800.51W89 U.S.S.R./167c: Circular telegram

The Secretary of State to the Chargé in the Soviet Union (Wiley)6

Department is issuing following statement for publication 9 P.M. January 31st

“The Secretary of State had a conversation today with Ambassador Troyanovsky. Assistant Secretary Moore, Ambassador Bullitt, and Mr. Kelley, Chief of the Eastern European Division of the Department of State were also present. This evening Secretary Hull made the following statement to the press.

‘You will recall the fact that in an effort to arrive at an agreement with the Soviet Government with respect to debts, claims and credits for trade, negotiations were begun more than a year ago in Moscow and continued in Washington, but that no understanding had been reached when Ambassador Troyanovsky left Washington in October to visit Moscow. In our last conversations with Ambassador Troyanovsky prior to his departure, we submitted for the consideration of his Government a proposal representing the limit to which we believed we could go without complete sacrifice of the interests of American claimants and without unduly pledging the credit of our Government for the purpose of facilitating trade between the United States and the Soviet Union.

The Government of the United States indicated its willingness to accept in settlement of all claims of the United States and its nationals against the Soviet Government and its nationals (and of all claims of the Soviet Government and its nationals against the United States and its nationals) a greatly reduced sum to be paid over a long period of years. The Government of the United States indicated that it would accept payment through the application of a rate of interest beyond the ordinary rate of interest on credits extended to the Soviet Government with the financial assistance of the Government of the United States. To facilitate the placing of orders in the United States by the Soviet Government on a long-term credit basis, the Government of the United States was prepared to make, through the Export-Import Bank, to American manufacturers and producers requiring financial assistance in connection with the granting of credit on suchorders, loans to a very large percentage of the credit granted. It was contemplated that the length of the credit extended would vary according to the different categories of goods and the Soviet Government was advised that the Government of the United States was not averse to making special terms in exceptional cases at the President’s discretion. It was intended that the loans extended to American manufacturers and producers should constitute a revolving fund for the continuous maintenance of Soviet purchases in the United States.

We hoped confidently that this proposal would prove entirely acceptable to the Soviet Government and are deeply disappointed at its rejection. In view of the present attitude of the Soviet Government, [Page 173] I feel that we can not encourage the hope that any agreement is now possible. I say this regretfully because I am in sympathy with the desire of American manufacturers and agricultural producers to find a market for their goods in the Soviet Union, and with the American claimants whose property has been confiscated. There seems to be scarcely any reason to doubt that the negotiations which seemed so promising at the start must now be regarded as having come to an end.

It will be for the Board of Trustees of the Export-Import Bank to determine whether or not there is any good reason for continuing the existence of the Bank.’”

Inform consuls.

  1. The same telegram was sent to all diplomatic missions in Europe, to the American Embassy in Tokyo, and to the American Legation in Peiping.