Russian Gold A COLLECTION OF ARTICLES, NEWS- PAPER EDITORIALS AND REPORTS, AND STATISTICAL DATA REGARDING THE RUSSIAN GOLD RESERVE AND SHIPMENTS OF SOVIET GOLD. Issued by the AMTORG TRADING CORPORATION INFORMATION DEPARTMENT 19928 Russian Gold A COLLECTION OF ARTICLES, NEWS- PAPER EDITORIALS AND REPORTS, AND STATISTICAL DATA REGARDING THE RUSSIAN GOLD RESERVE AND SHIPMENTS OF SOVIET GOLD. Issued by the AMTORG TRADING CORPORATION INFORMATION DEPARTMENT 1928 CONTENTS INTRODUCTION . The Russian Gold Reserve Before and During the World and Civil Wars (1883-1921) 7. Noviteky—Russia’s GoD RESERVE The Soviet Gold Reserve (1921.1923) M. L. Jacobson—Di1ssIPATION OF THE GOLD RESERVE Soviet Gold Movements (1923.1928) M. L. Jacobson—FoRrerGN Trapg, GoLb EXPORTS AND TRADE oF THE Soviet UNIoN WITH THE UNITED STATES oo A statement by the State Bank of the U. S. S. R. on the shipments of Soviet gold to the United States A. L. Scheinman—FreEncH CLAIMS To SovieT GOLD . 35 EDITORIALS IN THE AMERICAN PRESS ON THE SHIPMENTS or Sovier GoLp APPENDIX Customs Statistics of Sweden, Switzerland, France and the United States with reference to Russian Gold (1919-1922) Reports in the N. Y. Times, on Russian Gold Movement Russian Gold Production . Precious Metal Reserve of the State Bank 57 61 67 LR Soviet-American Trade . . Map Indicating Movements of Russian Gold. (1920-1922) 70 Back Cover INTRODUCTION The recent refusal of the Assay Office to accept a $5,000,000 shipment of Soviet gold brings up the interesting question of the Russian gold reserve. Among the various studies of this subject the basic and most authoritative appear to be a survey by V. No- vitzky, former Assistant Minister of Finance in the Imperial Rus- sian Government, and the chapter on the dissipation of the Russian gold reserve in the volumes on European Currency and Finance orepared by the United States Senate Commission of Gold and Silver Inquiry. These two studies, which we reprint in this booklet, indicate that about two-fifths of the Russian gold reserve amounting lo 1,600,000,000 rubles in 1914, was transferred by the Imperial Government to the Allies during the war period, approximately one bith was disposed of by the “white” generals fighting the Bolshe- viki and in payments under the several peace treaties to Germany and some of the independent states created on the western border of Russia. This left only about 680,000,000 rubles in the hands of the Soviet Government at the beginning of 1920. The Senate Inquiry, on the basis of customs statistics of various countries, proves that this Soviet gold reserve of approximately $350,000,000 during the following three years found its way by various channels to the United States. Corroboration of this conclusion is also found n contemporary press statements which are also reprinted in his vamphlet. As stated by Mr. Scheinman, Chairman of the Soviet State Bank, and corroborated by statistical data, (see pp. 37, 67) the present gold reserve of the Soviet Union represents either gold newly mined within the Soviet territory, or else has been acquired by the State Bank of the U.S.S.R. on the Russian and foreign markets. The $5,000,000 shipment of gold which the United States Assay Office refused to handle, came from the newly created reserve. The gold reserve held by the Soviet authorities in 1920 was ex- ported to pay for its purchases abroad at the time when the situation in Russia did not permit of any exports of Russian products to for- eign countries. This gold ultimately found its way to the United States for the reason that currencies in Europe were depreciated and the United States during these years was the only country with an effective gold standard. The direct trade between the United States and Russia in the years 1020-1922 was negligible. Since then, however, a direct and large Soviet-American trade has been established. This trade is of such a character that a sub- stantial unfavorable balance must be covered every year by the Soviet Union. During the six months ending March 31, 1928, alone an adverse trade balance of $50,000,000 was created. The earliest shipments of gold to this country (1919-1920), as shown by V. Novitzky, were made from Siberia by the “white” forces who came into possession of a large portion of the Russian gold reserve in 1918. An important part in the financial adjustments of that period was played by the Anglo-American Syndicate which received considerable quantities of gold from the Kolchak gov- ernment. The gold remaining in the possession of the Soviet authorities after the cessation of civil war reached this country during the years 1021-1022 by way of Sweden, France and Switzerland. To quote a dispatch in the New York Times of April z, 1921, (pp. 62, 63) “gold coming here in the form of bars bearing the official stamp of the Royal Swedish Mint. . . . is generally regarded as Soviet gold which has been smelted at the Swedish Mint or given in payment for Soviet gold sold to that institution”. The statistics of the Swedish, French, Swiss and United States customs (pp. 57-60) for 1920, 1921 and 1922 indicate that Russian gold went to Sweden and from there was shipped by two routes to the United States, one part going directly and the other passing through France and Switzerland on the way to this country. Aside from gold shipped to this country by way of other countries, several shipments of Soviet gold were sent directly from Russia to the United States. These took place in 1922, when Soviet gold was admitted into this counry in payment for supplies pur- chased through the American Relief Administration. The official restriction against Soviet gold was also lifted in the case of the gold allotted by the Soviet Government to the newly created states such as Estonia. and sent bv the latter to the United States Mr. M. L. Jacobson, author of the section on the Russian gold reserve in the Senate Report, continuing Mr. Novitzky’s story of Russian gold, indicates that by the beginning of 1923 practically the entire gold reserve inherited from the Czarist Government had been exported by the Soviet authorities. The Soviet State Bank, created in 1921, did not receive any of the Czarist metal, its original capital consisting only of a certain quantity of depreciated paper currency. With the inauguration of normal trade relations with foreign countries and in preparation for the reestablishment of a stable currency, the Soviet Union began to accumulate a new gold reserve. The State Bank as the future bank of issue went into the domestic and later also into foreign markets to procure the metal. Various other financial operations also served to build up the gold reserve in the vaults of the Bank. On January 1, 1923 the total precious metal and foreign currency reserve of the State Bank amounted to but 27,900,000 rubles. This figure, however, was increased several limes during the same year. On October 1, 1923 the precious metal reserve alone amounted to 90,500,000 rubles. The table on page 69 shows the increase in the gold reserve of the Issue Depart- ment of the State Bank from its early beginnings up to April 1, 1028, when it amounted to 180,208,750 rubles, while the total foreign currency and precious metal reserve of the State Bank on the same date was 262,536,000 rubles. A large part of the new gold reserve comes from the mines of the Urals and Siberia. Soviet gold production which at one tite dwindled to practically nothing exceeds in value $20,000,000 per annum at present. The State’ Bank of the U. S. S. R. has been both exporting and importing gold during the past several years, its turnover since 1924 amounting to 200,000,000 rubles. Soviet gold is accepted in all the leading countries of the world. This booklet containing authoritative studies of the Russian gold reserve, a statement by the State Bank of the U. S. S. R, and statistical data regarding the movement of gold from Russia, Russian gold production, the foreign trade of the Soviet Union and its present gold reserve, is intended to give the American public convenient access to data which ordinarily is difficult to obtain. On page 40-56 will be found reprints of editorials from the American press on the subject of the recent incident with the Soviet gold. AMTORG TRADING CORPORATION Information Department May, 1028 The Russian Gold Reserve Before and During the World and Civil Wars (1883-1921) RUSSIA’S GOLD RESERVE By V. NOVITZKY Formerly Assistant Minister of Finance in the Imperial Russian Government Prom “The Russian Financial Problem.” published in Paris, 1922 (in French) OriGINs oF THE GOLD RESERVE Since the Crimean War, all Russian Ministers of Finance consistently worked for the building up of a strong metallic reserve, which would permit Russia to resume specie payments. In 1862 he then Minister of Finance, M. von Reutern, thought that the ‘ime had come when he could place gold into circulation, as had seen done in England in 1819. . The Polish insurrection then pre- vented the plan from being carried out, and it took another 34 or 35 years for it to materialize. In 1877 M. von Reutern, with a view of securing the funds necessary for the foreign debt service, had a decree issued providing for the payment of customs duties in gold, as was the practice in the United States, Italy and Austria- Hungary. In 1881 M. Abasa inaugurated his program of monetary reform, including the gradual withdrawal of 400 million rubles of banknotes issued for the requirements of the Treasury during the Turkish War, and which constituted a debt of the Government to the State Bank. MM. Bunge and Vishnegradsky continued the policy of gold accumulation, which resulted in placing at the disposal of M. Witte the sums required for the resumption of gold payments and for the adoption of a gold standard on the basis of 1 ruble = 2.667 francs. The currency reform effected by M. Witte in 1897 was made possible by the collection of customs duties in gold, by the Siberian gold production, and also by the loans contracted abroad. The gold reserve had been increasing very regularly during the fifteen years that preceded the reform: January 1: Gold Held in Russia and Abroad (in millions of rubles} 1883 1884... 1885 .... 1886 .. EN 1887 ie erste in————————— 1888 . ees eine 1889 nn oer Starpoints 180 oo i eee eee 1891 ... 1892 .. 1893 . 1894 1895 1896 1897 264 298 303 367 382 390 430 470 576 642 852 895 912 964 1.005 The reform was successful. It actually did bring gold into cir- culation, to an extent sufficient for all needs of domestic commerce. A rather difficult trial was brought about by the Japanese War. The suspension of specie payments was theén avoided, however, thanks to the energy displayed by M. Kokovtzoff, which was criti- cized by Paul Leroy-Beaulieu as excessive financial affectation. A critical period was that of the domestic troubles of 1905- 1906. Through the discounting in Paris and in Berlin of 5169, Treasury bonds, the 300 million rubles margin of bank-note circula- tion was then restored. M. Kokovtzoff returned to his post at the head of the Ministry of Finance, which he had relinquished when Count Witte became President of the Council. During the ten years in the course of which he rehabilitated the Russian finances, restored the budgetary equilibrium, and did away with all borrowings for the current needs of the government, the objects of his policy were twofold, namely, first, the constitution of a strong metallic reserve and, second, the accumulation of considerable cash balances to provide for such con- tingencies as deficient crops or for any unexpected developments. These Treasury balances proved very helpful at the outbreak of the war with Japan in 1904, and their possession was likewise of advan- tage in August 1914, notwithstanding the moratorium. i {} On the eve of the World War the gold reserve attained 1,604 million rubles, without counting the gold deposited abroad in one form or another; this at the time was the largest. amount of gold held by any central bank and it slightly exceeded the amount of notes in circulation. The growth of the gold reserve was a result of good harvests, of a skillful foreign exchange policy, which con- sisted of acquiring foreign bills at the height of the grain export season, when their supply was most abundant and of the practice of placing at the disposal of the railway companies the equivalent in rubles of the proceeds of their loans placed abroad. The following table shows the Russian gold reserve (whether held in Russia or abroad) as of January Ist of each of the fifteen vears preceding the World War: January 1: 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 Millions of rubles 843 7317 709 769 909 1,082 927 1,191 1,169 1,220 1,416 1.450 ,436 1,656 1.695 GoLp SHIPMENTS TO ENGLAND AND TO SWEDEN Notwithstanding the fact that Russia had entered the war with a gold reserve of this magnitude, her financial position was much weaker than that of any other belligerent country. The bulk of the Russian rural population were not accustomed. to subscribe to public loans, and as a result of the relatively small amounts of capital funds available within the country, the government was compelled to meet the greater part of its war expenditures by large issues of paper money. The government was not disposed to spend any part of the gold reserve of the State Bank, as it was afraid that an un- favorable impression might be produced, if the metallic cover of the notes in circulation became impaired. There was, however, no other way. On the one hand, Russia required considerable funds abroad to assure the service of her loans and to pay for her war orders. On the other hand, it proved impossible to secure any credits in the Allied countries during the first months of the war. The L 3 Russian government was thus forced to utilize the gold reserve. In accordance with an agreement between the Russian and the British governments, a portion of the Russian gold stock, amounting to eight million pounds sterling, was shipped from Russia to England in October 1914. Extraordinary precautions were taken to safe- guard the greatest secrecy regarding this shipment. Upon reaching Archangel, the cruiser Drake and the military transport Mantois dropped anchor in the open sea, thirty miles off the coast, and the gold was delivered on board at night, by lighters. In spite of these precautions, however, the Germans learned of the shipment and when the Drake and the Mantois were on their way back to England they encountered mines which German submarines had laid along their route. The gold was delivered at Liverpool, but the dangers involved in such an enterprise and the damages suffered by some of the warships that escorted the shipment caused the government, to give up that method of shipment. All subsequent shipments were carried by rail to Vladivostok and thence, by Japa- nese cruisers to Vancouver. TEE ANGLO-RUSSIAN FINANCIAL AGREEMENTS Before we take up the question of Russian gold shipments to Canada via Siberia, we shall briefly analyze the agreements be- tween the Russian and the British Governments relative to deliveries of gold from Russia. The first shipment of 8,000,000 pounds sterling of gold amounted simply to a sale of Russian gold to Great Britain. The credit which was opened to Russia as a result of that transaction was immediately applied to the payment of war orders placed by Russia in England and in the United States. This comparatively small amount could not afford a solution of the difficulties that arose for Russia from the fact that the war became protracted. Rus- sia needed further and much larger credits, The negotiations which were started between the Russian and the British Govern- ments toward the end of 1914 and continued throughout 1915 dis- closed the following situation. Russia pointed out that her financial situation was very diffi- cult due to the fact that she had available no foreign credits and that she could not export gold, which had to be kept within the country to serve as cover for note issues. On the other hand, Eng- land showed the difficulties the Bank of England had to contend with, as it was the only bank of issue in any belligerent country which had not suspended the exchange of notes against gold. Eng- land, therefore, made her willingness to open credits to Russia condi- | © tional upon a certain amount of gold being placed at her disposal by Russia in advance. The negotiations dragged along without any result. Finally, Russia yielded only after France, which had also asked that credits be opened for her in England, declared her readi- ness to export there a portion of her gold. The Russian Minister of Finance was thus placed in an awkward position and had to give in, He succeeded, however, in securing special terms for Russia. It was agreed, namely, that the gold would be returned to Russia after the end of the war. Furthermore, the Russian Government reserved the right to keep the arrangement secret, so as to keep the impair- ment of the gold reserve from affecting in an injurious manner the balance sheet of the State Bank. The British Treasury also con- sented to open in favor of Russia a non-negotiable credit to the amount of £200,000,000, which was to appear in the statements of the Russian State Bank as gold held abroad. We quote below a translation of the full text of the agreement relating to deliveries of Russian gold. Art. 2. “In view of the arrangement concluded between the British Government and the Government of the French Republic, under the terms of which each of the two contracting Governments is to, make available an amount of £40,000,000 for exportation to the United States, the Russian Government is ready to place gold at the disposal of the British Government, at such times and in such quantities as gold will be exported hy the French Government. The Russian Government will, however, be under no obligation to export more than £20,000,000 up to March 3ist, 1916, or, under any circumstances, more than a total of £40,000,0000, and: this with the general understanding that exports will be effected only as the need thereof will he determined by the Bank of England. The gold thus exported by the Russian Government will be applied by it to the purchase of bonds of the British Treasury, bearing no interest, redeemable in gold, and maturing in 3, 3%, 4 and 4% years, in series of equal amounts. Said bonds will be held by the Russian Government until maturity. Art. 6. “In view of the issue of bank notes in Russia, and, as a temporary measure until such time as Russia shall have success- fully funded her domestic debt, the Government of His Britannic Majesty is ready to effect with the Russian Government an ex- change of obligations of equal value, which shall be remitted in Installments at the order of the Russian Government and shall not exceed the aggregate amount of £200,000,000 in British currency. On the part of the Russian Government, these obligations shall consist of Russian Treasury bonds bearing no interest. On the | & part of the British Government, they shall consist of “non-tangible” credits. The term of this arrangement expires at the latest one year after the conclusion of peace, and the obligations of equal value exchanged by the two parties shall be redeemed within the same period. ” Thanks to this arrangement, the diminution of the Russian gold stock which resulted from the export of £40,000,000 in gold passed unnoticed by the general public. The balance sheet of the State Bank showed a decrease in the amount of metal entered as “gold in coin, bullion, and mine warrants,” but this decrease was offset by the increase in the item ‘gold held abroad.” After the war, the gold exported was to be restored to the Russian State Bank. What has just been said accounts for the changes that appeared in the statements of the State Bank, the meaning of which was hidden from the public, inasmuch as the agreement between the British Treasury and the Russian Ministry of Finance was not published. There exists no longer any objection to making these facts public. When’ the credits opened under the terms of the above agree- ment between the Russian and the British Governments were ex- hausted, in 1916, and when new credits had to be obtained, Russia had to enter a new agreement with the British Government, by which she placed at England’s disposal an additional amount of £20,- 000,000 in gold, as a loan subject to repayment. We reproduce here the corresponding paragraph of this arrangement: “Upon demand of the British Government, the Russian Gov- ernment undertakes to deliver gold, at such places and such times as may be fixed by the British Government, to a tctal amount of £20,000,000, on condition that no such demand shall be made by the British Government except in the event that the gold stock of the Bank of England, including the cover for notes in circulation, shall decline to or below £85,000,000. In any case no such demand shall be made upon the Russian Government prior to January 1st, 1917.” The gold shipments provided by those arrangements were ef- fected in the following manner, Of the £40,000,000 which were to be remitted under the terms of the first agreement, £10,000,000 was shipped in December 1915, £10,000,000, in June 1916, and £20,000,000 in November 1916. The gold was shipped partly to Japan and partly to Canada. In accordance with an arrangement between the British Admiralty and the Japanese Ministry of the Navy, the gold was carried by Japa- nese warships, under Japanese escort. In a similar manner Lo ie tw a ad e is 18 8 Oe d 1S .€ at e lo 13 3b! oe J - 33 f 1€ e 1] | h) 18 3s 6. n id od ar £20,000,000 of gold was shipped from. Moscow, under the terms of the second arrangement, on the eve of the Revolution, in February 1917. As a result of all these shipments, Russia’s gold stock decreased by a total amount of £68.000.000 (640.200.000 gold rubles, or $329,703,000). In addition to the shipments of gold to England, the Russian Government, which had to place war orders in Sweden, started negotiations in the Fall of 1917, on the eve of ‘the Rolshevist coup with a syndicate of Swedish bankers, with a view to securing credits in kronor for Russia. Those credits were to be opened upon the delivery by Russia to Sweden of 4,850,000 rubles in gold. In October 1917 gold to that amount was shipped to Stockholm. and it remains to this time in the Swedish Riksbank. These were the only credit operations connected with the ex- ports of gold from Russia during the Great War. The subsequent operations with gold were effected by the Bolshevist authorities, and in the Fall of 1919, by Admiral Kolchak. We shall summarize those operations in the following chapters.. Gorp Cepep UNDER THE PROVISIONS OF THE TREATY oF Bresr-LitTovsk Of the gold stock which remained in Russia at the time of the Bolshevist coup, and which amounted in the aggregate to over 1,164,000,000 rubles, one half was kept at firs at Samara and then at Kazan, while the other half was held at Moscow and Petrograd. The Soviet Government, forced to accept the terms of peace im- posed by Germany, was required to ship to Germany, after the signing of the Treaty of Brest-Litovsk and on dates prescribed by the Treaty, 245,564 kilograms of gold, from the stock held in Mos- cow. Besides the gold, the Bolshevik authorities undertook to remit to Germany banknotes of the types known as “Ronianoff” and “Duma” notes and to make certain deliveries in kind. Articles 2 and 3 of the Financial Convention supplementary to the Treaty of Brest-Litovsk provided as follows: Art. 2. “With a view to compensating the Germans who suf- fered damages as a result of measures enacted by the Russian Gov- trnment, with due allowance for the corresponding counterclaims Presented by Russia and for the value of supplies requisitioned in Russia by the German forces after the conclusion of peace, Russia will pay to Germany an amount of six billion marks. Art. 3. “The payment of the six billion marks provided in Article 2 will be effected in the following manner: 1) A sum of 1% billion marks will be paid through the trans- = fer of 245,564 kilograms of fine gold, and 545,440,000 rubles in bank- notes, viz., 363,628,000 rubles in notes of 50, 100 and 500 rubles, and 181,813,000 rubles, in notes of 250 and 1,000 rubles. The transfers. will be effected in five instalments arranged as follows: (a) A first payment of 42,860 kilograms of fine gold and of 00,900,000 rubles in banknotes, viz., 60,600,000 rubles in notes of 50, 100 and 500 rubles, and 30,300,000 rubles in notes of 250 and 1,000 rubles; this payment to be effected on September 10, 1918; (b) Four instalments on the dates of September 30, October 31, November 30, and December 31, 1918. Each of these payments to consist of 50,675 kilograms of fine gold and of 113,635,000 rubles in banknotes, viz., 75,757,000 rubles in notes of 50, 100, and 500 rubles, and 37,878,000 rubles in notes of 250 and 1,000 rubles. 2) An amount of 1 billion marks shall be paid in kind as follows: On the dates of November 15 and of December 31 goods shall be delivered to a value of 50,000,000 marks each time; on March 31, June 30, September 30, and December 31, i919, to a value of 150,000,000 marks each time; on March 31, 1920, to a value of 300,000,000 marks. - 3) An amount of 214 billion marks shall be paid before Dec- ember 31, 1918, through the transfer of the bonds of a loan, which shall yield to the holders interest at the rate of 6%, beginnning with January 1, 1919, and shall be amortized, with accrued, interest through a sinking fund charge of 0.5 % . This loan shall be issued in Germany by the Russian Government, and the terms of said loan shall be considered as part of the present Convention. As security for thistloan there shall be pledged specified reve- nues of the State and, in particular, the rentals due from certain economic concessions to be granted to Germans. Said securities shall be determined in detail by a special convention, in such a manner as to assure annual revenues therefrom at least zo per cent. in excess of the annual interest and sinking fund charge. 4) The remaining sum of 1 billion marks, unless its payment is taken over by the Ukraine and by Finland, with the consent of Germany, in their conventions with Russia concerning the appor- tionment of the national property, shall be the object of a special agreement, which the contracting parties may conclude on this matter’ Under the terms of these provisions, the Bolshevist authorities in the time up to the Armistice which closed the Great War, remitted to ‘Germany 93,536 kilograms of fine gold (322 million francs), about 300 million rubles in banknotes, of which about one-half were | 6 3. kr 5 5 0 3 Ss 1 1 “1 E in ‘Romanoff’ notes and one-half in ‘Duma’ notes, and goods of a total value which it has been impossible to determine even approxi- mately, but which by far exceeds the value of the gold and banknotes remitted. The valuation of the goods thus remitted was effected at arbitrary prices, which were but a fraction of the prices actually current at that time in the Russian market, The amount in gold which had been remitted by the Bolshevik authorities to Germany was, in accordance with the armistice terms of November 11, 1918, turned over by the Germans to the ‘Allies. The disposition of the sums (including gold) turned over by Germany as a result of the annulment of the Treaty of Brest-Litovsk was formulated in the following terms in the Treaty of Versailles (Article 259, sections 6 and 7). ARTICLE 259 6) . . .. “Germany confirms the renunciation provided for in Article XV of the armistice convention of 11th of November, 1918, of any benefits resulting from the treaties of Bucharest and Brest- Litovsk, and from the treaties supplementary thereto. “Germany un.ertakes to transfer, either to Rumania or to the principal Allied and Associated Powers, as the case may be, all Monetary instruments, specie, securities and negotiable instruments or goods which she has received under the aforesaid treaties. 7) “The sums of money and all securities, instruments and goods of whatever nature, to be delivered, paid, and transferred Linder the provisions of this article, shall be disposed of by the prin- cipal Allied and Associated Powers in a manner hereafter to be determined by these powers.” In accordance with these provisions, the Russian gold remitted by Germany was taken over by the Bank of France for safekeeping. . As regards the gold which was kept at Samara and at Kazan, Its subsequent history was as follows. THE Gob Stock or SAMARA AND KAZAN In the month of June 1918, when the Czecho-Slovak movement Started in the lower Volga region, which resulted later'in the over- throw of the Bolshevist authority in the region where the Czecho- Slovak troops conducted their operations, the Bolsheviki transferred from Samara to Kazan a portion of the gold stock belonging to the Russian Treasury, which had been kept in the vaults of the Samara Branch Office of the State Bank. At that moment there was already In the vaults of the Kazan Branch of the Bank a certain quantity of gold, which had been brought there during the war from the cen- tral region of Russia. [n the month of August 1918, when the Bolsheviki hastily had to evacuate Kazan, they did not have the time to take along that gold, of which over 492,000 kilograms, valued at 633,600,000 rubles ($326,304,000) was seized there. The figure of 645,000 kilo- grams of gold, which has been given in a number of official and private reports, is inexact. The error is probably due to the fact that the weight of the alloy and of the wrapping was counted with that of the gold. In the statement of the Omsk Branch of the State Bank gold figures to an amount of 645,256,387 rubles ($332,307,038) namely, 501,233 kilograms of gold in coin and in bullion and 32,800 kilograms of gold and silver of various descriptions. From Kazan, at the end of the month of August 1918, the gold was shipped by steamships to Samara, where it was kept until the time when the members of the Constituent Assembly moved to Ufa; it was then shipped to the last named city. During their stay in Ufa, the members of the Constituent Assembly were conducting negotiations with the Siberian Government, which had been set up by that time as a coalition government. Each of the two parties had a real force to back it, and endeavored to utilize it in the course of the negotiations: the force of the members of the Constituent Assembly resided in the gold stock which they held, whild that of the Siberian Government was embodied in the newly formed volun- teer army. The first mentioned group was seriously hampered by the lack of good troops, as the remnants of the People’s Army* by that time were completely demoralized. On the other hand, the financial situation of the Siberian Government was a critical one, and the only way for it to acquire real financial strength was to get possession of the gold stock. Under the pressure of the Bolshevist advance, the People’s Government decided to transfer its seat from Ufa to Cheliabinsk, taking along the gold .stock, and there to con- tinue the negotiations with the Siberian Government. But then something happened which was not anticipated by the mem- bers of the Constituent Assembly. When the train carrying the representatives of the people and the gold arrived in Chelia- binsk, the members of the Government went to look for a place where they might store the gold in safety, and they selected for that purpose the grain elevators of the State Bank. Upon returning to the station, however, they no longer found there the trains loaded * That was the name borne by the Government of the Constituent Assembly and by its army. with gold, which had been in the meantime, upon an order the origin of which was not ascertained, dispatched to Omsk, where they arrived without any interference. That stratagem devised by certain members of the Siberian Government deprived the People’s Government of its strongest asset in the negotiations with the Sibe- tian Government. And thus the seizure of the gold led shortly to a tangible result, namely, the formation of the “Directorate,” on the basis of a coalition between the two governments. As is well known, the Directorate did not last long and was supplanted by the Supreme Government of Admiral Kolchak. Tue OMsk GOVERNMENT AND THE GOLD Stock y e 1 I! 2, The arrival of the gold in Omsk caused great joy among the Siberian Government. At first, the opinion prevailed that the gold, as patrimony of the people, had to be kept intact until the convoca- tion of a Constituent Assembly of all Russia. Soon, however, the insufficient equipment of the troops of the Siberian army, which maintained the struggle against the Bolsheviki, and, on the other hand the demand of the Allies for guarantees of eventual payment for the arms and war material sent by them to Siberia, compelled Admiral Kolchak and his Government to depart from that prin- ciple. Beginning with the month of May 1919 there began the sale of gold with the view of meeting the urgent expenses for the acquisi- tion of war material. Besides, gold had to be shipped to Hong- kong following upon the opening of credits in favor of the Omsk Government by the 'Anglo-American Syndicate (Baring Brothers, Kidder, Peabody & Co.). In all there was shipped from Omsk to Vladivostok, to be sold or to be deposited as security, 217,038 kilo- grams of gold, of a value of 270,508,835 rubles ($143,947,050) of which 184,238 kilograms (237,257,815 rubles equal to $122,187,775) soon arrived at their destination, while 32,800 kilograms (42,251,020 rubles equal to $22,789,275) were seized by Ataman Semenoff rand held at Chita. That arbitrary seizure of gold, which took place at the time of the retreat of Admiral Kolchak’s army toward Omsk, in the Fall of 1919, proves not merely that Ataman Semenoff regarded himself as independent of the Supreme Authority of Admiral Kolchak, but that he was in active opposition to that authority. All demands for restitution of the gold were in vain, nor was any result attained by the appeal addressed directly to Ataman Semenoff by Admiral Kolchak, Gen- eral Dieterichs and the Minister of Finance. The gold remained in Chita until the fall of the Irkutsk Government. Of the 184,238 kilograms of gold which reached Vladivostok, 32,800 kilograms, consisting of an alloy of gold and silver, were deposited for safekeeping at the Branch of the State Bank ‘in that city. The remaining 151,438 kilograms were utilized as a basis for credit operations, having been either sold or deposited as security. The sales effected in 1919 included 53,005 kilograms of ‘gold (68,261,497 rubles equal to $35,154,671), which were distributed as follows: To the French Government, in May “British “ “ British and French in July Japanese Government, in August “ “ in September French $+ Fra 0 ZB Leeserivinaniosvins 2,661,185 10,898,182 14,758,114 13,669,381 10,650,254 15,889,881 rubles 68,281,497 There was deposited as security a total of 98,433 kilograms, of a value of 126,765,304 rubles ($65,284,132). This amount included 31,680,765 rubles ($16,315,504) as security for credits of 30,000,000 yen opened in Japan, 90,860,437 rubles ($46,793,125) for the operations with the Anglo-American Syndicate, and 4,224,102 rubles for the purchase of rifles and machine guns n America. Tae God EvacuaTep From OMSK At the time of the evacuation of Omsk there was thus left, out of the original old stock of 645,256,387 rubles ($332,307,039) an amount of 408,189,912 rubles ($210,217,805), which was loaded in the days from October 28th to November 8th, 1919, on a special train containing 40 cars.. Admiral Kolchak’s trains denoted by the letters A, B, C, D, E, and the armored train left Omsk during the day.of November 12 and in the following night. Omsk was occupied on November 15. The Admiral had left on train B, while the General Staff, the Exchequer, and the guard were carried on trains A, C, Dy E. At Tatarskaya station train B ran into the train which carried the gold, and a fire broke out, which destroyed eight cars; 80 men of the guard were killed and 30 were injured. Several cases with gold were lost, and after the load of the destroyed cars had been placed in other cars, the trains arrived at their destination, Novo-Nikolaevsk, where they remained until Dec- ember 4. On that date, after a series of incidents, it became. pos- sible to dispatch the trains further easward. The Czechs, who had been seizing all locomotives for the evacuation of their troops. refused to place at Admiral Kolchak’s disposal the seven locomotives 0) which he needed, and they yielded only after intervention of the representatives of the foreign powers and under pressure of Gen- eral Syrovoy. At that time the line was blocked to such an extent that it could be used for only two trains daily. Four of Admiral Kolchak’s trains could not, therefore, advance beyond Krasnoyarsk and two only, that on which the Admiral was traveling and the one carrying the gold, could reach Nijneudinsk. At the latter station the events took place which are generally known. Admiral Kol- chak left his train and the gold train, relying upon General Janin’s promise, which was conveyed to him through the Czechs, to the effect that he would be assured unhindered passage to Vladivostok with the Czech detachment. Admiral Kolchak, accompanied by 28 persons of his retinue and by the officers of his guard, boarded a car, which was then attached to the train of the 6th Czech Regiment. That train, flying the flags of the Allies, went from Nijneudinsk to Irkutsk. There the Czech guard was recalled, and the Admiral was handed over to the Socialists. In spite of all exhortations of his ministers, the Admiral had previously refused to part from the gold train and to ship the gold to Irkutsk. He had thus delayed his own departure to the East. Had it not been for this circumstance, he certainly would have reached Irkutsk before the Socialist coup of December 4, and his ultimate fate would probably have been different. However, it would not be fair to blame the Admiral for having been so anxious to keep the gold under his own control. Since the fall of Omsk his authority had been constantly threatened by uprisings in various cities. Ship- ping the gold to Irkutsk, which was regarded as the main center of the Socialists-Revolutionists, would have meant creating parti- cularly favorable conditions for the revolutionary movement and for the constitution of a new government, with that gold as the mainstay of its authority. From the time that the gold train was left at Nijneudinsk, it is impossible to ascertain its fate with the same exactitude. All responsibility for its protection was borne by the Czecho-Slovaks. Under the terms of the armistice concluded between the Bolsheviki and the Czechs at the end of January, 1920, the gold was turned over to the representatives of the Bolsheviki. That had been made an absolute condition of allowing the Czech troops unhindered pas- sage eastward. RUMANIAN GoLD In December 1916, when the Rumanian capital was menaced by the German advance, the Rumanian Government entered into an 2? 1 understanding with the Russian Government for the transfer of gold, securities, and valuable objects to Russia, for safekeeping at the Kremlin, in Mosow. The same month there were deposited at the Kremlin the gold reserve of the National Bank of Rumania, amounting to 314,584,457 gold francs, and two chests of jewels belonging to the Queen of Rumania, of an estimated value of 7,000,000 francs. Somewhat later, in 1917, an additional quantity of gold of a value of 574,524 francs, likewise coming from the National Bank of Rumania, and securities belonging to the same Bank, representing a value of 1,600,000,000 francs, were also deposited in Moscow. Other de- posits were effected at the same time by various institutions con- trolled by the Rumanian Government, as well as by private concerns, to a total value of about five billion francs. All these Rumanian deposits were seized by the Soviet Gov- ernment. Ie PropuctioNn or GoLp IN SIBERIA Siberia in 1917, 1918 and 1919 produced 59,040 kilograms of gold. A large portion of this gold was apparently held at Irkutsk. 32,800 kilograms of gold were supposed to be in the vaults of the State Bank there at the time of the Bolshevist coup d’Etat, in January 1920. The greater part of that gold had been produced at the Lena mines and in the district of the Bodaibo laboratory. This gold had never been included in the balance sheets of the State Bank, and it must have been a pleasant surprise for the Bolsheviki to discover it. On the other hand, Ataman Semenoff was able to get about 8,200 kilograms of the gold, part of which he bought through special agents, and the rest seized on the persons of travelers passing through Daouria station. If we add to this the 2,738.8 kilograms of gold which the Bolsheviki had suc- ceded in exporting from Omsk in 1918, when they were supplanted by the Siberian Government, it will be found that at the beginning of 1920, there remained about 41,000 kilograms of gold of the production of the three preceding years. As to the remainder, of which it has been impossible to ascertain the exact umount, it must be either held by private persons or have been exported abroad. 19 To WaAT Extent May THE Borsuevikr HAVE INCREASED Tuer Gorp Stock After having examined the question of gold production in Siberia with reference to the utilization of that gold by the Bol- sheviki, we have to mention two further sources from which the Soviet Government may have increased its gold stock, namely: (1) the withdrawal of gold coin from circulation, and (2) the confiscation of articles of gold in churches, monasteries, palaces, and in private homes. The value of gold coins in circulation was estimated at a total of about oo million rubles, including the 15 and 7.5 ruble coins which circulated prior to February 1896. This large gold circulation was a result of the policy pursued by the Ministry of Finance in the decade 1900-1910, directed towards introducing gold coin into circulation and thus doing away with the rush to exchange banknotes against gold in periods of political or economic tension. Early in the war an effort was made to withdraw that gold from cit- culation, by appealing to the patriotism of the public and by grant- ing special advantages to those who made payments in gold when transferring money abroad. The results, however, were slight. All those who have studied this question have reached the con- clusion that the greater part of that gold was scattered in peasants’ hoards, from which it could by no means be extracted. It is also thought, from more or less conclusive evidence, that part of the gold coin has been melted down and used for industrial and tech- nical purposes, owing to the difficulty of procuring the metal. It would, therefore, be erroneous to assume that the Bolsheviki suc- ceeded in withdrawing that gold from circulation. Tae QUANTITY OF GoLD THE BoLsuEVIKI May HAVE AT THE END oF 1921 The Soviet Government has never made. public any data with reference to the movement of gold or to the quantities of gold which it had at its disposal at any given moment. Only a very approximate estimate of those quantities can be made . . . The total amount of gold which passed through the hands of the Soviet Government since October 1917 was certainly below one billion rubles. After the payments to Germany and the loss of the gold deposited at Kazan there was left to the Bolsheviki about 450 millions; to that should be added about another 450 million rubles which they Subsequently secured in Omsk, Nijneudinsk, and Irkutsk, also the Rumanian gold stock, and finally, the insignificant amounts of the New production, which ceased almost entirely after 1918. . J 3 ... The bulk of the gold exported by the Bolsheviki served to pay for goods purchased abroad. . » . . The quantity of gold shipped to Sweden to pay for pur- chases made in or through that country has been over 100,000,000 rubles. Prior to 1921 the shipments to Sweden were effected chiefly through the agency of the Skandinavska Kreditaktiebolaget. After 1921, the gold sent there by the Soviet Government was con- centrated in the Enskilda Bank. By the middle of 1921 there was in Sweden about 35 million rubles gold belonging to the Soviet Gov- ernment. The shipments made to pay for purchases in Norway and in Denmark have been much smaller; they hardly exceed 20 million rubles. Purchases effected in Germany in the period from May 15 to December 31, 1921 only, according to the data of the Bolsheviki mis- sion, amounted to 321 million marks, and gold doubtless had to be shipped in payment for these purchases. Soviet purchases in England amounted by August 31, 1921, to £5,620,000, and they were almost entirely paid for in gold. Three Russian gold shipments to France have been recorded, including 50,000,000 francs made in September 1920 on the steam- ship Petrell, 50,000,000 francs made in October of the same year by the steamer Janine, and a shipment of 11,335,000 francs gold landed at Calais in February 1921. All these data are, of course, incomplete and fragmentary. . +. . According to private information in our possession, the Bolsheviki had exported, to August 1, 1921 only, 451,000,000 rubles of Russian gold through the Estonian frontier and 74,000,000 rubles through all other frontiers. ... Large amounts of gold were remitted by the Bolsheviki to the governments of the secession states with which they concluded peace treaties. (Lithuania, Latvia, Estonia. Poland). Here are the respective articles in the several treaties: Peace Treaty between Russia and Lithuania. Art. XII, Sec. 3. “To remit to the Government of Lithuania three million rubles in gold within one and one half months from the date of ratification of the treaty.” Peace Treaty between Russia and Estonia, Art. XII, Sec. 1. “Russia cedes to Estonia fifteen million rubles in gold, of which eight millions will be paid within one month, and seven millions, within two months from the date of the ratification of the Treaty”. The Treaty of Riga between Russia and Poland, Art. XII “In accordance with the peace preliminaries of October 12, 1920, under the division relating to the participation of the territories of the Republic of Poland in the economic life of the former Russian Empire, Russia and the Ukraine undertake to pay to Poland thirty million rubles gold in coin or bullion, not later that within one year from the ratification of the present Treaty”. Other articles of the Treaty of Riga provide for additional gold deliveries in payment for rolling stock etc. To summarize, it may be said that the Soviet Government has dissipated the greater part of its gold reserve. Sich quantities as it still possesses (This was written in 1921.—EDITOR.) are in- significant in relation to its needs, and they are being exhausted at a rate so rapid as to afford an explanation of the efforts which are now being made by the Bolshevist rulers to secure credits in foreign countries. 2B The Soviet Gold Reserve (1921-1923) From “European Currency and Finance”, Commission of Silver Inquiry, United States Senate Foreign Currency and Investigations, Serial 9. Vol. II: Washington, 1925. Gold and Exchange DISSIPATION OF THE GOLD RESERVE By M. L. JacossoN At the outbreak of the war the total gold holdings of the state bank were about 1,744,000,000 rubles, of which about 1,604,000,000 constituted the portion held in the country. One of the earliest financial measures: following the declaration of war was the law of July 27 (August 9, Gregorian Calendar) 1914, which suspended gold payments by the bank and modified the provision of the bank act, which restricted the issue of uncovered bank notes to 300,000,- ooo rubles. This opened the era of paper money inflation, dis- cussed in previous sections. The bank was authorized to issue an additional 1,200,000,000 of uncovered notes, and the new issues were made largely for account of the Government and against the security of short-term Government obligations. But these measures were in- sufficient to meet the war necessities of the Government. Large war orders for munitions had to be placed abroad, funds had also to be sent to foreign financial centers to pay the interest and amortization on Russian state and corporate obligations held in the allied and neutral countries, while the efforts of the Government to obtain for- eign credits did not prove immediately successful. In October, 1914, therefore, the Russian Government in accord with the British Government made a first shipment of gold to England of 75.3 million rubles (equivalent to about £8,000,000 sterling), which was to cover a credit granted by the British Gov- ernment for war orders placed in Great Britain and in the United States. As the war proved more protracted than expected, and the British Government found it impossible to extend further credits, unless the allied Governments shared in gold shipments to the United States for the purpose of maintaining sterling exchange in New York, the Russian Government in conjunction with the French and Italian Governments undertook to make further shipments of 7 6 gold. These shipments up to the outbreak of the. revolution in I917 totaled 60,000,000 pounds sterling, viz; ’ December, 1925 ee een, June, 1916 oo... eben eee earner, November, 1916 A ET ins Testrseeesriamrontene sso February, 1917 £10,000,000 10,000,000. 20,000,000. 20,000,000 Including the initial shipment of £8,000,000, the Russian gold reserve suffered a loss of £68,000,000, equivalent to 640,200,000 rubles. In addition, the Kerenski provisional government on the eve of the November, 1917, revolution shipped 4,850,000 rubles gold to Stockholm, where they were to serve as the basis of bank credits, Deducting the amounts of gold shipped abroad and including the amounts of newly mined gold, also the relatively small amounts of gold withdrawn from circulation, the portion of the gold reserve of the State bank held within the country at the time of the Oc- tober revolution totaled about 1,164,000,000 rubles, or 440,000, 000 rubles less than on July 16-29, 1914, just before the outbreak of the war. * Of this total, less than one-half was held in Moscow and Pet- fograd (Leningrad), while slighly more than one-half had been removed out of the danger zone to Samara and Kazan, A further loss of 120,400,000 rubles in gold was caused by the payment to the German Government of part of the war indemnity under the Berlin agreement supplementary to the BrestiLitovsk treaty. Under the terms of the armistice this gold was turned over to the Allies, and Subsequently divided between the French and British treasuries. According to V. Novitzky, former Assistant Minister of Finance, ** the amount of gold abandoned by the Soviet authorities In Kazan and subsequently appropriated by the Kolchak Government totaled 633,600,000 rubles. In the published accounts of the Omsk Office of the State bank gold holdings (including small amounts of Silver) figure to a total of 645,256,000 rubles. During 1919 a considerable part of this reserve had to be shipped to Vladivostok in Payment of munitions, and as collateral for credits opened to the Kolchak Government by Japanese, British, and American banking Nterests. Part of the gold thus shipped (viz., 42,200,000 rubles) fell into the hands of Ataman Semionov, and it does not appear 8 _* According to E. Preobrajenski (Five Years of Finance and Currency in the Oviet Republic, Moscow, 1922) the entire gold stock taken over by the Soviet fr thorities amounted to about 1,000,000,000 rubles, of which 651.000 500 tell toc D © hands of Admiral Kolchak. Of the latter amount only two-thirds (about 20,000 ©0ds — 722,240 pounds) was recovered in Siberia. ** See a translation of an article by V. Novitzky in this pamphlet, pp. 9-25. Xe that this gold was ever recovered by the Soviet authorities. Of the 237,300,000 rubles of gold which arrived at Vladivostok, 68,300,000 rubles were paid over outright and 126,800,000 rubles were pledged to Allied financial interests, leaving a balance of 42,200,000 rubles in the vaults of the Vladivostok office of the State bank. About the end of October, 1919 when Omsk and Western Siberia had to be evacuated by the Kolchak Government, the balance of the gold reserve was shipped east on a special train, which was abandoned by Admiral Kolchak at Nizhneudinsk and for some time was guarded by the Czechoslovak troops, who delivered the gold to the Soviet authorities about the close of January, 1920, prior to their Anal evacuation of the country. In addition to the gold of the Russian State Bank the Soviet authorities also held bout 118,200,000 rubles of Rumanian gold, shipped to Moscow by the Rumanian Government for safe-keeping during the German invasion late in 1916 and at the beginning of i917. Their holdings were also augmented to a small extent by requisitions and confiscations of church and private treasure and the output of the Ural and Siberian gold mines. All in all the amount of gold in the hands of the Soviet Government at the close of the Civil War in 1920 is estimated by Novitzky at about 900,000,000, Or 1,000, 000,000 rubles, composed of, first, about 450,- 000,000 rubles, the balance left in their hands after payment of the German indemnity and the loss of gold in Kazan in 1918, and second, another 450,000,000, which comprises the gold which fell into their hands at Omsk, Nizhneudinsk and Irkutsk following the overthrow of the Kolchak and other Anti-Soviet governments, and finally the Rumanian gold and the small amounts of new produc- tion.” The official Statistical Annual of the Soviet Government for 1018-1920 (Vol. II, p. 41) shows the following amounts of gold held by the central office of the Budget and Accounts, the temporary successor to the former State bank, and in charge of its liquidation: (IN GOLD RUBLES) Jan. 1, 1920 July 1,1920 Jan. 1, 1921 3,052,622 87.194.636 153,745,769 Held in the central treasury Accounts of the State bank in liquidation: Gold at the mint... Gold in transit ........ 19,450,764 19,450,764 '76,381.3F 568,479,353 483,026,751 741,675,876 Figures for the earlier dates apparently are incomplete and do not include the accounts of outlying offices in Siberia, data for Total woe, 2 R ne 0 ed es ut “0 Id ed as he MT et id, ng of oy ad he se ut 9, of ad ell he ad {Cn or Ad ry oe 1 =Q 34 = 8 76 40 2) § which became available only in the latter part of 1920 with the Progressive pacification of the country. Meanwhile, however, the Government in order to pay for indispensable imports, also to meet international obligations assumed under the peace treaties with the new contiguous states (Esthonia, Latvia, Poland) begar to export gold in large quantities, chiefly to Sweden, whence after further refining and stamping, the gold found its way to the United States direct, or to other European countries (e. g., Switzerland, France, etc.) and ultimately to the United States. There are no Russian data regarding the volume of these gold exports, which commenced in 1920, reached their peal in 1921 and continued in large volume during the following year. According to the Swedish official. trade statistics, gold imports from Russia and total gold exports from Sweden during the three years mentioned were as follows (in thousands of kronor of 26.8 cents each) - Swedish Imports of Gold from Russia and Total Exports of Gold from Sweden, 1920-1922 Total gold exports from Sweden (kronor) 63,791,000 934,396,000 330,372,000 . Total snr incon. by 28 13 888,000 1,328,559,000 Equivalent in dollars ........... .. 331,739,000 855,963,000 Gold imports from Russia Of the gold exported from Sweden during these three years, 563,319,000 kronor, or 42.4 per cent of the total exported, went to the United States; 433,854,000 kronor, or 32.6 per cent, was shipped to Switzerland; while 215,386,000 kronor, or 16.2 per cent of the three years’ total, was forwarded to France. Smaller amounts are shown to have been consigned from Sweden tq the Netherlands, Great Britain, Germany, and Finland. Gold exports (largely coin) to Switzerland from Sweden were particularly heavy during 1921 and 1922. The Swiss figures of gold imports from Sweden for the same period differ but little from corresponding Swedish export figures. Most of the gold imported into Switzerland in coin form Was re-exported to the United States in the shape of bullion so as to comply formally with the provisions of the American regulations which prohibited the official assaying of gold traceable to Russia under Bolshevik control. A small part of the gold thus received was re-exported from Switzerland to India. Gold imports into the United States from Sweden during the three years under consideration are shown in the official United 20 States trade returns as $101,278,000, or about $50,000,000 below the corresponding Swedish export figures, while reported gold im- ports from Switzerland into the United States for the three-year period under discussion are quite insignificant. On the other hand, gold imports from France into the United States for the three years exceed by far not merely the corresponding exports but even the total gold exports from that country. It is evident, therefore, that American figures of gold imports from France include shipments to the United States from Sweden and mainly Switzer- land by way of French ports. Alggregate gold imports into the United States from Sweden and France during the three years under discussion are shown as slightly over $35,000,000, or in excess of 1,300,000,000 kronor, the approximate amount of gold exported from Sweden during this period. This total is equivalent to aboul 680,000,000 rubles, which may therefore be regarded as a conserva- tive estimate of the gold exported from Russia by the soviet authori- ties during the three years following the Civil War. These exports include also $11,400,000 of Russian gold, which in accordance with an agreement with the American Relief Administration were turned over by the Soviet authorities to the American Relief Adminis- tration for the purchase of food. This gold apparently must have reached the United States by way of some other European country. as the American import statistics fail to show any direct gold imports from Russia during the past few years. The Soviet Com- missariat of Finance has a small gold reserve of its own apart from the gold reserve of the newly established state bank. No statement of its size has ever been made. On the other hand, the early statements of the new state bank show but insignificant amounts of gold, and the present more important gold holdings of the issue department of the bank on May 1, 1925—viz, 180 million rubles—largely represent new output, imports, and gold brought out of hoards since the reestablishment of a relatively stable currency. See statistics of gold exports and imports of Sweden, France, Switzerland and the United States, pp. 53-56. The slight discrepancy between the figures above and those in the Appendix 18 due to the fact that Mr Jacobson, at the time of writing, had at his disposal only the preliminary statisties of exports and imports. atl 'W n- ar ud, rs 1e e, ie I= to I's 38 =d 1t a- 2 ts h xd S- re y. 1d 1 rt {0 1e nt of mn uf . ne | 18 \y Soviet Gold Movements (1923-1928) FOREIGN TRADE, GOLD EXPORTS, AND TRADE OF THE SOVIET UNION WITH THE UNITED STATES By M. L. TacoBssoN In the Senate Document entitled “European Currency and Finance”, published in 1925 (Vol. II, pp. 204-207) data were pre- sented regarding the amounts of Russian gold received by the United States indirectly through Europe during the years 1920-1922. An analysis of the gold movements reported for these years by the customs authorities of Sweden—the primary country of destina- tion—also of Switzerland and France, led to the conclusion that the Soviet Government exported during these three years a total amount »f about 680,000,000 rubles or about $350,000,000, which ultimately found its way to the United States. This huge total was shipped to cover an adverse trade balance, which, stated in terms of pre-war rubles, reached a total of over 400,000,000 rubles, and reckoned in ‘erms of then current prices must have amounted to a great deal more, and in addition an unknown amount of “invisible’ ’imports, such as the cost of war material and equipment, imported by the military authorities, the expenses abroad connected with the launch- ing of the several new trading and credit organizations in the prin- cipal foreign countries, the salaries and expenses of the Soviet diplomatic and trade agents stationed abroad, freights payable to foreign shipowners and carriers, etc. These expenses were parti- cularly heavy immediately after the termination of hostilities against the contiguous countries and of the civil war, when the Soviet Gov- ernment, after proclaiming its foreign trade monopoly, began to set up in the leading foreign countries along novel and untried lines its own trade representations and banking machinery for the financ ing of Soviet foreign trade operations. While the official trade accounts of the Soviet Republic for the years 1923, 1924 and 1927 indicate an excess of 225,000,000 rubles of merchandise exports over imports, this excess is almost counterbalanced by an adverse trade balance of 228,000,000 rubles for the years 1925 and 1926. If account is taken of the several mentioned “invisible” import items, it is evident that the balance of payments was attained by means of export items other than merchandise exports. n < As is well known, the Soviet is the only European country which did not incur any foreign funded debt since the conclusion of the great war. Its invisible exports, such as revenue from the tourist traffic, sea-carrying trade, other transportation, banking, brokerage and insurance services, for the use of which foreign na- tionals would be called upon to make payments to the nationals or the ‘Government of the Soviet Union, are altogether insignificant. The only item among the invisible exports, which temporarily assum- ed sizable proportions—remittances from the United States to friends and relatives in the Union and disbursements by various benevolent organizations, such as the Joint Distribution Committee, the American Relief Administration, the Jewish Colonization Society, the Society for Promoting Industrial and Agricultural Labor among the Jews in Russia, etc., of funds mainly collected in the United States, has lost some of its former importance, though still represent- ing relatively large amounts. It follows, therefore, that an excess of imports over exports, and other net debits on international account have to be liquidated either by means of short-term unfunded credits, or else by foreign shipments of gold. Now, while the security markets in Europe and the United States remained closed to the Soviet Union, its short-term credit, with the developments of trade relations with the outside world, showed a slow though steady growth. At present its amount exceeds probably $100,000,000 and possibly approximates $150,000,000. : Shipments of gold during 1920-22 practically exhausted the monetary gold reserve of the Union. In fact the new State Bank started operations about the close of 1921 without any gold reserve, its capital endowment by the government consisting of trillions of unredeemable and steadily depreciating paper rubles. Its present gold reserve of over 180,000,000 rubles, shown in the statements of the Bank’s Issue Department—is largely the result of imports, new output, and purchases in the domestic market, since the adoption of the gold standard and the maintenance of a stable currency. Russia’s gold production for the year 1914 was valued at 67,000,000 rubles, or about $35,500,000. During the great war and the subsequent period of internecine warfare gold production steadily declined and in 1921 reached a minimum below $1,000,000. Since then, owing to governmental efforts involving the employment of foreign capital and skill, and the installation of modern machinery, the industry became partially rehabilitated, and, according to recent information taken from the Annual Report of the U. S. Director of the Mint, its annual output has reached a total of nearly one million fine ounces, valued at $20,500,000. Part of this gold—mined largely 19 y Nn o in Siberia and the Ural region—is sent abroad. Thus, according to a recent statement of the State Bank, net gold exports to England during the period 1924-28 amounted to 100,000,000 rubles. Con- siderable amounts of gold appear to have been shipped also to Ger- many. The Russian gold shipment of over $5,000,000 received in the United States in February, 1928, proceeded from Germany and was returned, in April, to the same country. Accordingly the respec- tive amount figures in the U. S. trade returns as a gold import from and export to Germany. Below are shown tables giving the figures of the total trade of the Soviet Union and of the trade between the Soviet Union and the United States since 1918. TOTAL MERCHANDISE IMPORTS AND EXPORTS OF THE U.S.S.R. FOR THE PERIOD 1918-1927% /IN THOUSANDS OF RUBLES) Imports Exports Excess of Imports (—) “ ~~ * Exports (+) 347,979 5,053 27,072 188,130 188,156 61,762 1918 1919 1920 1921 1922 1923 Years end. Sept. 830: 1923.24 1924-25 1925-26 1926-27 491 04 L } 73,025 +) 1 207 20,193 81,621 205,818 r 369,187 135,656 575,25 148,243 676,620 79,712 Fin 770,548 57,861 Total 3,602,741 2,773,664 — 729,077 TRADE OF THE SOVIET UNION WITH THE UNITED STATES SINCE 1918* (IN THOUSANDS OF RUBLES) Calendar Years Imports from the Exports to the United States United States 126,728 5,803 797 1918 1919 1920 1921 1522 1923 Years end. Sept. 30: 1923-24 1924.25 1925-26 1926-27 976 39,795 38,935 17.899 51,195 201,821 122.162 (45.651 44,012 173,645 91,496 122,444 95,834 650,127 Power in Figures”, Moscow. 1927. Total 745,961 * From “Ten Years of Soviet These figures indicate that for every year since the new regime came into existence Soviet-American trade showed an adverse balance against the Soviet Union. As a matter of fact, out of a total ad- verse trade balance for the period 1918-27 of 729,000,000 rubles, not less than 650,000,000 rubles, or about go per cent, represents the adverse balance in the trade with the United States. This “one- sided” character of the trade between the two countries is likely to continue for years to come in view of the policy of the Soviet Gov- ernment to push the industrialization of the country and to introduce modern up-to-date industrial and agricultural machinery preferably of American manufacture. Imports from the United States of cotton are also likely to continue on a large scale in the near future, not- withstanding the efforts of the Soviet authorities to increase cotton cultivation in Central Asia and Transcaucasia, mainly for the reason that domestic production is as yet unable to keep up with the steadily growing demand for cotton goods on the part of the large masses of the village and town population. On the other hand, most of the leading exports from the Soviet Union (oil, grain, lumber, etc.) find their natural market in Europe and for some time to come are not likely to seek an outlet in the United States. It is evident, there- fore, that gold exparts from the Soviet Union will continue on a large scale, so long as the “unbalanced” trade between the two countries persists. 3 A 1€ ce 1- ot 1e tO J o- ze ly Mm t- 1 i 1 P J re re 2g Statement by the State Bank of the U.S. R. R. on the Shipments of Soviet Gold to the United States FRENCH CLAIMS TO SOVIET GOLD A Statement By Mr. A. L. SCHEINMAN Chairman of the Board of Directors of the State Bank of the USSR {Translated from ‘“Eeonomicheskava Zhizp” of March 16, 1928) “The action taken by the Bank of France in the United States in regard to gold of Soviet origin calls for certain elucidations. “The trade turnover between the Soviet Union and the United States has of late experienced a large and steady growth. The United States is the principal source of supply of raw materials (such as cotton, hides, metals, etc.) and of various machinery and equipment for the U. S. S. R. In addition the United States serves as an in- termediary for Soviet import operations with other parts of North and South America and with the Far East. “Unlike exports to most other countries Soviet exports to the United States are less in value than imports and the balancing of accounts between the two countries requires the covering of the difference in favor of the United States by payments in cash. “The adverse balance in the accounts befween the State Bank of the U. S. S. R. and banks of the United States have impelled the former on many occasions to sell gold in London or Berlin and to transfer the proceeds of the sales to the United States. This round- about method of settling accounts was neither in the interest of the State Bank of the U. S. S. R. nor in the interests of its American Correspondents. Therefore the State Bank attempted to establish direct relations with the Amcrican credit market. “For the purpose of carrying out this policy and also in order to settle accounts with the German Garantie und Kredit Bank in Connection with some contemplated additional purchases to be made in the United States through the German bank, the State Bank of the U. S. S. R. made a consignment of gold to New York to the value of about five million dollars. Upon the arrival of the gold in the United States doubt arose in Treasury Department circles as to the A admissibility of this gold in view of the fact that the gold was of Soviet origin and that as far back as 1920 the Federal Reserve Bank was prohibited by the United States Government from accepting gold of Soviet origin or gold belonging to the Soviet Government. “The raising of this question came quite unexpected not only to the State Bank of the U. S. S. R. and the German Garantie und Kredit Bank but also to the American banks in agreement with whom the shipment had been made, and even to the heads of the American Government who, in the persons of the President of the United States, Mr. Coolidge, and the head of the State Department, according to the press, stated after the arrival of the gold that they saw 10 objection to the admission of gold of Soviet origin. “The reference to a ruling of 1920 appears still more inexplic- able in view of the fact that after its issue, specifically at the end of 1921, an agreement was concluded in London between the Amer- ican citizen, Mr. Brown, and Mr. Krassin, representative of the U. S. S. R,, under which the Soviet Government was to export to the United States gold to the value of ten million dollars for the purchase of food supplies, this gold to be placed to the credit of the American Relief Administration. The gold was admitted to the United States without anv obstacles. “Notwithstanding the statements of President Coolidge and Secretary of State Kellogg, the consignment of gold was not admitted for assay and for transfer to the Federal Reserve Bank.. An action of this nature on the part of United States Government departments cannot, of course, aid the development of Soviet-American trade relations, since gold is the natural medium in adjusting unfavorable trade balances or seasonal fluctuations of one kind or another “Furthermore, it is necessary to point out that for the State Bank of the U. S. S. R. gold of Soviet origin—produced in the country itself—apart from serving as a reserve against note issue. is also an export commodity precisely in the same way that oil is for the Soviet Naphtha Syndicate, cotton cloth for the Soviet Textile Syndicate or furs for the corresponding Soviet industrial and trade organizations. If the United States prefers that accounts between economic organizations of the Soviet Union and business firms of the United States, and also accounts with the Far Est and South America be cleared by the State Bank through the mediation of other countries, especially by means of gold exports to such countries, the result of this method of setting accounts, while undoubtedly advan- 28 ageous to foreign banks, will hardly be in the interest of American irms. ‘After the last adverse decision of the United States Govern- ment on the question of the admission of Soviet gold for deposit, the German Garantie und Kredit Bank made a proposal to the American banks to reship this gold back to Germany. However, the American banks hesitated to comply with the request in view of the fact that the Bank of France had presented through the federal courts a claim to the gold on the ground that this consignment con- sisted, either wholly or in part, of the same gold which the French >ank had on deposit in the former Russian State Bank in the years [QIG-I1QI7. “This claim is entirely groundless inasmuch as the gold possessed by the State Bank of the U. S. S. R. was obtained by purchases from private parties, from gold-producing trusts, in the domestic market, and even abroad. With reference to this particular consign- ment of gold, it is definitely established by the stamp on the gold and by the books of the State Bank of the U. , S. R. and of the refining plants that this gold was produced in the years 1925 and 1026. “A claim of this kind appears still more strange to the State Bank of the U.S.S.R. when it is considered that from May 1925, to February 1928, that is, in a period of less than three years, the State Bank effected a turnover with the international markets of gold imports and exports of 200 million rubles (over one hundred million dollars), two-thirds of which was with England. The Bank of France was, of course, well informed in regard to all of these shipments of gold belonging to the State Bank of the U. S. S. R. However, up to this time the Bank of France did not see fit to launch similar attacks either in England, Germany or in any other country, evidently recognizing that not a single country carrying on regular trade relations with the U. S. S. R. would regard its claims as having any foundation. “To this must be added that the State Bank of the U. S. S. R,, founded in October 1921, can in no way be considered the successor of the old State Bank. The Soviet State Bank inherited neither the assets nor the liabilities—not even the files—of the Imperial State Bank or of any other formerly existing bank. At the time of its establishment it received as initial capital an allotment from the budget of two trillion paper rubles. “How the State Bank was built and how the people of the Soviet Union, in spite of the catastrophic decline of the ruble, aided in strengthening and developing the bank, is well known, not only to all citizens of the Soviet Union but also to the banks throughout the world; also the methods used and the rate at which the State Bank was able to accumulate, in the course of its commercial oper- ations, gold and foreign exchange reserves. “The State Bank of the U. S. S. R. is responsible only for obligations incurred by itself. The State Bank of the U.S. S. R. is an independent corporate body, in no manner a part of the State Treasury Department. The State Bank does not carry any respon- sibility for the debts of the Treasury Department. “Similarly in the United States the State Bank assumes respon- sibility only for its own obligations. It is strange that the Bank of Trance, a bank of a country carrying on diplomatic relations with the U. S. S. R,, presents in such a unique manner claims against the U. S. S. R. which result from war-time relations between the Czarist and the French governments and their respective central banks. This is still more inexplicable in view of the well known fact that the Soviet and the French governments, upon resumption of diplomatic relations, mutually agreed to adjust all fiscal disputes through negotiations. “The presentation by the Bank of France of this absolutely baseless claim may be explained only by a desire to put obstacles in the way of developing and strengthening trade relations between the State Bank of the U. S. S. R. and the friendly banks in other countries,—the United States among others,—and by a desire to hamper the issue operations of the State Bank, through the raising of doubts as to the right of the State Bank to dispose, in its own way, of its gold and foreign exchange funds. These calculations are ill-advised. The State Bank will continue to support in the future, with an even greater measure of success, I hope, the building up and strengthening of Soviet commercial and credit operations with foreign banks and industrial and trade organizations, on the basis of the established correct procediire. “The news of the action of the French Bank, supported by a hostile note of the French Ambassador in the United States, which was aimed at the breaking up of normal and friendly commercial relations between the State Bank of the U. S. S. R. and foreign banks, in particular those of the United States, and at the undermin- ing of the issue operations of the State Bank, will arouse sentiment among the broad masses of the Soviet Union who have made the AQ greatest sacrifices in order to create and build up their State Bank and their own stable currency. “Neither can there be any doubt that this attempt of the Bank of France will arouse the public opinion of the United States, which will see in this action an attempt to transplant the disputes between the Soviet and the French governments to the territory of the United States. This procedure endangers the further development and strengthening of the trade and banking relations between the Soviet Union and the United States which, conducted in a perfectly proper manner and with profit to both countries present the most favorable prospects for further growth and development.” <9, Editorials in the American Press Regarding the Recent Shipments of Soviet Gold to the United States Brooklyn Daily Eagle, February 24, 1928 INTERFERING WITH BUSINESS “The World War may be over for most of us, but it seems that the Treasury and State Departments are still fighting against Bolshe- vist Russia. Five million dollars in gold shipped here by Russia to pay for American goods is lying idle in the vaults of the Chase National Bank and the Equitable Trust Company because the war- time ban on Russian gold 1s still in effect. “This is carrying antagonism to the Soviet regime to a ridiculous extent. If we permit trade with Russia common sense suggests that we should permit the inevitable concomitants of trade, We have a trade of $100,000,000 a year with Soviet Russia. Her agencies are established all over the United States and her engineers and buyers are welcomed everywhere. “To maintain wartime restrictions against the import of Russian gold is an unintelligent and useless procedure. The gold can, of course, be shipped to Canada and handled from there. Or the local banks can sell it without putting it through the United States Assay Office. But it was intended to distribute it to Federal Reserve Banks and this cannot be done while the Assay Office refuses to receive and pass on any gold that originates in Russia. “Only a few weeks ago the State Department made an offensive and unnecessary ruling in forbidding American banks to handle the interest payments on Russian bonds sold in this country. This is using political power to interfere with private business. It estab- lishes a bad precedent.” Journal of Commerce. New York, February 25, 1928 PAYMENT FOR EXPORTS “The pen of a satirist is needed to do justice to the idiosyn- crasies of our conduct in matters that relate to the present Soviet Government. No objection is raised to trading transactions be- tween our citizens and representatives of the Soviet Governmetit. 4.1 $2 i» at a. ia 38 1s at a re re in )f al Jy $ re 7e £2 1- 3 Sales to Russia inevitably result in payment of some sort, and the majority of them have to be financed somehow, but no official has presumed to say that goods sold to Russia must not be paid for or that sellers mav not advance short time credits to the Russian buver. “American citizens may not only sell to Russia if they choose, but they are free to make liberal loans to the buyer provided they are careful to advance funds in the form of short time credits. But if they attempt to find the resources for financing long time Russian capital requirements by assisting in the disposal of Russian securities in this market, they fall under the ban of official disapproval. Similarly if Americans selling to the Soviet Government are care- ful to take their compensation in approved form all will be well, but it now develops that they will be very ill-advised to receive pay- ment in gold shipped under the Soviet seal. “Russian trading organizations may establish branches in our midst and effect financial connections with highly reputable banking institutions. If, however, for any reason they desire to liquidate their obligations by direct gold shipments they will find that the Federal Reserve Bank refuses to recognize the gold in any way whatever. If these absurd distinctions served any purpose beyond causing mingled irritation and amusement, together with considerable unnecessary expense, they would be easier to pardon. As it is they represent a sort of planless harassment thay may ultimately do a certain amount of good by convincing people of the folly of our present lack of consistent policy in dealing with Russia. “According to the latest information President Coolidge is re- ported to accept the plain common sense view that gold shipments from Russia are a legitimate outgrowth of commercial dealings with Riiacia News, Indianapolis, Ind., February 25, 1928 SOVIET GOID “Russia sent $35,000,000 in gold bullion to the United States this week. It was consigned to two of the great financial institutions in New York, to be held for the account of the Soviet State Bank at Moscow. Such transfers of monetary metal ordinarily attract little notice. They are a part of normal processes in trade inter course among nations. The significance in the case of Russia is greater. The shipment was the first Soviet gold to come directly to this country since the Communistic revolution of 1917. Economic and political bearings are involved. “Notwithstanding that the government of the United States has yet to recognize the existing government in Russia, commerce be- tween the two countries now amounts to more than $100,000,000 a year. This is more than in the days of the czars. An official delegation of eleven Russians recently made a tour of American industrial centers to make purchases including gas engines, steam shovels, automobiles and drilling machinery. Farm machinery, cotton and other commodities have also been purchased in quantities recently. The shipment of gold indicates that the Soviet authorities may be planning to maintain an increasing part of their banking reserves here for commercial credit “The monetary metal is coming from the mines of Siberia. After the Communistic upheaval a decade ago, $300,000,000 in gold remaining in the old Imperial Bank was scattered and dissipated without any regard for its established place as a basis for currency. The theories of the Bolshevists included no reliance on this symbol of capitalism. But the fixed practices of other nations did not yield. So the rulers at Moscow turned toward the Siberian re- source. They are mining now about $25,000,000 annually. Out of the product a reserve has been built up for the Soviet State Bank. The amount sent to the United States will help to settle an adverse balance of visible merchandise trade. “On the political side what has been done is a renewed sign of the gradual recedence of extreme radicalism in Russia. More and more Moscow is using the commercial and financial system that it once was determined to spurn. The remittance received at New York from the Soviet Bank is not the first of the kind it has made, but the others have gone to London. The change in destination very likely is not unrelated to official resentment of Great Britain's severance of diplomatic relations with Russia Journal, Milwaukee, Wis., March 5, 1928 OUR RUSSIAN COMPIEX “We read that $5,000,000 arriving in New York from Russia to be used in promoting trade lies idle in a bank. Gold is not gold in the United States until the government indorses it, and our gov- ernment says this gold was stolen. This is one of the anomalies of our attitude toward Russia. We might claim a certain logic for our attitude, if the navy had not very recently purchased oil for its ships in Asiatic waters which the Standard Oil Co. has bought from Russia. This oil was stolen by the soviets, if the gold was. IL + 28 0 4 “When are we going to act rationally with regard to Russia? One might hazard the guess that when the interests of those who want to sell and lend to Russia become as influential as the interests which want Russia’s debt paid, the change will come. But there is another factor than the immediately commercial. The revolution has occurred; it will not be undone. The Russian people accept the result. No one really thinks Russia would be better off if it would go back to czars, or that the world would be better off. But there is still a great deal of fear that, if we recognize a soviet govern- ment, folks over here may go bolshevik. That fear lacks the sav- ing sense of humor; things got pretty bad before Russia revolted. Unless we mean to let things get pretty bad, we need not fear communist. “The French revolution was worse than the Russian revolu- tion has been. The resulting form of government, a republic, was overthrown and overthrown again, but it is in good standing today with the nations of the world. Reading from our own past, we know that our own future will see us on good terms with Russia. Meanwhile, how much profited is the world because we undertake an attitude of aloofness and coercion, because we turn back gold which we say is stolen while we pay out gold for oil that must be equally stolen? Is there not some common sense reason and a regard for the future of civilization in asking whether it is not time to adopt a more helpful attitude toward Riissia New York World, March 8, 1928 SPURNING RUSSIAN GOLD “After two weeks of deliberation the Treasury Department has decided that the $5,000,000 in gold sent to New York by the Russian Government shall not be permitted to pollute our national stock of money. The gold was sent here to pay for goods which the Soviet Government intends to buy. We are glad to sell cotton, locomotives, motor-cars, farm machinery and other goods to Russia. Payment so far has been prompt, and our trade has been growing. In our sales to Russia last year we were surpassed only by Germany, ind 23 per cent. of the Russian imports came from the United tates. “Yet never have we been paid with tainted gold. We have been quite willing to take bills of exchange and even gold itself if It has first been purified by passing from Russia through the hands of some other nation; but when the gold is offered from Russia's own hands we refuse it. We cannot be sure that the Russian title to it is clear; it may have been confiscated from its lawful owners during the revolution; we do not choose to be receivers of stolen goods. “Very well. Then let us be consistent. If it is wrong to take the gold directly, can it be right to take it indirectly? Suppose Russia ships the gold back to England, buys sterling with it and then offers sterling bills for our goods. Is our moral obligation any less than it was before? If it is wrong to admit this gold, is it not wrong also to permit an oil company to bring money into this country which it has made by trading in Russian oil which other companies claim is their confiscated property? “In this matter we ought to be either consistent or sensible. At the moment we appear to be neither.” Elizabeth, N. J., Times, March 8, 1928 NOBODY WANTS IT “In the vaults of the Chase National Bank of New York and the Equitable Trust Company there are $5,000,000 worth of gold in bars. Nobody seems to own it and nobody in this country seems to want it. “The Treasury Department ruled yesterday that the gold must go back to Soviet Russia, whence it came. “The Treasury ruling maintains the embargo on Russian gold set up by this country when Lenine and Trotsky overturned Im- perial Russia by bloody revolution and formed the Soviet regime, which until recently has not ceased to urge world revolt while re- pudiating all external obligations. “Until cordial relations are established between Soviet Russia and this country our Government wants no traffic with the old country of the czars. In the interest of world commerce, how- ever, it seems to the man in the street that it is time the breach between the countries should be closed.” Johnstown, Pa., Democrat, March 9, 1928 THAT RUSSIAN GOLD “The Russian government has sent $5,000,000 in gold to this country as a basis for credit in the purchase of American goods of various kinds. The gold is tied up in New York banks and ap- parently will remain there idle because the pious Mr. Mellon. the a's itle ers len 1lce ase nd on is .to ar 18. nd 1d 18 st 1d 1 €, greatest secretary of the treasury since Alexander Hamilton, con- siders the yellow metal tainted with Bolshevism. “It happens that quite a few able-bodied American working nen are idle. They have been idle for some time. Employment in many lines is slack and uncertain. Many wheels are motionless because there is a lack of effective demand for manufactures of many sorts. Perhaps quite a few of these wheels would begin to whirr were that Russian gold turned into the channels of trade.” - . . . The Russian undertaking is perhaps not more startling in character that that upon which the founding fathers entered when about 150 years ago they set up a government based on the theory that all men are created equal and that they are endowed by their Creator with the unalienable right to life, liberty and happiness. Most of the old world looked upon this undertaking with hostile and fear-smitten eyes, just as Secretary Mellon is look- ‘ng on that of the Russians. Yet our undertaking was permitted ‘o prove itself. The world held aloof and allowed us to work out our destiny in our own way. “Whether the Russian undertaking can prove itself it is perhaps entirely too early to say. For our own part we are bound to say that we feel and have always felt that it is doomed to failure. As We see it, it runs counter to human nature. It doesn’t conform with the real aspirations of mankind. It is contrary to the deeper in- stints of the human race. And instead of harmonizing with those nstincts, as the American undertaking did or strove to do, it dis- regards them and seeks by sheer force to create an atmosphere in which it can flourish. ia d f - “But all this is beside the real question which relates to the $5,000,000 in Russian gold which might set many wheels humming if it were released for the purchase of American machinery, live Stock, manufactured goods and wares of various kinds. Five mil- lion dollars amount to little, it is true. But even so small a sum might help in a time of depression. And back of the $5,000,000, We are told, there are other millions which will come hither for like Purposes if permitted to enter into the channels of trade.” {K Charleston, South Carolina, Post, March 9, 1928 RUSSIAN GOLD REJECTED “The saying “ As good as gold” has little significance in its application to five million dollars worth of the precious metal shipped by the Russian Soviet government to New York and held in its vaults at banks there for some time while the United States Treasury considered whether or not it should be admitted to assay. The Treasury has ruled that the Russian gold shall not be assayed at the mint, and it has no authentic status, therefore, and will probably have té be sent back to Russia. “The Treasury takes the position that ownership of the gold by the Soviet government is not established, but, on the contrary. is subject to question and that, should it take the gold, as it is ac- customed to take such offerings at he mint, the United States might later be involved in international contentions over the owner- ship of the metal. “It seems like an overstrained point. The United States is the only one of the great powers which has not recognized the Soviet as the de facto government of Russia, and the Moscow regime, there- fore, has full status in the international scheme save only to this country. If the Soviet is the recognized government in Russia, its possession of gold shipped by its fiscal department cannot be questioned, and none of the European powers, therefore, would be in position to challenge the title of the Soviet to this store of metal m New York. “Much more likely is the United States to make trouble fof itself by rejection of the gold, since it thereby tends to set itself up as a censor of the authenticity of any like shipment made by a Euro- pean government and even to admit claims for recovery of dis puted gold taken in at the mint. Perhaps the administration is afraid that the handling of gold from the Soviet treasury may corrupt the government of the United States and even threaten overthrow of the republic.” New York Times, March 11. 1928 GOI.D TINDER SIUISPICION “Our Government’s refusal, after prolonged consideration, tO put its seal of approval on the import of $5,200,000 gold from the 1A its ~tal eld tes ay. ved il old ry, ac- tes Af" ‘he iet ce- 115 ia, Se he al of ap O- id he 1 0 ae Russian Soviet’s bank, has certain humorous aspects. If the con- signment had been goods instead of gold no question would have arisen ; at any rate, none did arise regarding the item of $30,596,000, officially reported as “merchandise imported from Soviet Russia in Europe in the six months ending with December 1927”. Apparently neither the State Department nor the Treasury saw any reason for not approving the gold importation also; but the Department of Justice ruled that the Government could countenance it only if the title to the gold was guaranteed. The Government could not forbid banks to take Russian gold from an incoming steamship or demand that it be sent back to Russia. But the gold had to be assayed at the Mint before it could be used for bank reserves, and the Treasury could instruct the Mint to refuse its services. “The New York banks professed inability to guarantee the title; perhaps being unable to see how title was to be established. perhaps merely puzzled at the Government's attitude, The official ruling could hardly be ascribed to dislike of * tainted money”; pre- sumably it was based on a suspicion that the gold was part of the Imperial Russian Bank’s $600,000,000 reserve, which in 1917 had been seized by the Bolshevist insurgents, along with other property of the old regime. This theory is now strengthened by the action of the Bank of France in claiming the gold as its rightful property. However, Siberia is now turning out upward of $20,000,000 new gold annually from which the present Russian State Bank's reserve of about $90,000,000 gold, comparing with five million dollars five years ago, was mostly accumulated. So it may not be easy to prove from which source this particular $5,200,000 came. We often hear nowadays of ‘earmarked gold,’ but that refers to its destination, hot its origin. Besides, if the Soviet’s title to the gold in the Im- perial Bank’s reserve is defective, how about its title to the Ural rold mines? “The incident has the curious interest that attached to almost every transfer of gold throughout the war; it has much of the war- time atmosphere about it. ‘Gold movement,’ which before July 1914, had been the most routine and commonplace of international transactions, suddenly began to present unexpected pictures. The treasure ships that brought a billion dollars’ worth of European gold to America in 1915 and 1916, and the railway train that in 1914 carried the $800,000,000 coin reserve of the Bank of France to Bordeaux, with voN KLUck at the gates of Paris, were the least surprising of them. We somehow began to get new ideas of gold when the National Bank of Sweden refused in 1918 to accept any more of it from importing bankers, through fear that it would cause ‘inflation’; when KorcHAK captured the treasure which the Soviet had sent for safety from the Imperial Bank to Omsk, and a railway accident littered the track and right of way with Russian gold rubles which were never afterward accounted for. War has always had a way of upsetting the dignity of the precious metals. These occurrences of a few years ago seemed only another chapter in the story of 1795, when the French revolutionary army overran Holland and made for the gold reserve of the Bank of Amsterdam, celebrated by Apam SmitE—only to find the bank’s vaults empty, with no subsequent explanation of what had happened to their contents. “The $5,200,000 Soviet gold, now as effectively banned from the United States as an immigrant of whose record Ellis Island dis- approves, may be sent to London. The Bank of England has lately been as short of gold as we have been surfeited with it, and no awkward questions of title are likely to be asked. The London bank, indeed, has been accepting Russian gold with the utmost cheerful ness; as lately as last January it took in $5,000,000 of it without demur. If sterling were to fall again, and London were by chance to export some of this very Soviet gold to the United States, the Department of Justice would not interfere. It would have become respectable, or else its title would have been quietly merged with that of the $7£0,000,000 other gold in the Bank of England’s vaults.” l.os Angeles, Cal. Times, March 11, 1928 THE SOVIET SIBERIAN GOLD “The mines of Siberia are yielding $25,000,000 annually for the Russian soviet government and from this amount a considerable sum is being used to establish a reserve for the state bank. Recently $5,000,000 in gold bullion was received by two New York banks to be held for the account of the Soviet State Bank at Moscow. The Russian government is beginning to utilize the proved methods of the world’s civilized nations and is using the gold of Siberia to do it. “Despite the fact that the Russian government has not been recognized by the United States for reasons generally known If this country and throughout the world, commerce between Russia ty id ne le! in as is. er 1n n. ys 117 m 5- y 0 Ky [- at ce 1 1e h or le y I< XN. is 14 N MN IY and the United States is growing and contrary to popular opinion already exceeds the volume recorded in years when the czars ruled at St. Petersburg. The annual commerce between Russia and the United States now totals more than $100,000,000. “The $5,000,000 received in New York from the Seviet State Bank of Moscow is the first Russian gold to enter the United States since 1917. The shipment demonstrates the intent of the soviet government to establish credits here on a sound basis and to increase its volume of trade with the United States. Soviet radical- ism is gradually giving way before the necessary adjustments of a vast empire which cannot take its proper place in the world without commercial contact with other commercial countries.” Indianapolis, Ind., Times, March 12, 1928 THE STRANGE CASE OF RED GOLD “When is $5,201,000 in gold neither gold nor money, but merely ‘material’ which costs $700 a day to keep? “The answer is: When the gold belongs to Soviet Russia and is locked up in a couple of New York banks from which certain quixotic technicalities prevent it from getting into circulation. “About a month ago Russia sent twenty crimson casks of gold bars to the United States to be used as a basis of credit for pur- chases in this country. After placing them in the vaults of the Equitable Trust and the Chase National Bank of New York, the Russians felt, no doubt, that they might proceed with their shopping. “But they had reckoned without their host, that host, in this instance, being the red tape entanglements which hair-splitting offi- cials can throw in the way. “Before business could proceed, it was deemed necessary to deposit the gold with the Federal Reserve Bank. But an embargo, dating back to 1920, stands against Russian gold in this country, so, after two weeks’ delay—and a loss in interest of about $10,000, or more than $700 a day—the Treasury Department ruled against accepting the casks. Russia’s title, it seems, is not quite clear and the millions might be tainted. “Of course, after Germany, we may get more Russian trade than from any other nation in the world. And in one way or another—in bills of exchange, for instance, bought with Russian gold in London, or Paris, or Berlin—we are accepting Russian money every day of the year. But these casks of actual ingots, well, they seem to be different. Ly “Meanwhile the plot thickens and the $700 daily losses multiply. The Bank of France just has brought suit in the Federal courts of New York to recover the gold bars, on the theory that they are the identical gold sent from Paris to Petrograd in 1917 at the instance of the czar but to be returned to the owner on demand. “Which raises further technicalities. In the first place, this gold is not gold, since there is an embargo against Russian gold and legally no Russian gold can exist in this country. “So far as Uncle Sam is concerned, the casks contain only ‘material’ In the second place, the United States has never recog- nized Soviet Russia, so Russia does not exist. And, being non- existent, Russia cannot sue or be sued in this country, albeit she occupies one-sixth the land surface of the globe. “So there you are. And yet foreigners call us ‘the most practical people in the world” It may be a good thing for Soviet Russia, just now, that she does not exist, legally, in this country; other- wise the French might grab the twenty casks of gold. “But regardless of who owns the yellow treasure, its enforced idleness is now netting somebody an economic loss of about $30 an hour, $700 a day, $22,000 a month or approximately $275,000 1 year. “That much money would pay for a lot of goods. Making these goods would keep a lot of people busy. And they do say we have amongst us considerable unemployment.” Taunton, Mass., Gazette, March 13, 1928 SPURNING $5,000,000 “Verily, some of the ways of high finances and high government are hard to fathom. “The Soviet Government recently sent $5,000,000 in gold bullion to New York, intending to use it to buy goods in the American market. But government officials have decided that this money may have come from the reserves of the czar’s old Imperial Bank ; hence it may be subject to other claims. So they have prohibited its use nn this countrv. “It is good gold, but the Soviet cannot buy here so much as a package of chewing gum with it. They can, however, send it to another country and buy $35,000,000 worth of goods there. The ultimate losers, it would seem, will be American manufacturers.” zn 3 y' vf a a d y Fou - a 1l a 0 0) Intelligencer, Wheeling, W. Va., March 13, 1928 A SILLY QUIBBLE “After several weeks of profound meditation, the United States Treasury has solemnly decided that five million dollars worth of gold, sent to a New York bank by the Soviet government to pay for American goods, cannot be accepted. It will have to be sent to England, converted into sterling credit, and these bills of exchange used for payment of our goods. “This is one of the silliest quibbles, and most inconsistent actions taken by the present Administration, which has usually handled mat- ‘ers of this sort with good sense. Good sense is shown in refusing to recognize Russia, until that nation guarantees to accept the com- mon obligations of international dealing and responsibility. It is equally good sense to place no special barriers against private trade with Russia. Last year twenty-three per cent of Russia’s imports ame from the United States. She bought more from us than from any other nation except Germany. The goods was mainly machinery needed to rehabilitate the industrial fabric of Russia and modernize her agriculture, and was paid for promptly. “If it is wrong, therefore, for our banks to accept Russia's gold directly, it must be equally wrong for them to accept bills of ex- *hange purchased with the same gold abroad. If it is not morally right to let Soviet money come into this country, then it is not morally right to let our oil companies bring profits here which were secured in trading in oil from Russian concessions. So long as we are trading with Russia, as private individuals and pocketing the profits, what difference can it make if payment is made in Russian gold sent here directly or sent indirectly in the form of British ster- ling notes purchased with the same gold. The Treasury’s decision has the savor of a a pious pose that does not coincide with the facts of the case.” Meriden, Conn., Record, March 15, 1928 GOLD A-BEGGING ‘A unique situation was created by the shipment of gold from Russia to this country, solid yellow gold bars, $5,000,000 worth of them, that are worse than valueless, that are a dead loss of $700 1 day. Ordinarily the arrival of $5,000,000 in gold in New York ity would not cause even a comment; it would have been received ind absorbed without creating so much as a ripple—ordinarily. “But this is no ordinary occasion; the gold is from Russia, Soviet Russia, and it will be remembered that the right of Soviet Russia to all things Russian has never been definitely established to everyone's satisfaction, so there is, of course, a little hesitancy in receiving this gold for fear there may arise some dispute as to ownership. The two New York city banks to which it was sent naturally do not care to take the risk; they have receeived it as agents, but they do not care to buy so much gold to which there is not a clear title. And the position of the United States assay office and the treasury is, of course, very clearly defined by the law regulating the purchase of bullion—it must be tendered by the owner. This gold is not tendered by the owner, and those who do tender it do not care to purchase it. “Which gives us the unique situation of $5,000,000, not in goods and chattels, not in promissory notes of either individuals or gov- ernments, but in the pure, solid, yellow metal, gold, that is abso- lutely without purchasing power in this country. Unless some change is made in its status it must be returned to the source from which it came, Soviet Russia. The gold having been sent to facilitate trade, which reached the sum of about $100,000,000 annually, it seems unfortunate that a cloud on its title should; render it useless and send it a-begging.” Scranton, Pa., Times, April 4, 1928 FIGHT FOR GOI.D “The American public finds unique interest in the situation created by a legal battle between France and Soviet Russia over the five million dollars in gold bars now held in New York banks in the name of the Soviet government. France is suing for possession claiming to have deposited this very same gold in the State Bank of Russia before that institution was seized by the revolutionists “ “Washington's attitude is clear cut,” says the Louisville Courier- Journal of the treasury department’s refusal to permit the gold. to enter the channels of trade in this country. ‘Since 1920, there has been an embargo on Russian gold. It is regarded as the property of the czarist regime. The seizure of it by the revolutionary fac- tions does not change its title, as the United States does not recognize the ‘Communist state. Further, the czarist regime owed debts to the United States which the Soviet will not acknowledge. So five millio? dollars in Russian bullion lies idle in two American banks and the treasury department will neither assay nor buy it.’ The incident suggests to the Courier-Journal ‘how little trust is put in a natio? RYO ia, let ad as -nt as re ay he by se ds ve 30- ne it ite it G5 on ‘he in on nk ar- to 148 rty 1 c- ize the jon the ant an that repudiates its obligations and refuses to play the game with the rest of the world.’ “‘The French bank has sued,’ explains the Newark Evening News, ‘not the owner of the gold nor even the Soviet bank, the owner’s primary agent, but the New York banks where the gold is on deposit. But if those banks come into court, as expected, with the idea that they are merely the agents of the Soviet bank, and de- cline responsibility save as custodians of the treasure, there is no suit. For there is no defendant which American courts can recog- nize, the federal courts, in which the suit is brought, being part of the same government which denies the existence of the present Russian government. It is a fiction, of course, that the Russian government does not exist. So another counteracting fiction seems likely to be set up to the effect that the Soviet bank is not what it is, the state bank of the Soviet union, but that it is a private institution whose existence can be legally recognized here’ ” Springfield, Mass., Republican, April 9, 1928 MIGRATORY GOID “An end has been made to the effort of the Russian government to reinforce its credit by the shipment of $5,000,000 in gold bullion, and the rejected gold has been sent back to Europe after lying in the vaults of two New York banks since February with a loss in interest computed at $1000 a day. The legal questions raised by the claim of the Bank of France to ownership of the gold are stiil to be disposed of, but it is not believed that the claim was very seriously intended; seizure of so relatively small a sum would not materially help in the adjustment of the immense claims and counter- claims outstanding between France and Russia. “The direct attack having failed, resort will be had to indirec- tion, and it is understood that the migratory gold will be sent next to Berlin for conversion into currency. It might perhaps have been taken to London but for the rupture of diplomatic relations between Great Britain and Russia, for Great Britain like Germany is not so disdainful of gold as the United States which has a glut of the precious metal. In one way or another the wandering millions will no doubt get into circulation, for gold is still gold, even though its prestige has fallen below that of the dollar. “Perhaps the most significant aspect of the adventures of this much-traveled gold is the light which it throws on the obstacles put in the way of Russia's foreign trade by countries of which Russia might with proper facilities be a valuable customer. A level- = 0 headed British investigator at Moscow recently found that the chief reason for last year’s war scare in Russia was that the Russians could not believe that so practical a nation as England would knock its trade with Russia on the head unless it meant to follow up the rupture with war. They have not entertained a like suspicion of the United States, but leaving the question of recognition out of the account they wonder that our government is so little interested in promoting profitable trade with Russia. “In Russia, for example, there is a great demand for American motion pictures, yet it was stated in a recent dispatch that no new American films had reached Russia for months, and that a represen- tative of the Russian motion picture business had been unable after repeated efforts to secure a visa for a visit to the United States to buy or rent pictures. Meanwhile Mr. Hays thinks it worth while to make a special trip to France to head off restrictions which would hurt Hollywood's business in that country. “Examples are hardly needed to make it clear that Russian trade still has to overcome formidable barriers due to lack of trade facilities. If and when the great commercial countries, and notably Great Britain and the United States, decide that growing unemploy- ment makes necessary a further expansion of foreign trade, Russia offers the greatest still unexploited market, and the very fact that it has been so long pent up suggests that it might be made to expand rapidly by a little well-directed effort. Journal of Commerce, New York, April 7, 1928 WANDERING GOLD “The Soviet ~old which reached these shores a few weeks ago and was refused recognition by the Assay Office has been removed after a delay involving a heavy loss in interest. The removal i easy to understand, since had the gold remained much longer it would doubtless have been attached by France or some other clainr ant, and the interest losses would in that case have continued to pile up for an indefinite period of time. “Tt is claimed by some of the Russians that the French effort to annex this gold shipment was undertaken for political reason and not with any expectation that a suit to recover possession wold meet with success. Considering, however, the strange decisions that our courts have given in matters relating to former Russian prop” erties and the lack of precedents by which to test the present issu the case may not have seemed altogether hopeless to France. French action if due to a deliberate plan to embarrass Russo-American trade 3 1ef ald its -he he he in -an ew 2n- ter to ule ld ian 1de bly Dy- 1512 nat 1 nd 120 red 18 it m- ile ‘ort ns uld hat ap” ues ach le relations to the confusion of the United States and the aggrandize- ment of France is hard to understand. “In the first place, French trade with Russia is not of a char- acter to profit by any losses that this country might sustain in deal- ings with the Soviets. Secondly, interference with gold shipments is merely a pin prick by comparison with the major obstacles to the development of Russo-American trade which are created by the re- fusal of the United States to establish a definite basis for trade with Russia.” New York Times, April 10, 1928 THE “SOVIET GOLD” “The question what became of the old Russian Imperial Bank’s gold reserve after the Bolshevist coup d'etat in 1917 has long been shadowed in mystery, but interest in it now bids fair to be super- seded by the question about the international status of the gold now held by the Soviet national bank. The $5,200,000 gold sent by that institution last February to establish a Russian credit balance at New York knocked at doors and was denied admission ; no one was ready to conform to the Government's requirement and ‘guarantee title.” This was unusual enough, but a still more singular controversy followed, of which the end is not yet. Friendless as the $5,200,000 gold appeared to be, a legal claim for it was put in by agents of the Bank of France and the Bank of Rumania on the ground that in 1917 the Soviet had seized and misappropriated gold held by the old Russian bank for their account. Eventually, however, and without withdrawal of the law-suits, the Soviet gold was quietly shipped out last week to Germany. What Germany will do about it is not yet known. Probably the gold will be received in a friendly spirit, seeing that remittances of Russian gold have been accepted without question during the past year, not only by the Reichsbank but by the Bank of England. “Counsel for the Bank of France declare, however, that if the courts were to sustain its claim the New York banks which held the gold would be responsible for it, even with the gold back again in Europe. So the litigation still has possibilities. But the controversy has some confusing aspects. The Soviet bank has been quoted, in the first place, as declaring that it has nothing to do with ‘pre-rev- olutionary reserves’; that it had not itself gone into business at all until 1921, since when it has accumulated its present reserve of $90,000,000 from new Russian production in the Ural. It might still be contended that at the time of the Bolshevist coup d’etat the SR Imperial Bank of Russia was supposed to possess about $580,000,000 gold, for which the Government that seized it is accountable. But the adventures of that gold reserve were mysterious. “The common version is that about $350,000,000 of it was sent for safety to the Volga before the revolution and subsequently fell into the hands of the anti-Bolshevist General Kolchak, its final dis- position being disputed. A considerable part of what was left at Moscow was turned over by the Soviet to Germany, under the Treaty of Brest-Litovsk, and after the war was surrendered by Germany to France, A lawsuit based on the supposition that the Soviet ‘Government still holds the old ‘Czarist gold reserve’ would apparently have to unravel these and numerous other intricacies. “It must be remembered that the contempt of ‘bourgeois insti- tutions,” entertained and expressed by. Lenin and his disciples during the early years of the Soviet experiment, was abundantly bestowed on gold. Whether this sentiment went so far as to exclude retention of a secret governmental reserve, to be used in buying real things from the simple-minded bourgeois countries, is not so certain. It is left a matter of conjecture, also, what would have happened if the New York banks which received the $5,200,000 gold in February had been in a position to ‘guarantee title,” and if the gold had then been duly assayed by our Government and deposited in the Federal Reserve.” xa 00 ‘he nt al (S~ at ae xy he 1d 4i- 1g ed mn 35 is he cy °n al APPENDIX Gold Movements in 1920-1922 According to Customs Statistics of Sweden, Switzerland, France and the United States IMPORTS OF GOLD INTO SWEDEN (Kronor, Par Value = $0.2680) 1920 1921 1922 Total, three years BULLION * 68,260,104 39,246,568 3,712,676 111,219,347 Of this, from Russia 67,740,000 25,297,000 2.363.937 95,400,937 COIN 209,758,054 644,734,051 292,953,092 1,147,446,007 Of this, from . Russia ~~ 204,747,078 644,731,251 292,880,415 1,142,358,744 TOTAL 278,018,158 683,980,619 296,666,667 1,258,665,444 Of this, from Russia ~~ 272,487.078 670,028,251 295,244,352 1,237,759.681 EXPORTS OF GOLD FROM SWEDEN (Kronor) 1921 1922 Total, _ Co three years BULLION, Total 33,855,096 254,059,060 92,663,715 380,577,871 this, to: ” United States 12,757,731 203,328,681 77,805,756 293,892,168 France _.... ........ 20,619,000 ..._... _ 20,619.000 Switzerland 5,334,500 16,347,185 12,001,445 33.773.130 COIN. Total 25,285,815 680,337,293 237,707,977 943,281,085 this, to: United States 4,598,340 124,217,473 140,611,768 269,427,581 France .... ....__.. 168834213 21,548,530 190382743 Switzerland 6,436,400 319,383,236 74.261,509 400,081,145 TOTAL ..... 59,090,911 934,396,353 330,371,692 1,393.858.956 Of this, to: United States 17,356,071 France ........ ooo Switzerland 11.770.900 327,646,154 218,417,524 563,319,749 189,453,218 21,548,530 211,001,743 385,730.421 86.352.954 433.854.2775 57 IMPORTS OF GOLD INTO SWITZERLAND (Francs, Par Value = $0.1930) 920 19921 1922 Total, three years BULLION 32,570,919 42,165,221 26,698,314 101,334,454 Of this, from: Sweden .... Russia 9,391,885 15,980,251 6,978,781 32,350,917 7,950,000 7.950.000 COIN 6,042,500 433,126,778 153,053,432 598,122,710 Of this, from: Sweden ..... 6,942,500 398,115,509 122,960,411 528.018.420 TOTAL ..... 39,513,419 475,291,999 179,651,746 694,457,164 Of this, from: Sweden ... 16,334,385 414,095,760 129,939,192 560,369,337 Russia .. 7,950,000 7,950,000 EXPORTS OF GOLD FROM SWITZERLAND (Francs) 9920 1921 1922 Total, three years BULLION ... 1,873,856 876,233,500 72,414,991 450,522,341 Of this, to: France .. United States 1.688,733 17,264,782 357,413,962 corinne. 18,958,515 30,419,657 3887.833.619 COIN 11,174 3.250 7,5677.8362 7 591.786 TOTAL ....... 1,885.030 376,286,750 79,992,353 458,114,133 Of this, to: France .. 1,688,733 17,264,782 United States ....... . 357,418,962 cnr 18,053,515 80,419,657 387.833.619 IMPORTS OF GOLD INTO FRANCE (KG) ry 154 217 YOO BULLION oie. Of this from: Switzerland ... 1621 1922 Total, three years 17,619 120,192 24,503 162,314 2,221 104,479 8,862 115,562 0 1 L920 B84 Of this, from: Sweden BUssia woe 768 99,185 703 99,185 23,140 123,028 ennenes 99,888 22,618 22,618 37 00 17 Lb 1Q Of this, from: Switzerland... Sweden Russia wo 18,322 219,377 47,643 285,342 2,221 104,479 703 99,185 8,862 115,562 — 99,888 22.618 29.618 EXPORTS OF GOLD FROM FRANCE I'KQ.) 32( 1921 1922 Total, three years 6 13 2 fo) BULLION in 51,545 206,345 34,760 292,650 . 891 37,643 1,383 39,917 52,436 243,988 36,143 332,567 50 IMPORTS OF GOLD INTO THE UNITED STATES 1920 Total .......... Of this from: France ..... . Russia .. Sweden 1921 Total oo. a Of this from: France ..... Russia ......... Sweden 199292 Total ......... Of this from: France ......... Sweden Total for Three Years ....... nn. Of this from: France .... Sweden co... Russia ...$417,068,27¢ 31,192,911 1,268,631 2.036.064 691,248,297 190,666,453 85,000 666.355.9265 275.169.7858 27,043,158 32.885,875 1.383.486.3bb 248,902,622 101,277,864 1.853.631 21 79 11 921 Dispatches appearing in the New York Times, 1919-1922, Regarding Movements of Russian Gold 04 97 bs no 20 5 4~4 75 38 0 4 21 New York Times, July 2, 1920 MORE RUSSIAN GOLD ARRIVES IN AMERICA MORGAN & CO. ANNOUNCE RECEIPT OF 12,000,000 RUBLES FOR BRITAIN’S ACCOUNT Shipment Assumed to Have Been Sent by Kolchak to Pay Off New York-London Loan. The arrival of 12,000* rubles gold at San Francisco yesterday was announced by J. P. Morgan & Co. This gold, it was said, had been received for the account of the British Government with the Morgan firm and the account of J. P. Morgan & Co. will be credited with the metal at the Federal Reserve Bank at San Francisco. In terms of American monev the shipment is worth approximately $6,500,000. This is the second large arrival of gold on the Pacific Coast within the last few weeks. The first, amounting to $22,200,000, came in at San Francisco and Seattle, the latter by way of a Ca- nadian port, on May 27. At that time it was stated that the gold had come from Hongkong and was part of the collateral which the Kolchak All-Russia Government had deposited at Hongkong to secure an advance of about $38,000,000 made by a syndicate of New York and London banks. The loan to the Kolchak Government was arranged in De- cember last and was to have run for eighteen months, but it was stated in May that half of the loan had been paid off, the collateral released and disposed of to the British Government. Whether vesterday’s arrival was also part of the Kolchak gold was not known here. but it was assumed that it was New York Times, October 7, 1920 GOLD SHIPMENT NOT RED. ESTHONIAN GOVERNMENT SENT SUSPECTED $339,636 FOR TRADE. WasHINGTON, October 6:—The $339,636 which was recently mysteriously shipped into this country from Russia came from Reval and from the Esthonian Government, so the Department of * Obviously a misprint: should be 12.000.000. 29 Justice said this afternoon in a formal statement. lt was said that the gold was sent here for commercial purposes which were per- fectly legitimate and with the approval of the United States officials. Various rumors have had it that the gold had been shipped into the United States by the Soviet Government of Russia and would be used to pay for propaganda in this country. ' The first intimation of the shipment came last week when the Federal Reserve Board announced that it had arrived from an unknown source and to an unknown consignee. The statement made today by the Department of Justice reads: “After full investigation, the Department of Justice finds that the recent shipment of gold totaling $339,636 from Russia to the United States was shipped from Reval and imported into the United States by commercial agents for the Esthonian Government for an entirely proper com- mercial purpose and with the knowledge and consent of the proper United States Government officials.” New York Times, April 2, 1921 FEARS SOVIET GOLD COMES FROM ALLIES. Local Assay Office Asks for Ruling on Shipments from England and France. MAY REQUIRE AFFIDAVITS METAL BARS BEING RECEIVED HERE HAVE NO GOVERNMENT MARKINGS. FLOW MAY BE CURTAILED Fear that a considerable portion of the gold which is coming to this country from England and France may be of Russian origin has caused officials of the local United States Assay Office to apply to the authorities at Washington for a ruling as to whether all gold tendered to the Assay Office must be accompanied by affida- vits of ownership and origin. If the rule is given that these affida- vits must, be made, it is believed possible that the flow of gold to this country will be decidedly curtailed, for it is understood that few bankers here care to put their signatures to the documents. For several months the Assay Office on instructions from Washington has been declining to accept gold known to be of Russian origin, and in cases where a suspicion exists that the metal may have come from Soviet territory, an affidavit declaring the gold not to be of Russian origin is required. The only exception to this rule is gold coming here in the form of bars bearing the official stamp of the Royal Swedish Mint. This gold is generally regarded y as Soviet gold which has been smelted at the Swedish Mint or given in payment for Soviet gold sold to that institution. Because of the amicable relations between the United States and Sweden, Assistant Secretary of the Treasury S. Parker Gilbert, Jr., and Director of the Mint Raymond T. Baker have ruled that the Assay Office may not refuse to purchase this gold. Very recently some doubt as to the origin of gold being sent here by British and French interests has been raised and the Assay officials are puzzled as to whether they are complying with the ruling against receiving Soviet gold. The practice in both countries is to have the metal assayed and run into bars by private assayers who do not work exclusively for their Government or for the Banks of England and France. Thus, it is pointed out, it might be pos- sible for some Europeans to get Russian gold into England and France, have it turned into bars by the same agencies which work for the Governments and then transfer it here and sell it. There are only three Government mints, outside of the United States, which put distinctive markings on gold bars. These are the Swedish Mint, the Canadian Mint at Ottawa and the British Indian Mint at Bombay. All other Governments use unmarked bars, some of them using special forms, but most of them using conven- tional forms. Under these circumstances, with private assayers doing a majority of the work, the chances of converting Soviet gold into the ordinary commercial form are considered great. The affidavit which the Assay Office uses in cases of suspicious offerings is considered very comprehensive. Tt reads. in part, as follows * “The undersigned owner of a lot of gold in the amount of. . . for the purpose of inducing the United States to purchase said gold, delivered to the United States Assav Office, does hereby represent and warrant that said gold is not of Bolshevist origin and has never been ‘in the pos- session of the so-called Bolshevist Government of Russia. “The undersigned further represents that it is acting on its own behalf and not for account of another in of- fering said gold for sale in the United States and does forever warrant to the United States, without any qualifi- cations or reservation whatever, the title to said gold.” Authorities here are of the opinion that if it is made neces- sary to append this affidavit to all gold offered to the Assay Office, very little of the metal will be brought here unless the Government of foreign countries can guarantee the character and origin of the gold. Even in such cases there might be difficulty in getting Amer- ican bankers to take responsibility for gold coming from foreign countries, and as the regulations of the Assay Office put entire responsibility on American bankers for the legitimacy of the tran- saction, it is believed that the flow of gold to the United States will be seriously interfered with. Incidentally, it is pointed out, a situation would be created where gold generally believed to be of Soviet origin would be admitted because of the Swedish Mint stamp, while gold which might not come from Russia at all would not be admitted because of the inability to find bankers willing to be res- asonsible for it. . New York Times, May 4, 1921 Lonpon, Mav 3:—Gold bars said to be worth approximately $15,000,000 have just crossed Sweden and Norway from Russia en route to the United States, says a Stockholm dispatch to the Exchange Telegraph Company, quoting rumors current in that city. New York Times, June 7, 1921 SOVIET GOLD IN SWEDEN Swedish Mint Reports about $100,000,000 to Moscow’s Credit There. P § h A in Ir WasHINGTON, June 6:—Nineteen tons of Russian gold were melted in Sweden and reissued as Swedish coins during the year 1920, according to a statement from the Swedish Mint received here today. In the same period seventy tons of Bolshevist gold ar- rived at Stockholm, representing a value of 71,000,000 gold rubles. Of the gold melted about three and a half tons were in coin of various nationalities. Deposits of Russian gold amounting to 600,000,000 crowns, or approximately $160,000,000 were made with Swedish banks in the last year. Of this sum 200,000,000 crowns were later con- veyed to other European countries, 200,000,000 crowns having served as security for commercial orders placed in Sweden. The remaining 200,000,000 crowns are held at the disposal of the Soviet Government. Since January 1, 1921, this 200,000,000 crown fund has been nearly doubled, the Mint statement says! An appreciable amount of Soviet gold is passing through Sweden for America, the statement says, pointing out that the United States transacts no direct business with Russia, but uses Sweden as an intermediary. Most of the American firms doing at te: he A th: the an ax Lo gn itire -an- will , a » of np, be reg business with Russia maintain agents in Swedish or other Baltic ports. The Soviet Government is said to have a fund of approximately $7,000,000 on deposit at the present time with a New York banking ~oncern. New York Times, April 23, 1921 SOVIET GOLD IN SWEDEN TOTALS $120.000.000 SEVENTY TONS SMELTED THIS YEAR. MOST OF IT REPORTED SENT HERE. ely ssia the rhat mee, vere rear ved ar- les. ~f VIS, nks on- ing The viet nd 1gh the 1S€5 ng StockHOLM, April 22: —Considerable quantities of Russian gold have been smelted and turned into rubles and other gold articles by the Swedish Mint lately, according to a statement of the Director of the Mint to the Associated Press today. ' During’ 1920, he said, nineteen tons of Bolshevik gold were smelted of which three and a half tons were turned into rubles. This year the mint has smelted seventy. tons, worth approx- imately $42,000,000, and most of this gold, according to the Director, has been sent to the United States in payment for goods. Gold ngots made up at the ‘mint, he explained, are stamped with the nsignia of the Swedish Mint. Bolshevist gold at present in Stockholm banks is estimated at more than $120.000.000. New York Times, August 6, 1921 MAY SHIP SOVIET GOLD HERE Moscow No Longer Barred From Doing So, British Officials Rule. WASHINGTON, August 5:—Russian Soviet gold may now be shipped to this country from Great Britain as the result of a recent ‘est case in the British courts. The Department of Commerce has been advised to this effect by Ambassador Harvey. “The London Board of Trade now takes the ground,” the Ambassador said, “that the outcome of the test case demonstrates that no holder of Imperial Russian securities can successfully contest the Soviet claim to legal ownership of the Russian gold reserve, ind I am informed that the Bank of England will henceforth grant export license or documents of title for Soviet gold without regard to the character of the assay marks it carries.” 1g New York Times, December 13, 1921 SOVIET GOLD COMING HERE. $18,000,000 Worth Said to be Aboard the Frederick VIII. ‘COPENHAGEN, December 12:—A dispatch from Christiania states that Russian gold to the value of $18,000,000 has arrived there by way of Stockholm abroad the steamer Frederick VIII, which is carrving the gold to New York. New York Times, February 16, 1922 RUSSIAN GOLD FOR RELIEF Total of $7,739,200 Sent Here on Account of American Commission A shipment of $2,800,000 in Russian gold coin has arrived it New York from Sweden on the steamer Stavangerfjord, and has been deposited in the Guaranty Trust Company for the account of the American Relief Commission. This is the second similar ship- ment and makes a total of $7,739,200 in Russian coin to be received on Relief Commission account, in payment for food and clothing Another shipment of $2,600,000 is expected to arrive here in the near future on the liner Malmen, which left Sweden February 8 This is also Russian gold coin and comes for the same purpose as the other two. The Guaranty Trust Company, which handles the account, expects to receive advices of further consignments later. The Stavangerfjord also broucht a consignment of German gold coin valued at $3,250,000 to the National City Bank. This is received on ordinary account and is not a part of the Relief Commission business. The steamship Olympic, which arrived vesterday from England brought $4.000.000 in gold consigned to Kuhn, Loeb & Co. New York Times, March 15th, 1922 MORE RUSSIAN GOLD HERE. $2,600,000 Arrives for Account of Relief Commission. The Swedish-American liner Malmen has arrived from Goth- enburg with $2,600,000 in Russian gold rubles, consigned to the Guaranty Trust Company and $777,000 in German gold marks, consigned to the National Bank of Commerce. The rubles are fo! the account of the American Relief Commission in Russia and comprise the third similar consignment to the Guaranty Trust Company. The total value of the three shipments is $10,339,200. By special arrangement, the coin is receivable at the Assay office for assay and melting, although ordinarily Russian gold coi is refused. 36 11a ved III. Russian Gold Production (in kilograms) ION. in has of Aip- ved ‘ng. the 8. as the an his l1af 1d th- the ks, for wd ust 0. say Wn 1914 1915 ... 1916 i. 1917 ... 1918 ... 1919... 1920... 1921 1922... 1923 ... 1924... 1925... 1926 crore 86,439 cree 48,098 en 30,461 smi vans» eon 3808 cre rn 20,780 rns 6,536 ne nnn ¥1, 769 cons 4,563 orn 17,850 cnr 30,642 tts. 30. 8 60 The 1927 gold production exceeded that of 1926, according to unofficial estimates. A number of important measures have recently been taken by the Soviet Government to increase gold production, The nine former trusts have been united into one large company, the “Soyuz-Zoloto” (Union Gold). The “Soyuz-Zoloto” is moderniz- ing the mines by installation of new machinery much of which is purchased in the United States 1914-1921 data was taken from “Narodnoye Gosudarstvenoye Khoziaistvo (People’s and State Economy of the U.S.S.R.), published in 1923 by the Commis- sariat for Finance. 1922-26 data taken from reports of the Director of the Mint of the United States. * Incomplete; Far Eastern region not included, RA The Gold Reserve of the State Bank of the U. S. S. R. The State Bank of the U. S. S. R. (originally named the State Bank of the R. S. F. S. R.) was established October 12, 1921, after the introduction of the New Economic Policy in the Soviet Union. Its foundation capital, received from the government, consisted of two trillion paper rubles. One of the principal functions assigned to the Bank was to accumulate a gold reserve in order to prepare for the currency reform which was effected at the end of 1922 by the issue of the new banknotes—the Chervonetz. In its initial period the State Bank resorted to four principal methods of building up a gold reserve. (1) With the advent of the New Economic Policy and the return of private trade and industry the State Bank entered the open market and purchased the old gold coins which had been hoard- ed by the population, and the small’ quantities of alloyed gold bul- lion which had been obtained by prospectors in the years following the revolution. In the same way the State Bank purchased on the market foreign currency, principally pounds sterling and American dollars. (2) The State Bank bought up as much as possible of the gold that was being mined since 1921. (3) The State Bank financed exports, principally of timber and fax, making advances in paper money and receiving in return the proceeds of these export operations. This was the main channel for building up a gold reserve. (4) Foreign currency transferred to friends and relatives if the U.S. S. R. from abroad, principally from the United States, was deposited to the credit of the State Bank or its correspondent banks abroad, and the recipients of the money were paid out in the U.S.S.R. in Russian currency at the rate of the day. By January 1, 1923, about a month after the issue of the Chervonetz, the reserve of the State Bank in precious metals and foreign valuta amounted to 27,900,000 rubles. With the stabilization of the currency and the improvement in commerce and industry, particularly with the increase of exports, the State Bank began to make steady progress in accumulating a gold reserve, as may be seen from the tables below. 2 5 PRECIOUS METAL AND FOREIGN CURRENCY RESERVE OF THE STATE BANK OF THE U. S.S. R (IN RUBLES) -ate ‘ter on. of ned are by pal the the ird- bul- ring the ran rold and -he for n was 1nks SR the and rion iErys -gan he Total Foreign Precious Metals Currency (gold and platinum) Jan. 1, 1923 ........ April 1, 1923 ... July 1, 1923 ....... Oct. 1, 1923 .... April 1, 1924 ...... Oct. 1, 1924 «ooo. Oct. 1, 1925 coo Oct. 1, 1926 cee. Oct. 1, 1927 March 1, 1928 .. 27,900,000 60,800,000 85,800,000 144,800,000 54,300,000 290,100,000 189,900,000 297,200,000 148,700,000 298,100,000 76,000,000 253,400,000 67,100,000 299,900,000 101,500,000 287,300,000 77,200,000 90,600,000 100,200,000 148,500,000 221,100,000 186,300,000 198,400,000 210,100,000 GOLD COIN AND BARS Held by the Issue Department of the State Bank of the U. S. S. R. (in rubles) March 1, 1925 .. October 1, 1925 ....... April 1, 1926 .. October 1, 1926 ...... April 1, 1927 .... October 1, 1927 iis April 1, 1928 .... eee 152,144,900 cevmrerssenneenensennn: 1 84,768,850 .147,606,460 cerrenerrnicsnnnnnnenn 1 08,345,490 won 165,882,000 cere 1 183,626,080 cme: 1 80,208,750 RE Soviet-American Trade IMPORTS AND EXPORTS (According to the Soviet Customs Statistics) Soviet Imports Soviet Exports Unfavorable from the to the Soviet Trade United States United States Balance (923-24. $49,955,000 $ 4,377,500 108,618,000% 14,471,500 15,759,000 74,984,400 11,098,500 62,085,900 (025-26........ [Q26-27 ooo During the first six months of the Soviet fiscal year 1927-28 purchases in this country for shipment to the Soviet Union amount- =d to over $65,000,000, while sales were about $15,000,000. The anfavorable trade balance amounted to $£0.000.000. "Soviet fiscal year runs from October 1 to September 20.) Includes $20,000,000 worth of flour, the only purchase of this ~ommodity during the past five years. SOVIET TRADING ORGANIZATIONS IN THE UNITED STATES la {a 0 | I) oi YO AR a | & The four outstanding organizations doing the bulk of business between the Soviet Union and the United States are the Amtorg Trading Corporation, 165 Broadway, representing the principal trading and industrial organizations of the Soviet Union; the All- Russian Textile Syndicate, Inc., 120 Broadway, which purchases cotton for shipment to the Soviet Union; ‘Centrosoyus, Inc. 17 Battery Place, and Selskosojus, Inc., go West Street, representing the consumers’ and agricultural producers’ cooperatives of the Soviet Union respectively. All of these addresses are in New York City. The total amount of orders placed in the United States by the above named trading organizations during the past five years is $315,000,000. ‘Apart from this, shipments of machinery to the U. S. S. R. have been made by several other American firms under concession. Manganese ore and furs, not included in the above figures, to the value of over $30,000,000 were imported into this country during the period. Soviet-American business since the commencement of regular trade relations between the United States and the Union of Soviet Socialist Republics as reckoned in terms of purchases and sales in the United States, amounted to about $400,000.000. More than half of this trade consisted of purchases of cotton by the All-Russian Textile Syndicate. ORDERS PLACED IN THE UNITED STATES FOR SHIPMENT TO THE SOVIET UNION In 1925-26, 1926-27 and First Half of 1927-28 COMMODITY GROUP —_—- —1925-1926—— — Oct. 1, 1925—Sept. 30, 1926 Other Amiorg Organizations 32,018,375 67 §32,496,930.01 335,121.24 287,853.26 2,918,962.33 1,166,779.88 268,100.88 23,210,08 5,951,748.16 1,165,304.82 664,870.27 896,041.22 Raw Materials ......ccoviiencninnnn Semi-Manufactured Goods ....cccocssenns {industrial and Electrical Equipment Automotive Equipment ....c..iniee Agricultural Mach’y, Live Stock, Ete. Consumers’ Good... civcceirrieissrcesonranesssaan Total $34,516,305.68 622,974.50 4,086,742.21 291,310.96 8,117,052.98 1,060,977.49 B48 693,207.82 5183,157,178.56 $35,636,119.27 "I Raw Materials wousamnsosnsmmssimmon Semi-Manufactured Goods ......ceueeeee Industrial and Electrical Equipment Automotive Equipment .......ccceciivennne Agricultural Mach'y., Live Stock, Ete. Con SUMErs’ GOO. ete es ene oneness Raw Materials uci Semi-Manufactured Goods ......cueeeens Industrial and Electrical Equipment Automotive Equipment .......cccceemriveennns Agricultural Mach’y, Live Stock, Ete. Consumers’ GoOOB. ur iiiisrnrenrterssnsnnesnse TOTAL veer aviv, ein 1926-1927 ——eeee—— Oct. 1, 1926—Sept. 30, 1927 Other Organizations Total $43,945,838.56 $50,230,991.39 18,600.00 1,924,948.08 86,646.66 10,867,479.11 17,489.60 1,614,166.30 1,538,944.83 6,617,952.42 39,210.34 716,178.25 $26,325,186.07 $45.646,529.48 $71,971,715.55 —— First Half 1927-1928 (Oct, 1, 1927—March 31, 1928) Other Organizations Total $44,805,189.50 $48,982,994.54 116,905.00 1,122,869.78 432,816.72 6,928,150.138 465.72 1,236,004.95 2,709,490.83 5,726,239.99 97.270.55 473.4389.61 ~17.%307.060.86% £8,162,188.32 365,469.199.00 INCLUDED IN “OTHER ORGANIZATIONS” ARE: Le 2. . i All Russian Textile Syndicate, Ine. 5. Belskosojuz-America, Ine. 6. Centrosoyuz-America, Ine. 7. Georgian Manganese Co., Ltd 8. 9. Autonomous Industrial Standard Oil Co. of New York Lena Goldfields Co. Allied American Corp. Russian-Amer. Compressed Gas Co. Jolony “Kuzbas’ 79D 39 08 11 20 42 25 535 54 78 is 95 99 51 0} “Y. oN N o ~ i 2 N a oA id a [ 2 3 y “ U I~ » 2 ) = = 0 ES aa wr od H I} 2 "M x = 0 »# het n " u a4 J ar vy, r z oO [8] jy Bi Zi of I = < T s L > 0 r 2 x > A - Yy - 2 ~ > » w= wn 3 wy 10 E— le 0) sd 2S 1t 0) d .d 18 e rr at J. 5 £ x A e& t i £ ] ? $ 3 z WM § 3 3 i p> 3 —- I o Z N | came available only in the latter part of 1920 with the ve pacification of the country. Meanwhile, however, the ent in order to pay for indispensable imports, also to meet mal obligations assumed under the peace treaties with the iguous states (Esthonia, Latvia, Poland) began to export arge quantities, chiefly to Sweden, whence after further and stamping, the gold found its way to the United States * to other European countries (e. g., Switzerland, France, ultimately to the United States. There are no Russian wrding the volume of these gold exports, which commenced reached their peak’ in 1921 and continued in large volume we following year. According to the Swedish official trade gold imports from Russia and total gold exports from during the three years mentioned were as follows (in s of kronor of 26.8 cents each) : oo No ’ te oo a | 1 nk om “ a Imports of Gold from Russia and Total Exports of Gold from Sweden, 1920-1922 Ce — Total gold exports from Sweden (kronor) (kronor) 272,487,000 63,791,000 670,028,000 934,396,000 rien. 205,818,000 330,372,000 Total ifn 1,237,888,000 1,328,559,000 nt in dollars ....... . . 331,739.000 355,963,000 7} the gold exported from Sweden during these three years, 000 kronor, or 42.4 per cent of the total exported, went to ed States; 433,854,000 kronor, or 32.6 per cent, was shipped rerland ; while 21 5,386,000 kronor, or 16.2 per cent of the irs’ total, was forwarded to France. Smaller amounts are to have been consigned from Sweden ta the Netherlands, Jritain, Germany, and Finland. Gold exports (largely coin) zerland from Sweden were particularly heavy during 1921 2. The Swiss figures of gold imports from Sweden for the sriod differ but little from corresponding Swedish export Most of the gold imported into Switzerland in coin form exported to the United States in the shape of bullion so as ly formally with the provisions of the American regulations >rohibited the official assaying of gold traceable to Russia 3olshevik control. A small part of the gold thus received exported from Switzerland to India. Id imports into the United States from Sweden during the ears under consideration are shown in the official United E. - ™ 2 er 5 2 ry OD % = — O - i o —1 > ~~] 0 Ay 3 | 20 oo on > oe]