890F.515/2: Telegram

The Minister in Egypt (Kirk)45 to the Secretary of State

110. As background to message transmitted in my 73, January 14, 5 p.m.,46 Owen states that original plan proposed in November by British Minister in Jidda47 and Rugman, Financial Secretary to Sudan Government, called for furnishing 25,000,000 new rials and supply requirements, the whole to total 4,000,000 pounds sterling or slightly more. This recommendation was based on estimate of about 64,000,000 rials of which it was expected to obtain about 3,000,000 from Casoc, 3,250,000 from Pilgrimage and remainder of about 57,750,000 rials, or slightly over 4,000,000 pounds, from the British in the form of rial currency and supplies.

This proposal was vetoed by London which proposed substitute plan outlined in my telegram under reference. Message from London making proposal was received just prior Owen’s departure from Jidda and despite Najib Salha’s48 optimism reaction of King problematical since suggestion of Rugman last year49 for use of rupee notes was turned down on ground inter alia of countervening religious law. Plan for organizing bank also not yet clear and presumably may depend largely at this stage on Rugman’s recommendations.

In reporting foregoing it occurs to me that should the bank proposal prove acceptable to the Saudi Arabian Government an opportunity might be afforded for American participation therein as a step not only in token of recognition and support of the friendly attitude of Saudi Arabia in war but also as contribution to long range stability of that country along lines indicated in my despatch number 778 of January 4.50 Other contributing considerations would be facilitation and protection of existing American interests in Saudi Arabia and equalizing effect in respect of increasingly discernible tendency toward British economic intrenchment in this area under war [Page 857]impact to a degree which might materially negate best intentioned postwar agreements for equality of opportunity.

In commending this matter to the Department’s attention it is suggested that in view of [alleged?] inability of British to furnish silver and gold our contribution in bank scheme might take form of providing all or part of gold and/or silver requirements of bank under Lease-Lend and participation in management of bank in order to assure satisfactory control. Winant51 sees possibilities in this, as also do Owen and Ohliger of Casoc. May I have Department’s views at earliest convenience as guidance for further exploration?

In conclusion I feel impelled to state that after watching operation of system by which American assistance to Saudi Arabia has been channelized through British, I have gained impression that we have thereby lost considerable prestige in the eyes of Saudi Arabians who have been given increasingly to feel that the British were their only friends in need. In the interests of all concerned and in sight of both immediate and long term considerations, the best all around solution would seem to be one of understanding cooperation with British on basis of equality and bank proposal might well afford suitable opportunity for inauguration of such a policy before situation crystalizes to such a degree as to render such cooperation more difficult. In addition I recommend early consideration of extension of direct Lease-Lend of supplies to Saudi Arabia in collaboration with and parallel to British but I would emphasize desirability in so doing of not arousing Saudi Arabian hopes of greater assistance than we prepared to extend and necessity of meeting promptly any engagements contracted.

In the event that Department favors extension Lend-Lease to Saudi Arabia, I suggest that in view of political considerations involved and of Ibn Saud’s susceptibilities an opportunity be given him to approve such a step prior to its announcement.

Repeated to Jidda.

  1. At this time Minister Kirk was accredited also as Minister to Saudi Arabia; for correspondence regarding the status of the diplomatic representation of the United States in Saudi Arabia, see pp. 830 ff.
  2. Not printed; the message transmitted was a private telegram from Mr. Garry Owen, Jidda representative of the California Arabian Standard Oil Company (Casoc), to an officer of the company at San Francisco, regarding Casoc-British negotiations for supplying Abdul Aziz ibn Saud, King of Saudi Arabia, with needed income. The British Foreign Office had taken the position in the negotiations that the currency problem of Saudi Arabia must be met by the issue of internal notes controlled by the Currency Control Board, as in Palestine, and backed by the British Bank (890F.515/1).
  3. Francis H. W. Stonehewer Bird.
  4. Saudi Arabian Director of Mines and Public Works.
  5. See telegram No. 75, July 29, 6 p.m., from the Minister Resident in Saudi Arabia, p. 882.
  6. Not printed.
  7. Frederick Winant, at this time ranking civilian representative of the Lend-Lease Administration in the Middle East, at the Middle East Supply Center (MESC), Cairo; for correspondence regarding the decision of the United States in 1942 to participate with the British in the Middle East Supply Center, see Foreign Relations, 1942, vol. iv, pp. 1 ff.