The Ambassador in the United Kingdom (Winant) to the Secretary of State

No. 8599

Sir: I have the honor to refer to the Department’s instruction no. 2472 dated March 6, 1943, requesting the Embassy to obtain information regarding banking and currency projects which it is understood the British Government is considering for Saudi Arabia, and to enclose herewith a copy of a memorandum of conversation between representatives of our Treasury and a British Treasury official, and a copy of an informal communication from the Foreign Office.63

From these enclosures it will be seen that while the establishment in Saudi Arabia of a bank of issue is not being contemplated, it has been proposed to set up a Currency Board which will issue paper rials convertible into sterling.

Ibn Saud, it has been pointed out by British officials, has been paid a subsidy by the British Government for the past two years which [Page 866]represents the loss of revenue formerly derived from pilgrimage and customs duties. The subsidy has been paid in part in goods and in part in silver rials minted in India. As it is becoming very difficult to obtain silver rials, the scheme to provide paper rials through a Currency Board was devised.

Respectfully yours,

For the Ambassador:
W. J. Gallman

First Secretary of Embassy
  1. Neither printed.↩