cable you details of the same.
The $5,000,000 fund above referred to will be employed to purchase and ship commodities which will not be purchased or shipped by private account, possibly because our proposed system of control hereafter described will be regarded as too rigorous, or perhaps because we shall desire certain of these supplies to be shipped to points where private interests will regard the risk as too great to warrant their assuming the same. This sum will also be available to purchase needed supplies which may be available locally or in Japan or Manchuria and which should be procured there to save tonnage. We have not yet determined the machinery through which the $5,000,000 fund will be handled.
We believe that we shall be able to secure the allocation of shipping for the transport of supplies from the United States to Vladivostok at the rate of possibly 15,000 tons per month at the beginning, which amount we hope subsequently may be increased. This tonnage will, however, in part be utilized for the transport of military supplies for the Czecho-Slovaks and partly for the transport of railroad material for Stevens. We will cable you as soon as possible of the space which will be available for civilian shipments in addition to the two other requirements mentioned.
It will be our policy when our plans are fully developed to license no exports of civilian supplies for Siberia without previous reference to you for your recommendation as to the character and amount which should be licensed and the conditions which should [Page 152] be attached. In general, we propose to issue to private shippers export licenses only under conditions which will insure to you effective control of the manner, place, and terms of sale.
In exercising the power of control which will thus be conferred upon you, you will have in mind the following considerations: (a) The manner and terms of sale must be such as to insure the supplies reaching on equitable terms the actual consumers who need the same. While a profit must be allowed the exporter which will be reasonable, taking into account the risks involved, it is of the utmost importance that excessive profits be avoided, and that no basis be permitted for charges of exploitation. We suggest that possibly these results can best be secured by causing the imported goods to be sold to representatives of various cooperative societies in whom you have confidence. You will be able to judge of the value of this suggestion and you may desire to recommend another plan. (b) With reference to the place of sale, you will have clearly in mind the military situation and the importance of creating a friendly population in the areas where American and other Allied troops are operating. We also regard it as most important that supplies be made available to Russians located in the areas where the Czecho-Slovaks are operating, or along the route over which supplies to the Czecho-Slovaks are to be shipped, otherwise, if clothing, etc., are to be shipped to the Czecho-Slovaks over territory occupied by Russians who are in urgent need of such supplies, we feel that great jealousy and ill feeling would be created toward the Czecho-Slovaks. (c) To the extent that the terms of sale involve a barter of commodities, we will desire you to exercise your control, having in mind (1) the importance of securing supplies which might otherwise become available to the enemy, and (2) the securing of commodities which are of a kind desired for import into the United States. We will shortly cable you a list of possible imports from Russia, in order of their need here, which will guide you in this matter.
In order to enable you effectively to determine needs at various localities and to impose appropriate conditions oil their disposal, it will be necessary for you to select and dispatch to the important centers of population west along the railroad as far as conditions warrant, suitable Americans, speaking Russian if possible, whose duty it will be to investigate and report to you upon local needs and the reliability of local purchasing bodies, such as local branches of cooperative societies. These agents will also report upon local products which may be made available for the use of the armies or of civilians in other places or for export from Russia. You are authorized at once to proceed to create such an organization, advising us in advance, however, in so far as practicable, of the agents you propose [Page 153] selecting and of the financial obligations incident to their employment. A temporary contingent fund of $10,000 has been made available to you and against which you may draw by draft on the State Department. You will advise us as to any person in the United States whom you may desire to recommend to be sent to Vladivostok to assist you and we shall from time to time suggest to you desirable persons who seem to be available. Warland of War Trade Board and familiar with its organization and operations is leaving at once to assist you.
In order to create the necessary credits with which to pay for exports from the United States the War Trade Board is prepared to grant licenses to permit of the importation into the United States by cooperative societies or other responsible persons of Russian products. Such import licenses, however, should be granted in such a way as to insure priority of import to goods actually required by the United States. We understand that the Siberian Cooperative Union now hold in Canada skins of high value, the import and sale of which might be authorized at once to create a credit with which to pay exporters of commodities to branches of this Union. Such skins are not however regarded as desirable imports. We propose to limit imports from Russia to a tonnage equivalent to that employed to carry exports to Russia provided this quantity of imports will suffice to meet essential political and exchange requirements.
McCormick,1 Baruch,2 and Hurley3 as an informal committee appointed by the President are taking charge temporarily of the purchase, shipment, and distribution of supplies for the Czechoslovaks. Shipment has been arranged through the Red Cross of about 1,700 tons of clothing, etc., which in part will be carried by United States transports. In cooperation with Captain Urban, the Czecho-Slovak military attaché here, and with General Janin, now en route to Vladivostok to command the Czecho-Slovaks, a list has been prepared of military supplies considered to be immediately required. We will cable you details of purchases made for this purpose. The Government of the United States will probably loan to the Czecho-Slovak Government $7,000,000 to pay for these supplies and freight and insurance thereon.
In order to support Stevens in the primary necessity of arranging for the most effective operation of the railroads so that supplies may be distributed to the Czecho-Slovaks and Russians, we understand it will probably become necessary to ship railroad material, a considerable quantity of which is now available from Russian [Page 154] stocks in this country; and also to procure and ship supplies for the civilian employees of the railroad. For example, McCormick has just arranged for the purchase and shipment of cloth for uniforms for Stevens’s men.
It is desired that you keep in the closest possible touch with requirements for Czecho-Slovaks and for the railroad as above indicated so as to make recommendations as to the priority which should be accorded the various purchases and shipments to be made for civilian Russians, Czecho-Slovaks, and railroad.
We are working on a plan somewhat similar to foregoing applicable to Archangel and Murmansk.
  1. August Heid, War Trade Board representative at Vladivostok.
  2. Vance C. McCormick, chairman, War Trade Board.
  3. Bernard M. Baruch, chairman, War Industries Board.
  4. Edward N. Hurley, chairman, U. S. Shipping Board.