Foreign Relations of the United States: Diplomatic Papers, 1944, The Near East, South Asia, and Africa, The Far East, Volume V

102.1/10574b: Telegram

The Secretary of State to the Minister Resident in Saudi Arabia (Moose)⁶¹

Washington, April 12, 1944—8 p.m.

57. From Treasury. The following is the text of the letter to be sent to the Honorable Henry Morgenthau, Jr., Secretary of the Treasury:

“My dear Mr. Secretary: Reference is made to previous communications between representatives of our respective governments relative to the vital need of Saudi Arabia for a supply of silver for coinage purposes.

An additional demand for silver coin has developed. Foreign diplomatic missions and foreign business enterprises in Saudi Arabia require silver riyals in order to meet their expenses in Saudi Arabia and have requested that such riyals be made available to them in exchange for dollar credits in the United States. The Government of Saudi Arabia will be unable to meet this demand unless an additional quantity of silver is provided under the Act of March 11, 1941, for the specific purpose of exchanging silver riyals for dollar credits in the United States.

Accordingly, I request on behalf of His Majesty the King of Saudi Arabia, that you will be so kind as to inform the Foreign Economic Administration that the need of Saudi Arabia for silver for coinage to be used to supply foreign diplomatic missions and foreign business enterprises in Saudi Arabia with riyals in exchange for dollar credits in the United States during the balance of the calendar year 1944, may be met to the extent of 3,437,500 ounces of silver from the stocks of silver of the United States Treasury.

I am prepared, on behalf of His Majesty the King of Saudi Arabia, to transmit to the Foreign Economic Administration requests of Saudi Arabia for the above mentioned silver, and the agreement of Saudi Arabia to fulfill the commitments made in this letter and to return to the United States Treasury within 5 years after the end of the existing emergency as determined by the President of the United States, an amount of silver bullion equivalent to the total number of ounces of silver transferred to Saudi Arabia under the Act of March 11, 1941, from the stocks of the United States Treasury silver, provided, however, that if conditions of the world supply of silver make it advisable, such period may be extended by agreement of both Governments for an additional 2 years.

I agree, on behalf of His Majesty the King of Saudi Arabia, that the 3,437,500 ounces of silver to be transferred to Saudi Arabia under the agreement which I am prepared, on behalf of His Majesty the King of Saudi Arabia, to transmit to the Foreign Economic Administration, shall be coined into 10 million riyals by the United States Mint for Saudi Arabia, to be used only for the purpose of providing riyals for foreign diplomatic missions and foreign business enterprises in Saudi Arabia in exchange for dollar credits in the United States at the rate of 30 United States cents per riyal. I further agree, on behalf of His Majesty the King of Saudi Arabia, that whenever silver transferred to Saudi Arabia, under the Act of March 11, 1941, is used for the purpose of providing riyals for foreign diplomatic missions and foreign business enterprises, 60 percent of the dollar credits so obtained shall be deposited in an account to be opened with the Federal Reserve Bank of New York, as fiscal agent of the United States, in the name of His Majesty the King of Saudi Arabia, and shall be held for the sole purpose of purchasing silver to be returned to the United States Treasury. It is understood that the dollars in such account may be invested and reinvested from time to time in direct obligations of the Government of the United States; that all such securities shall be held by the Federal Reserve Bank of New York, as fiscal agent of the United States, in a securities account in the name of His Majesty the King of Saudi Arabia; and that the earnings accruing thereon need not be held for the sole purpose of purchasing silver to be returned to the United States Treasury.

The costs incurred by the United States Mint in minting the 10 million riyals and the cost of shipping the riyals from the United States to Saudi Arabia will be paid by Saudi Arabia out of the dollars derived from the provision of riyals to foreign diplomatic missions and foreign business enterprises in Saudi Arabia. It is understood that these costs will be over and above the amount deposited with the Federal Reserve Bank of New York for the purpose of purchasing silver to be returned to the United States Treasury.

It will be appreciated if you will kindly advise the Foreign Economic Administration of your approval of the foregoing request.

Respectfully yours,”

The following is the text of the letter to be sent to the Honorable Leo T. Crowley, Administrator, Foreign Economic Administration:

“Sir: His Majesty the King of Saudi Arabia, through (name) (title), hereby requests the Foreign Economic Administration to supply, as soon as possible, 3,437,500 ounces of silver under the Act of March 11, 1941, from the stocks of the United States Treasury silver.

I hereby agree, on behalf of His Majesty the King of Saudi Arabia that Saudi Arabia shall return to the United States Treasury, within 5 years after the end of the existing emergency, as determined by the President of the United States, an amount of silver equivalent to the total number of ounces of silver transferred to Saudi Arabia under the Act of March 11, 1941, from the stock of the United States Treasury silver, provided, however, that if the conditions of the world supply of silver make it advisable, such period may be extended by an agreement of both Governments for an additional 2 years; and that Saudi Arabia will fulfill the commitments made in the letter addressed to the Secretary of the Treasury of the United States on . . . . . 1944.

Respectfully yours,”

[Treasury]
Hull

61. The Minister Resident, replying in telegram 153, May 11, 6 p.m., reported that “Deputy Minister of Foreign Affairs has just delivered signed letters dated April 24 as prescribed in Department’s 57, April 12, 8 p.m. He also delivered royal decree authorizing him to sign prescribed letters.…” (102.1/10822) A signed letter was also delivered in which the Saudi Arabian Government agreed to open appropriate accounts, in the name of the King, with the Federal Reserve Bank of New York as fiscal agent of the United States, as requested by the Secretary of State in his telegram 56, April 12, 8 p.m. (not printed).