The High Commissioner at Constantinople ( Bristol ) to the Secretary of State
[Received September 22.]
Sir: I have the honor to enclose herewith copy of “Special Report No. 1”, dated 23 of August, 1921, marked confidential, prepared by Mr. Julian E. Gillespie, Assistant Trade Commissioner of this High Commission.
It is known that in this part of the world the different nationalities have made every possible endeavor to open up trade with the Caucasus States as well as with Soviet Russia. In general, it is known that such attempts have practically resulted in failure of any [Page 779] considerable accomplishment. In some cases attempts were a complete failure.
The British Government completed a trade agreement which practically amounted to the recognition of the Soviet Russian Government and, if all reports are correct, British trade has profited little or nothing by this agreement. So far as trade through South Russia is concerned the British have failed.
The Italians have made a special effort to open up trade and have given particular attention to the Caucasus. Thus far they have not been very successful in their efforts, though they appear to have done more than any other nationality. The Germans and Swedes are also doing some business in the Caucasus.
From the best information obtainable it would seem that in these efforts of the different nationalities to open up trade with Soviet Russia and with the Caucasus there was a great deal of profiteering. Thus, the Caucasus Republics when they formed a trade union for foreign trade turned to Americans for assistance. Before this some gold had been brought from the Caucasus by the Italians, but it was utilized to pay for Italian goods and money was made on the gold transaction as well as upon the transaction in merchandise. The proposition made by Mr. Day is to utilize the gold obtained as a revolving credit for the establishment of a flow of trade between the Caucasus and the outside world.
This proposition of Mr. Day’s seems to me to be a businesslike proposition that may open up trade based upon business principles without profiterring where the negotiations of trade conventions and other schemes have failed.
It has always been my opinion that the first steps in the reconstruction of Russia would be obtainable by establishing trade relations through private institutions based upon business principles and conducted in a fair way without graft or profiteering. I have felt that our American business men would probably be the first to accomplish this end, especially when they were backed by our Government, which consistently has stood out for certain well-established political and economic principles being recognized by Soviet Russia and the other Soviet Governments established in Russia.
The first step taken by Mr. Day to establish trade with the Caucasus Republics has been successful. If the contracts for concessions made by him with the representatives of these Caucasus Republics are lived up to, it seems to me that a big step will have been made in bringing about a reformed policy in these Soviet Governments, and this start may lead to a steady development of these three Republics into some form of recognizable governments by other countries.[Page 780]
It must be remembered that in the past contracts similar to these have proved to be of little or no value and have generally been repudiated by Soviet representatives who have violated all old-established rules in regard to contracts and economic dealings. In spite of this, it must be remembered that if a change does come in their methods of dealing, there must be someone that will be the first to recognize this change and to prove it. It may be that Mr. Day has struck the psychological moment. For the sake of the benefits to American interests and particularly for the beginning of reconstruction of some part of the old Russian Empire, it is to be hoped that Mr. Day will succeed.
In carrying out the Department’s policy as I understand it, Mr. Day should receive the sympathy and encouragement of our Government so long as he follows the policy that we demand of a government in Russia which is a government of the people, by the people, and for the people and that such a government shall recognize the old-established principles of property rights.
I have [etc.]
- Not printed.↩