Memorandum by the Chief of the Division of Eastern European Affairs ( Kelley )

Conversation: The Ambassador of the Soviet Union, Mr. Troyanovsky;
The Assistant Secretary of State, Mr. Moore;
Mr. Robert F. Kelley.

Mr. Moore outlined briefly the developments which had taken place in the matter of the settlement of the question of debts and claims outstanding between the United States and the Soviet Union. Inasmuch as it did not appear possible at the present time to arrive at a final settlement of the matter, he thought that it might be desirable to reach a temporary working agreement which would permit the Export-Import Bank to function in respect to purchases of the Soviet Government in the United States. He suggested that, without coming to an agreement as to the total amount to be paid in settlement of debts and claims, and without the Bank undertaking any obligation with regard to the amount of credit which would be made available, it might be possible for the Bank to extend financial assistance in connection with Soviet purchases in the United States provided that the rate of interest which would be paid on money advanced by the Bank were sufficiently large to permit the deposit of a certain amount of money [Page 191] in connection with each transaction into a special fund which would be used by the United States Government for the satisfaction of claims against the Soviet Union. Mr. Moore said that, of course, there would have to be an agreement as to the rate of interest and the term of the credits. There would also have to be a statement issued with regard to the Bank’s engaging in such activities. Mr. Moore said that he thought that the President would be willing to give consideration to an arrangement along these lines if the idea met with the approval of the Soviet Government.

The Ambassador said he did not know what attitude Moscow would take, but, of course, he would communicate immediately with his Government. He intimated that it would be difficult for his Government to agree to such a proposal, since other Governments which were guaranteeing credits extended to the Soviet Union and had claims against the Soviet Government would undoubtedly be inclined to have recourse to this procedure if the Soviet Government did not object to it. He thought that the chief difficulty would be the working out of the phraseology of the statement which would be issued relative to the matter. Mr. Moore stated that he thought that the statement need merely recite that it was not possible at the present time to reach a final settlement of the question of debts and claims, and that, with the object of facilitating the development of trade in the meantime, it was deemed advisable to permit the Bank to function in connection with such trade on the condition that the participation of the Bank in transactions with the Soviet Union involved the accumulation of funds which could be used by the United States Government to indemnify claimants against the Soviet Government. The Ambassador indicated that he was not optimistic, but said that he would discuss the matter with his Government.17

[For incidental consideration of the question of debts, claims, and credits in subsequent years, see sections under the years 1936, 1937, 1938, and 1939, entitled “Reports on Developments of Significance Concerning Soviet Relations With Other Countries, Especially With the United States,” pages 281 ff., 357 ff., 504 ff., and 731 ff. For the temporary revival of this discussion in consequence of the interview on June 5, 1938, between Ambassador Davies and Stalin, see despatch No. 1348, June 9, 1938, page 567, and the unnumbered despatch from Ambassador Davies at Brussels, January 17, 1939, page 594.]

  1. No record of any reply from the Soviet Government to this proposal has been found in the Department files.