Memorandum by Mr. G. Frederick Reinhardt of the Division of European Affairs

Mr. Erich Nielsen of the War Shipping Administration asked me to attend a meeting on December 29 with Messrs. Scott and Hart of the British Merchant Shipping Mission to discuss the informal offer made by the Soviet Government to the British and American Governments to provide the officers and crews of British and American merchant ships in north Russian ports with certain ruble bonuses.

Mr. Nielsen said that the War Shipping Administration was of course in principle opposed to the payments of bonuses to American seamen by foreign governments but pointed out that in the present case the rubles to be provided the American and British seamen would have a very limited purchasing power in the Russian ports and absolutely none elsewhere, and that the ruble bonus proposed by the Soviet Government appeared to be the only feasible solution of the exchange problem,53 although it in fact was tantamount to giving the seamen concerned a cheese sandwich with one glass of vodka a day. I confirmed Mr. Nielsen’s estimate of the economic situation in Archangel and Murmansk and said that at the request of our Embassy in Kuibyshev we had instructed it to postpone informing the Soviet Government of our acceptance54 of its proposal55 in the hope of finding some solution of the problem which would be acceptable to the British as well as ourselves and thus avoid possible friction between British and American seamen in those ports.

Messrs. Scott and Hart evidenced an understanding of the problem and said they thought it might be possible to induce London to accept the Soviet proposal. In this connection they suggested that further discussion of the matter be postponed until the arrival in Washington of the British Ambassador to the Soviet Union, Sir Archibald Clark Kerr, who is expected to arrive in the near future on his way back to Moscow from London. They expressed the opinion that if the Ambassador approved, London would undoubtedly withdraw its objections. I stated that from our point of view it would also be better to postpone the matter pending Admiral Standley’s56 and Commander [Page 615] Frankel’s57 arrival in the Soviet Union because of their interest and responsibility in the matter.

  1. A special exchange rate for diplomats of 12 rubles for $1 (British rate, 48 rubles for £1) went into effect on March 18, 1941. See telegrams No. 538, March 19, 1941, and No. 707, April 8, 1941, from the Ambassador in the Soviet Union. Foreign Relations, 1941, vol. i, pp. 871 and 875, respectively. The unrealistic official rate of exchange had been fixed at about 5.3 rubles for $1.
  2. See telegram No. 1121, December 21, 1942, from the Chargé in the Soviet Union, ibid., 1942, vol. iii, p. 678.
  3. See telegram No. 881, October 13, 1942, from the Chargé in the Soviet Union, ibid., p. 654.
  4. Rear Adm. William H. Standley, American Ambassador in the Soviet Union.
  5. Samuel B. Frankel, Assistant Naval Attaché and Assistant Naval Attaché for Air in the Soviet Union.