890F.515/5–1945: Telegram
The Acting Secretary of State to the Minister in Saudi Arabia ( Eddy )
141. From Treasury and Foreign Economic Administration. The following is the suggested letter to be sent to the Honorable Henry Morgenthau, Jr., Secretary of the Treasury:
“My dear Mr. Secretary:
“Reference is made to our letter addressed to you on April 24, 1944,9 relative to the demand for silver coin to be supplied to foreign diplomatic missions and foreign business enterprises in Saudi Arabia in exchange for dollar credits in the United States.
“The Government of Saudi Arabia will be unable to meet the demand for silver coin of foreign diplomatic missions and foreign business enterprises during the calendar year 1945 unless an additional quantity of silver is provided under the Act of March 11, 194110 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 [Page 898] 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 calendar year 1945 may be met to the extent of 5,843,750 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 the request 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 in an equilavent or higher fineness and equivalent in quantity and form 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 5,843,750 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 17 million riyals11 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 agree, on behalf of His Majesty the King of Saudi Arabia, that whenever, after the date of this letter, riyals are furnished to foreign diplomatic missions and foreign business enterprises in exchange for dollar credits, 60 percent of the dollar credits so obtained shall be deposited in the account with the Federal Reserve Bank of New York, as fiscal agent of the United States, entitled ‘His Majesty the King of Saudi Arabia, Special Dollar Account’, until deposits have been made to such account of 60 percent of the dollar credits obtained from an amount of riyals equivalent to the total number of riyals coined from silver supplied after the date of this letter to Saudi Arabia under the Act of March 11, 1941. It is understood that such deposits shall be in addition to the $1,800,000 required to be deposited for the silver supplied in accordance with our request of April 24, 1944. The dollars in such account shall be held for the sole purpose of purchasing silver to be returned to the United States until silver has been returned to the United States equivalent to the total amount of silver supplied to [Page 899] Saudi Arabia under the Act of March 11, 1941. It is understood that the dollars in such account will be held and may be used pursuant to the terms and conditions set forth in our letter to you of April 24, 1944.
“The costs incurred by the United States Mint in minting the 17 million riyals and the cost of shipping the riyals 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 in the account, ‘His Majesty the King of Saudi Arabia, Special Dollar Account’, at the Federal Reserve Bank of New York.”
The following is the suggested letter to be sent to the Honorable Leo T. Crowley, Administrator, Foreign Economic Administration:
“Dear Sir:
“His Majesty the King of Saudi Arabia, through ______(name)______, _______(title)______, hereby requests the Foreign Economic Administration to supply as soon as possible 5,843,750 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 bullion in an equivalent or higher fineness and equivalent in quantity and form 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 the 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 . . . . . . ., 1945.”12
- Not printed; but see Foreign Relations, 1944, vol. v, p. 68, footnote 61.↩
- The Lend-Lease Act (55 Stat. 31).↩
- In telegram 143, May 19, 1945, 8 p.m., the Department stated: “You will note that although SAG requested only 15 million riyals for this purpose, the documents provide for 17 million riyals. You should explain to appropriate SAG officials that the US Government has taken the liberty of drafting the documents in this way because it has information of additional needs of the Legation and American companies (SAMS and American Eastern) amounting to more than 1 million riyals and has provided a margin for emergencies.” (890F.515/5–1945) For request by Saudi Arabian Government for 15 million riyals, see telegram 109, March 16, noon, from Jidda, p. 863.↩
- In telegram 244, June 23, 1945, noon, the Minister in Saudi Arabia reported that the proposed letters were signed by the Saudi Arabian Minister of Finance on June 21 (890F.515/6–2345). The letters were forwarded in despatch 145, June 23 (890F.515/6–2345). Copies were transmitted by the Acting Secretary of State (Grew) to the Secretary of the Treasury (Vinson) and the Foreign Economic Administrator on August 1 with the Department’s recommendation “that the request of the Government of Saudi Arabia be granted”. (890F.515/6–2345)↩