800.51W89 U.S.S.R./179: Telegram

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

50. Litvinov said that he had long since accepted the rupture of the negotiations with the United States for a settlement of debts and claims as a foregone conclusion. That was why he had consented to [Page 177] have the negotiations transferred to Washington. He claimed that when the American Government decided to abandon the “letter of the agreement,” namely a loan, he had “capitulated” just as far as possible. However, it was not possible for the Soviet Government to accept a settlement which involved the extension of credits to the manufacturers instead of direct to Soviet agencies. He added that he thought it was a good thing for the negotiations to be “put on ice” for a while. Perhaps at some later date they could be resumed with better chances of success. I asked what inspired his optimism. He replied that political conditions would change and might greatly influence matters. I answered that the possibility of any such political change in the United States was indeed remote. He explained he had Europe in mind; not the United States. He did not clarify his cryptic allusion.

Though Litvinov appears both serene and intractable, I am reliably informed that high quarters are much disturbed over the rupture of negotiations and that a new and more favorable Soviet orientation is not entirely impossible.

Litvinov expressed regret that you had gone into “so much detail” in your press release. In consequence he was under heavy pressure from the press. He was reluctant to yield to it as he did not wish to embarrass either the President or you. I intimated that neither the President nor you feared embarrassment in the matter.