102.1/9829: Telegram

The Minister Resident in Saudi Arabia (Moose) to the Secretary of State

5. For Treasury. Plan for conversion of dollars into Saudi riyals described in Department’s 111, December 15, 9 p.m.,35 has been informally discussed with responsible local officials on whose advice King36 will rely and it will be presented formally to Foreign Ministry today.

Discussions indicate that King will approve plan, provided Lend-Lease silver over and above other Saudi requirements is supplied for sale to Legation and commercial enterprises. It has been pointed out both orally and in writing once plan is in operation sale of gold in Jiddah market at or near existing sovereign-riyal rate should give local government substantial benefit over and above recovery of riyal sums sold. Nevertheless it is likely that Saudi Government will wish to increase its request for Lend-Lease silver by full amount of expected sales of riyal for dollars.

Best guess now is that total demand from Legation, Casoc37 and same in 1944 would be about 10 million riyals.37a Reasonably accurate estimate may be available in a few days. Attention is called to the fact that insofar as Legation is concerned suggested plan is more complicated and less economical than that of supplying sovereigns as recommended in Gunter’s letter to White dated September 24.38

A formal reply cannot be expected for more than a week.

  1. Ibid., p. 916.
  2. Abdul Aziz ibn Saud, King of Saudi Arabia.
  3. California Arabian Standard Oil Company, American oil company operating a concession in Saudi Arabia; the Standard Oil Company of California and the Texas Company owned the stock of this company. On January 28, 1944, the Minister Resident was informed that the name of the company had been changed to Arabian American Oil Company (Aramco).
  4. Sentence apparently garbled.
  5. Letter not found in Department files. Harry Dexter White was Assistant to the Secretary of the Treasury (Morgenthau), and Director of the Division of Monetary Research, and John W. Gunter was Treasury Attaché assigned to Ankara, temporarily in Saudi Arabia; for correspondence regarding the Gunter Mission to Saudi Arabia, see Foreign Relations, 1943, vol. iv, pp. 854 ff., passim.