800.51W89 U.S.S.R./146: Telegram
The Chargé in the Soviet Union (Wiley) to the Secretary of State
[Received 8:25 p.m.]
368. Your 283, October 16, 11 a.m.75 Troyanovsky lunched with me today. He stated that be expected to leave Moscow for Washington about the 10th or 11th. He has not yet decided which ship he will take. He wishes to be present for the celebrations in Moscow on the 7th of November, the annual commemoration of the revolution. I asked him what progress he had made in discussing the question of the settlement of debts and claims with his Government. He replied that he had seen Litvinov and Molotov briefly; Stalin, Voroshilov, Kaganovich, and others had not yet returned to Moscow. Pie stated that he intends to confer with all of these and that he has the “conviction” that a settlement should be accepted by his Government substantially on the basis of the last proposals of the Department. He added that in these proposals the rate of interest was fixed at 4% plus a fractional interest charge for the small expenses of Export-Import Bank and 2½% extra interest to be applied to a capital sum of $100,000,000; should, however, the debt be fixed at [$]125,000,000 the extra interest rate would be proportionately increased. Whether [Page 160] the interest payments would extend over 20 or 25 years was still an open question. Troyanovsky has some variations in mind which he has not taken up with the Department. These seem largely questions of drafting, except that the total amount of interest payments might be substituted for any mention of the total amount of the debts and claims. I replied that I had no information on the subject and expressed great surprise over the interest rates he had cited.
Troyanovsky conveyed an impression of confidence that he would be able to bring the Soviet Government to his point of view but showed concern over the fact that Mr. Bullitt would not be in Washington when he returned. I believe he considers the first part of December the critical period in the negotiations with the Department. From one or two facetious remarks it is evident that his relations with Litvinov are not good.
At Litvinov’s request I called on him this afternoon. We had an animated but amiable debate of 1 hour with much give and take. In respect of the question of a debt settlement, much the same ground was covered as in his previous conversations with the Ambassador. Litvinov showed me the undated memorandum of his conversation with the President in which the term “loan” was employed. I pointed out to him that “loan” without any modifying adjective was not sufficient to substantiate his thesis. He replied that had anything but a straight loan been considered in Washington he would have left without recognition rather than subscribe to a proposal so disadvantageous to Soviet relations with both France and England. It had taken many years for the question of Russian debts to France to reach their present stage of lethargy and he could not accept anything at this late and critical date which would revise [revive?] the whole question. I replied it would take at least as many years for Soviet indebtedness to the United States to reach a state of lethargy and I doubted whether it would be in the Soviet interest to make this investment in time. I refused to believe that the proposals of the State Department would require any great ingenuity on his part in order to meet the situation with the other creditors of the Soviet Union.
Litvinov volunteered the information that a plethora of credits was available to the Soviet Union from many sources at low rates of interest, a great deal more in fact than the Soviet Government could possibly accept. The Soviet Government was not paying and would not pay more than 6%. I asked him where he got these figures. He replied, from the Soviet Credit Department. I suggested ingenuously that he have them checked, as personally, I did not believe them. He replied somewhat weakly that of course there might also be indirect extra payments; he asserted, however, that if the American Government so desired he would be willing to sign a statement that the Soviet [Page 161] Government would neither seek nor accept credits from the United States for the next 30 years. I suggested that this might not be in the best interests of Soviet economy, particularly the Soviet railways. He admitted that of course there were many purchases that could be advantageously made in America.
Litvinov reverted to the question of visas, hoped the American Government had established a large Embassy and a very large Consulate General in Moscow. The fact that it was still impossible for Soviet citizens proceeding to the United States to obtain visas in Moscow was “insulting”. I replied quite calmly that it was purely a practical question; that without readjustment of quarters and personnel we were not as yet in a position to bring in a visa control bureau; and that as a matter of fact we were encountering administrative difficulties with the Soviet authorities which were certainly far more aggravating and difficult than our present method of issuing visas was to them. This method was provisional and had been worked out on the basis of causing the least inconvenience possible, Litvinov let the matter drop without further argumentation. Rubinin has asked me to discuss the matter in detail with him and I shall report further on this subject.
I do not feel that the question of solving our differences with the Soviet Government is at all hopeless. Indeed, I think, though without tangible evidence, that the Soviet Government would like to reach an agreement on the subject of debts within the relatively near future and that the present stage of the negotiations is, on the part of Litvinov, in the obstreperous stage which is characteristic of his method of approach to financial problems.
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