File No. 861.51/361

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


433. Also for Secretary of the Treasury:

Referring to my 401. September 14, 4 p.m., and 423, September 24, 7 p.m. Lindley says British Government has its heart set on financial scheme and has no objection to modifying plan in accordance with my contention, that is to build reserve fund in pounds sterling London or dollars in New York thus permitting sellers Russian products to receive pay therefor in sterling or dollars and enabling us to procure rubles here by depositing dollars in reserve fund there. For instance, if we require a hundred thousand rubles, State Bank issues new currency here and we deposit dollars in reserve there at the rate [Page 72] of eleven and nine-tenths cents per ruble, which is the equivalent of forty rubles to the pound when sterling is worth four seventy-six New York as now and has been for some time. This scheme for stabilizing gold coinage [exchange of?] ruble at eleven and nine-tenths cents or their [forty] to the pound.

Lindley remained after conference yesterday, and after saying his Government had advised him that it would not object to reserve in America, told me confidentially his Government had decided to begin operation and man en route here for that purpose; has not told French Ambassador because relying on preparing another scheme which Lindley thinks is Allied bank; if so I am not inclined to recommend.

British have need for tens of thousands of rubles daily for unloading ships. Labor exorbitant. The British receive and distribute all supplies even to American soldiers, French and Italians. Currency becoming scarce. Archangel issue circulating; Bolshevik government here issued one hundred million in government scrip, redeemable in rubles, but only circulated twenty-six million thereof, when deposed taking the remainder with them. On arrival I advised the government to stamp notes in circulation thus preventing Bolsheviks from using seventy-four millions; sovereign government now stamping Archangel issue. British claim must have currency to pay laborers, etc., consequently propose stabilizing financial scheme; do you see any objection thereto? Old rubles will be converted into new through conversion office and the rate of interchange fixed from time to time so that old rubles having no stable value will disappear from circulation. Allied soldiers will be paid new rubles and the supplies imported by the Allies will be sold exclusively for new rubles.