102.1/9809c: Telegram
The Secretary of State to the Minister Resident in Saudi Arabia (Moose)
Washington, December
15, 1943—9 p.m.
111. From Treasury. In order to meet the needs of the Legation for riyals, Treasury requests that you submit the following program to Ibn Saud directly or through his ministers:
- 1.
- Suggest to the King that he sell to the Legation the number of riyals needed to meet your disbursements from his stock of riyals, including those minted from silver lend-leased from Treasury stocks. It would be advisable to indicate specifically your riyal requirements. Payment for the riyals would be made at the rate of 30 U.S. cents per riyal.
- 2.
- Inform the King that at his request the Treasury will convert the dollars which he acquires into gold at the rate of $35 per fine ounce plus one-fourth of one percent. The Treasury is prepared to provide [Page 917] this gold in the form of bars of five ounces and up, bearing the stamp of the United States Mint and certified as to their weight and fineness, and either earmark the gold for his account at the New York Federal Reserve Bank or arrange to have it shipped to Saudi Arabia by United States Army Air Transport.
- Regarding the alternatives of holding some dollars and/or gold here or converting all the dollars into gold for shipment to Saudi Arabia, you should point out to the King that he might desire to keep some funds in the United States which could be used for the purchase of goods in this country.
- 3.
- In discussing the rate of 30 cents per riyal, you may find it desirable to point out that: for the $12 which the King would receive for 40 riyals, the King would be able to buy approximately 164 grains of fine gold; while at the present rate of 40 riyals per sovereign in Saudi Arabia, he can obtain only 113 grains of fine gold, the fine gold content of one sovereign. Delivered in Saudi Arabia, after payment of insurance and all other expenses incidental to the shipment, the net gold derived from the sale of 40 riyals to the Legation would be approximately 156 grains. This latter figure will vary slightly depending on insurance rates, the size of the gold bars shipped, and other factors.
- 4.
- If the King reacts favorably to the suggestion of selling riyals to the Legation, you should suggest at a time chosen at your discretion that the King, in order to promote friendly trade relations with the United States, should consider selling riyals for dollars at the rate of 30 cents per riyal to commercial enterprises having need for local means of payment. Any dollars acquired in this way would be convertible into gold under the above conditions. [Treasury.]
Hull