124.615/390: Telegram

The Ambassador in the Soviet Union ( Steinhardt ) to the Secretary of State

770. Department’s 454, April 12, 5 p.m. The Soviet authorities have not stated and presumably will not state the method by which they arrived at the rate of 12 rubles to the dollar which they have fixed for the Diplomatic Corps in Moscow. However, this rate was [Page 877] determined upon after prolonged negotiations between the German Ambassador as Dean of the Diplomatic Corps and the Soviet authorities. In the course of a conversation with the German Ambassador before the negotiations were concluded, in expressing his dissatisfaction with the rate of 12 rubles to the dollar proposed by the Soviet authorities, he remarked to me that the rate about to be fixed undoubtedly reflected “Soviet pride and an unwillingness to do better for the diplomats in Moscow than the German Government had done for the diplomats in Berlin.”

From the Ambassador’s remarks it would appear that the rate of 12 rubles to the dollar was based by the Soviet authorities on the calculated value of the ruble in terms of the German reichsmark at the official rate.

An examination which I have personally made of the retained coded copy of my 707, April 8, 9 a.m., shows that it was properly encoded to read “1 American dollar to 12 rubles”.

The Soviet authorities have made it quite clear that the special rate of 12 rubles to the dollar is limited exclusively to the official and personal requirements of the Diplomatic Corps as well as to the total amount fixed for each mission as set forth in the note from the Foreign Office reported in my 707 and that no other changes or modifications of any kind in existing regulations are entailed or contemplated.

Specifically, the Soviet authorities are not prepared to sell dollars for rubles at this or any other rate for any purpose.