File No. 861.51/182

The British Ambassador (Reading) to the Secretary of State

The policy adopted by His Majesty’s Government in the past regarding Allied financial requirements is well exemplified by the case of Russia. The latter’s demand for $700,000,000 is, for reasons explained below, quite unreasonable. If, however, she were to present such a demand to an inter-Allied council sitting in London it would be impossible for the other Allies to criticise it as unreasonable, seeing that they would be all putting forward demands of their own. The following observations might even be taken exception to by the Russian representatives were it a question of the council forwarding them officially.

The situation at Vladivostok. According to the latest figures available the accumulations there amount to 662,000 tons. It will take all this year and the greater part of next to move this quantity into the interior of Russia. Accordingly it has been decided to suspend the shipment of goods to Vladivostok. Exceptions are however made in favour of rolling stock which can help in clearing the port, a certain amount of material required to complete the goods already shipped to Vladivostok or material convenient for packing such rolling stock.

The situation in the White Sea up to the close of navigation. From France 291,957 tons will be shipped and 188,043 tons left behind.

From the United Kingdom there will be shipped 374,104 tons and left behind 75,800.

From the United States 237,276 tons will be shipped and left behind 447,359.

It is still quite problematical how much the Murman route will be able to carry during the winter. But in any case, in relation to the above tables, the amount cannot be very important.

The goods which Russia has thus ordered already exceed more than can be shipped by June of next year. Particularly is this the case as far as regards America where at the end of the season enormous masses of material will still remain unshipped.

From the above it follows that it will be useless, for many months to come, to place any more substantial orders for Russia, except in the case of certain classes of goods which may be exceptionally urgent and at the same time of small volume.

The value of orders already placed by the British Government on behalf of the Russian Government (and a certain number which the Russian Government has placed independently at various dates but which are believed not to be very large) may be taken as a measure [Page 21] of Russian financial requirements. Say $10,000,000 a month for exchange would also be a reasonable request for the Russian Government to put forward. Thus a total sum of $350,000,000 to $400,000,000 up to the end of the year would be fully sufficient: this amount would include arrears due to the British Government for American disbursements on behalf of the Russian Government since April 1 last.

The above figures clearly show the narrow limits within which shipment is possible although of course orders might be placed to an unlimited extent.