verification of the facts and evidence, they are found guilty, in the judgment of the British Governmeut, of having infringed clauses of the Russo-British Trade Agreement, which now-again in the opinion of the British Government itself-require new and more exact drafting, the inore so that the references to Russian diplomatic correspondence contained in the memorandum of the British Government of the 8th May, include, as already pointed out in the first reply of the Russian Government, side by side with distorted versions of actual documents, quite clearly invented quotations. The Soviet Government fully concurs that the agreement would lose all its importance if the representatives of the contracting parties should violate it in practice by their acts.

The officials whose guilt has been established by both Governments, which are equally interested in the maintenance of friendly relations, must be recalled or subjected to some other penalty. But, of course, this presupposes full and unconditional reciprocity.

However, the Soviet Government, on the strength of information, materials and documents at its disposal, has no doubt that, if the same criteria as have been used by the British Government in judging the activities of the Russian representatives at Kabul and Tehran were applied to the activities of the corresponding British agents, who have implicated themselves in the organisation and preparation of risings in Turkestan and the Caucasus, the British Government itself would not have thought it possible to insist on its one-sided demand. The necessity for a conscientious, business-like and exact settlement of these questions is undeniable, and if, as a result of consequent negotiations or verification, it should be found necessary to recall one or other official, the Soviet Government would naturally not hesitate to do so in order to maintain and develop friendly relations.

7. A quite new demand is that now put forward that the Russian Government should admit the principle of compensation of British citizens as a condition for the maintenance of the trade agreement, which does not include any such point. The Soviet Government is neither able nor inclined to deny the fact that a considerable number of British citizens have suffered injury in the course of, or as a result of, the revolution and the civil war; but the Soviet Government at the same time knows too well, and is unable to forget for a single minute, that the damage to individual British subjects pales and disappears before the terrible calamities which have befallen millions of the population of the Soviet Republics through the blockade and intervention of the Entente countries. To the wounds suffered by the people of Russia as a result of their participation in the imperialist war, which participation secured the victory of the Entente, were added countless new wounds, inflicted on them as a punishment for their desire to order their lives in their own way. In the North and in the South, in the West and in the East of the Soviet union lie immense regions where ruins and cemeteries call for reparations not less than the devastated areas of Belgium and France.

The Soviet Government, however, has always considered, and considers now, that it is possible and necessary to resume and develop economic relations, which are their own justification, independently

of methods of settling the sombre and sanguinary accounts of the past. In so far, however, as the British Government raises this question in connection with the maintenance of the trade agreement, the Russian Government expresses its full readiness to compensate the losses of British citizens, but only on a basis of full and effective reciprocity.

8. Summing up the position created by the exchange of memoranda, the Soviet Government puts on record that on four points (the letters of M. Weinstein; fishing; compensation for repressive measures against two British agents, and the amount of this compensation; mutual undertaking of non-interference) there remain no obstacles to agreement.

On the fifth point-the recall of MM. Raskolnikof and Shumiatsky-the Russian Government invites the British Government to admit that such an exceptional measure, even in the moderated formula of the last memorandum, could be decided upon only as the result of a joint examination of one-sided or mutual

accusation.

On the sixth point-the making of compensation for all injuries to British subjects a new condition for the maintenance of the trade agreement-the Russian Government cannot renounce the principle of reciprocity, thereby placing on the shoulders of the Russian people an unjust and intolerable financial burden; and it insistently proposes that the question of loyal co-operation in the future should not be made dependent on past accounts which have remained unsettled not through any fault of the Russian Government.

The Russian Government, like the British Government, would. regard the rupture of trading relations not only as an economic loss, but also as a political disaster, the effect of which, in the present state of Europe, would threaten far more than the Russo-British Trade Agreement. On precisely this ground the Soviet Government, after the extraordinary concessions of its first memorandum, has made new concessions in its second declaration of the 21st May, as well as in this present document, which go exceedingly far to meet the views of the British Government.

However, as aforesaid, the Russian Government knows and sees no other way for the settlement of questions at issue between two independent parties-provided one of them has not already decided to bring about a rupture at all costs-except the way of negotiations. The refusal of the British Government to meet the People's Commissary for Foreign Affairs of the Russian Socialist Federal Soviet Republic shows again that the obstacle to the settlement of the conflict certainly does not arise on the Russian side. The presence of M. Krassin, the People's Commissary for Foreign Trade, in London affords no substitute for negotiations, in view of the adoption by the British Government of the method of ultimata and one-sided demands, which are not to be subjected either to examination or to discussion. Should a rupture ensue from these circumstances, the responsibility for it cannot be placed, either directly or indirectly, on the Soviet Government.

Precisely in view of the full clearness which has now been established, the Soviet Government expresses its firm belief that the

British Government, on its part, will take those necessary steps, based on the elementary principles of equality of the two sides, which will secure not only the consolidation, but the further development of economic relations between the two countries.

Moscow, June 4, 1923.

No. 4.

Memorandum communicated to M. Krassin, June 13, 1923.

His Majesty's Government have considered the memorandum dated the 4th June, which was enclosed in M. Krassin's note of the 9th June, in reply to the communication addressed to him on the 29th May.

They note with satisfaction that the Soviet Government has accepted the proposals of His Majesty's Government with regard to the exchange of notes concerning the limits of territorial waters and also with regard to the compensation to be paid to Mrs. Stan Harding and Mrs. Davison.

They are further glad to learn that the Soviet Government accepts the expanded undertaking to refrain in the future from all hostile action or propaganda which was appended to the British memorandum of the 29th May, and they agree to the addition thereto of the following words :

" and in particular undertakes, on its own behalf and on behalf of the Governments of the British dominions, colonies, protectorates and mandated territories, not to assist any hostile designs. against the Soviet Government or the republics associated with it which may be entertained by Russians who have emigrated from Russia."

The statements contained in paragraph 7 of the Russian memorandum are based upon an obvious misunderstanding. In respect of compensation for personal injuries (in cases other than that of Mrs. Stan Harding and Mrs. Davison), His Majesty's Government have not made any demands not based on reciprocity. Their attitude was clearly expressed by Lord Curzon to M. Krassin on the 17th May, and as it is recorded in the minutes of that meeting, viz. :-

"The other cases [of claims in respect to personal injuries], however, could not be ignored and would be brought up later. If the Soviet Government could establish a prima facie case in the counter-claims they professed to have, there would be no objection to their being brought up at the same time, and we could discuss how they were to be dealt with, but we could admit no liability in these cases now."

To that position His Majesty's Government adhere.

In reference to paragraph 6 of the memorandum under reply, His Majesty's Government now understand that, in accordance with the normal arrangements governing the movements of members of

!

the Russian diplomatic service, the transfer to another post of M. Raskolnikof, against whom the main charges have been made, has already been decided on. The obstacle which his continued presence in Kabul presents to friendly intercourse will thus be removed. If it is contemplated to leave M. Shumiatsky at Tehran for any further period, His Majesty's Government confidently infer from the undertaking now given by the Soviet Government that it will take very special steps to secure that he complies fully and consistently with the letter and the spirit of that undertaking. In the event of any infringement of it by M. Shumiatsky in the future, they will bring the case at once to the attention of the Soviet Government, and will in such circumstances expect the Soviet Government to take the prompt and severe disciplinary action which it promises in its note.

The Soviet Government having thus complied with the essential conditions of the demands put forward by His Majesty's Government, this correspondence may now be brought to a conclusion.

It is proposed to publish this memorandum, the Russian memoranda of the 23rd May and 4th June and the British memorandum of the 29th May, on Thursday next, the 14th June.

Foreign Office, June 13, 1923.