File No. 861.00/3315

The Ambassador in Russia (Francis) to the Secretary of State

No. 1229

Sir: I am in receipt of a circular of October 11 stating that on October 10 the Department had handed to the Ambassadors of Great Britain, France, Italy, Japan, Russia, and Minister of China an aide-mémoire. This circular sets forth that the United States will regulate the commerce of its citizens with Russia, placing same under control of War Trade Board. The circular states that the Allied countries have been asked to express their views concerning the plan and to suggest modifications thereof; it also says that by regulating the price and distribution of imports with relation to the value of Russian products taken in exchange, it is hoped that the antewar value of the ruble, 50 cents gold (51.45 cents), will be restored in time.

This is a very comprehensive scheme, and I think it is much better than the appointment of a commission composed of prominent men who could do nothing more than come to Russia, hold meetings, express good will and give advice.

I am impatient to know what reply our allies will make to this proposition, especially our British cousins. England, or her subjects, had considerable interests in Russia before the war, and while they have suffered, they have not experienced nearly the losses the Germans have. The Germans set about recouping their losses immediately [Page 156]after the Russian Army was demobilized or even before. The Bolshevik government, if not German agents, was completely under the control of Germans. The economic and unpublished provisions of the Brest Litovsk treaty gave Germany many large important commercial advantages—exclusive in some instances. Col. Raymond Robins, I have heard and advised the Department, when he returned to America in May, was the bearer of a proposition from the Soviet government proffering to our Government like advantages and concessions. The Bolshevik government was treacherous to its German pledges and thought it could induce us into making agreements to the exclusion of our allies. I have asked the Department if Colonel Robins presented such proposals and advocated their acceptance, but have received no reply. Again, I should like to be informed on this subject if the Department will permit.

The general conduct and bearing of all British representatives, military and civil, at Archangel and Murmansk indicates a belief or feeling on their part that if they do not have exclusive privileges at these ports, they should have, and they will not be contented with not having a decided advantage. Every move on their part indicates a desire to gain a strong foothold. There were 20,000 tons of flax in Archangel and the British, after stating to the French and our representatives that we should not compete therefor and thus advance the price to unreasonable figures, and after we consented thereto, contracted for the entire holdings of the Cooperatives. Three thousand tons were apportioned to us (by what authority, I have been unable to ascertain, although I have cabled the Department and Consul Cole has also) and as same is shipped, Captain Proctor, the British representative, demands payment for purchases shall be in pounds sterling in London, notwithstanding shipments are made to America, and the Cooperatives or the sellers wish and request payments to be made in dollars in America. At this writing I have instructed Consul Cole and Berg’s representative (Berg is making purchases for the Linen Thread Co. of America) to inform the Cooperatives and Captain Proctor that the sellers of this flax when shipped to America can receive purchase money in dollars in America. I am waiting reply to this message.

I cabled you (see my No. 483 of October 151) that Lieut. Hugh S. Martin, our representative at Murmansk, had sent me confidential information by Mr. Crawford Wheeler, ranking secretary of Y.M.C.A. in Russia, that he had proof that the British were attempting to negotiate commercial treaties of an exclusive preferential character with the Russians at Murmansk. I can not believe this is true, but am waiting the arrival of Lieutenant Martin before making [Page 157]up my mind on the subject. The British have been experienced in international commerce for centuries, and consequently they have the advantage over others who have less experience.

The Russian problem is difficult of solution and even if peace is established the Russian difficulties will not be adjusted thereby. If the destiny of Russia is referred to her own people to work out, they will almost surely engage in civil strife. If some scheme such as the Department has proposed is not adopted and the economic resources of this enormous country are preyed upon by adventurers or even by reputable business men or by great corporations, the outcome will be unsatisfactory to the Russians and the result may be deplorable.

I have [etc.]

David R. Francis
  1. Not printed.