File No. 861.51/392

The British Chargé ( Barclay ) to the Secretary of State

No. 1148

Memorandum

The British Chargé d’Affaires presents his compliments to the Secretary of State and has the honour to inform him that the memorandum from the Department of State of October 5, with regard to the Russian currency question, was duly telegraphed to London. Mr. Barclay has now received instructions from the Foreign Office to transmit to the Department the following statement with regard to this question:

The memorandum from the United States Government setting forth their views on the proposed currency for Murmansk and Archangel has received the careful consideration of His Majesty’s Government.

With regard to the first question raised in this memorandum, i. e., the exchange value of the new currency, careful consideration was given to the possibility of endeavouring to give the new rouble a gold value of 50 cents, but it was felt that in practice almost insuperable difficulties would arise if the value of the new unit were to be separated so very widely from the value of the present unit. The objection particularly taken by the State Department on this point seems, however, to be due to a misapprehension. It is proposed that the new notes should bear on their face a statement indicating that they will be redeemed at the rate of forty to the pound sterling, and this will prevent any question arising as to a liability to redeem them in the future at 50 cents.

With regard to point No. 2: In view of the need for prompt action and in view of the fact that His Majesty’s Government are principally responsible for operations in north Russia, the British authorities have naturally been led to take the first steps in the new currency proposals. For similar reasons it would be equally natural if the lead as regards these matters in Siberia were taken by the [Page 76] United States. The new Russian currency will in any case be under Russian auspices, and will not carry any guarantee on the part of Great Britain, and the connection of the British Government with the scheme will be principally through the medium of British financial advisers.

With regard to point No. 3: The British Government think that several months of elaboration and discussion would be necessary in order to work out the details of a scheme of new currency of an inter-Allied character to circulate throughout Russia and Siberia. For this reason, the British Government have felt it essential to bring forward a plan of an experimental character and limited application, in order to meet the urgent military requirements of the situation.

In the present situation the British authorities think it essential that immediate action should be taken. The British representative at Archangel has telegraphed that it will be necessary to bring the new currency into circulation very shortly, and the British Commander in Chief agrees in this view, and is of opinion that it would be “disastrous” further to delay bringing the scheme into force. General Poole also telegraphed on October 11 that he expected that local outbreaks might shortly take place unless a supply of currency could be secured, owing to the government being unable to find cash for the payment of wages for necessary services such as those of the port, railway and fire departments.

In view of the urgency of the situation now existing in northern Russia, the British Government hope that the United States Government will not feel any objection to the proposal to proceed at once with the British currency scheme, which will be done without prejudice to later developments or to any subsequent scheme on permanent lines which may eventually be reached between the Allies. This course is rendered inevitable by the military exigencies of the situation and the absence of any alternative scheme which could be brought into operation without delay. The British Government much regret that the pressure of circumstances should be such as to make it impossible to evolve at the present moment a complete and final scheme of inter-Allied character. As soon, however, as such a scheme has been evolved, it could of course absorb the emergency issue made by the British Government to meet military exigencies.

The British authorities anticipate that some announcement as to the new currency arrangements in Archangel will have to be made not later than the 19th instant. They hope, therefore, that the Department of State, if they desire to make any further communication with regard to this question, will do so at the earliest possible moment. The British authorities are most anxious to meet the wishes of the United States Government in this matter, and realize the importance of united action; on the other hand they feel that the United States Government will realize the urgency of the present situation and the impossibility of avoiding an announcement on the lines indicated above.