File No. 861.00/2623

The Ambassador in Japan (Morris) to the Secretary of State


Your August 31, 4 p.m. Owing to the increased difficulties of making payments for our Red Cross and relief work in Siberia, I [Page 65] have been for the past ten days investigating currency conditions at Vladivostok. I had planned to send one of the Embassy staff there to check up with Mr. Frazar1 the facts which had been submitted to me, but in the absence of any reply to my August 24, 7 p.m., Mr. Frazar came to Tokyo to confer with me on this and other material questions which required decision. The facts are: There is no difficulty in purchasing either in Japan or in Siberia ruble notes of large denominations, but care must be exercised as counterfeiting is increasing. Notes of small denominations are exceedingly scarce and all kinds of makeshifts are being used, such as stamps and Russian bond coupons.

To meet this situation the Japanese military authorities acted promptly and are forcing the yen into use by the issue of headquarter notes calling for yen upon presentation. This was the method successfully used in Manchuria during the Russian war. No plan has been adopted by the British or French whose transactions are thus far comparatively small. Americans at Vladivostok have submitted to me several suggestions, among them the one outlined in the letter of the Secretary of the Treasury. Informal conferences have been held with a view to joint Allied action and some plan might be developed later but is not practical as an immediate remedy. Our military authorities in the Philippines requested the Philippine National Bank to investigate the situation with a view to arranging some method of paying our soldiers. Mr. Kopp, an official of the bank, is now here on his way to Vladivostok and will continue his journey in company with Frazar on Friday. In the meantime, at the suggestion of some one in Washington, Mr. Annatto, an Englishman, but representing the Shanghai office of the International Banking Corp., has arrived at Vladivostok and is considering the feasibility of opening a branch there. I am of the opinion: (1) That it would be a misfortune to the Russian people if the ruble were driven out of eastern Siberia by Japanese or any other currency; (2) that for the present joint Allied action is not possible; (3) that in view of our large expenditures in Siberia, we are justified in adopting our own method to meet the situation; (4) that we should act promptly or the yen will hold the field and render future reconstruction more difficult.

I believe it will be possible to carry out the plan suggested by the Secretary of the Treasury through the instrumentality of the Philippine National Bank, but before definitely recommending its adoption I have asked Frazar to obtain for me the final approval of Preston,2 [Page 66] Bullard,1 Kopp, and Annatto, all of whom are expending large amounts for American activities and have made suggestions in regard to the problem.

  1. Everett W. Frazar, of Tokyo, representative in Siberia of the American Red Cross.
  2. Charles L. Preston, representative in Siberia of the American Red Cross.
  3. Arthur Bullard, Russian division, Committee on Public Information.