861.131/5–1350

The Ambassador in the Soviet Union (Kirk) to the Under Secretary of State (Webb)

confidential

Dear Jim: I have been trying to figure out some way to defeat the Soviets in their unilateral stand on the ruble-rate. We here in [Page 1290] Moscow cannot get rubles except through the Disbursing Officer, who must draw on the Soviet State Bank, using “U.S. Treasury checks. The Treasury is now forced to accept six rubles for one dollar, and on 1 July 1950 must accept only four rubles for one dollar. The Soviets could always change again whenever they liked—say to 2 to 1:

We need a lot of rubles to run the Embassy, and we all here need rubles for our housekeeping and personal expenses. It is tough now, and will be serious by 1 July.

I have made one suggestion to the Department, namely, that we might accept a flock of rubles in addition to dollars, in settlement of the Lend-Lease Account owed us. There are many angles to such a settlement, but we might get somewhere with the Soviets, if we took a good slice of rubles. It would be necessary to have an understanding with our Treasury that such rubles were to be made available to the Department to defray costs here—and many angles to that, too.

Whatever scheme, if any, works out, I would strongly recommend we very selfishly insist it be reserved solely for the U.S. We ought not to get soft and intimate we would help out other friendly nations stuck with this same problem.

This suggestion may not stand up at all, but I mention it as evidence of my concern, and of our soul-searching over here.

Yours sincerely,

Alan G. Kirk