The Ambassador in Great Britain (Harvey) to the Secretary of State
[Received 7:15 p.m.]
584. Embassy’s telegram 361, April 28th, 5 p.m., and despatch number 4590, April 29th.84 Judgment has been given in the test case, anticipated in paragraph 13 of the trade agreement, by which a holder of Russian 5 per cent bonds of 1906, issued under a ukase of the late Tzar sought to attach 7,500 gold imperial roubles which has formed a part of the gold reserve of the late Imperial Russian Government and which had been recently deposited by Krassiri’s85 cashier in the Bank of England for safe keeping. The judgment denies that this gold was charged in favor of the bondholder with payment of all sums thereunder, and the question of the validity of the act of the Soviet Government by which it took possession and is now disposing of the gold reserve was not considered. No notice of appeal has been given. The effect of the judgment is to confirm the Soviet ownership of the gold. Satisfactory certificate of origin can now be given against which export licenses may be issued. To complete the test the actual gold which formed the basis of the action is to be sent to the United States by the Bank of England acting as agent. According to agreement Soviet gold intended for export must go through the Bank of England and I am assured by Sir Ernest Harvey, chief cashier, that export licenses will not be issued for gold bearing private assay marks.
In connection with the trade agreement the Treasury here agreed that the privilege of export license should be given Soviet for six months from time of importation. It is this agreement which is referred to by Krassin in his interview quoted by the letter of the Treasury Department which accompanied instruction number 6, of [Page 777] May 31.86 It is insisted by the Foreign Office that this was not in the nature of a secret clause of the agreement but was a special Treasury ruling which can be revoked at any time and which was merely a recognition of the fact that in the marketing of its gold the Soviet Government was at a particular disadvantage. It is not anticipated by Treasury officials here that this judgment will result in the arrival in England of any great quantity of gold for export on the ground that it is not the Soviet plan to sell more than is absolutely necessary but rather, title having been established, to use it to cover commercial operations. Full text of judgment by pouch.86