Memorandum by the Assistant Chief of the Division of Eastern European Affairs (Packer)

American-Soviet trade relations have now been put on pretty much of a “pay-as-you-go” basis, with the Soviet Government acquiring a very sound financial position in the American market.

In the nine months ending September 30, 1935, gold valued at $13,063,853 and silver valued at $1,601,058 (total $14,664,911) were imported into the United States from the Soviet Union.* In addition, Soviet commodity imports into the United States during the same period have totalled $12,454,577. The grand total of imports is thus slightly more than $27,000,000. In the same nine-months’ period, American exports to the Soviet Union have totalled only $15,928,231. [Page 218] In short, a favorable balance of some $11,000,000 has been built up in nine months,

Although it is not known whether the surplus is being left on deposit here or transferred abroad, there would seem to be no reason why the Soviet Government should not be able to pay largely in cash, if desired, for the orders, totalling $30,000,000, which it must place here, under the July 13, 1935, exchange of notes, within a year from that date; or, perhaps, even for orders totalling the higher figure of $50,000,000 which Mr. Bullitt has been informed may be placed here.36

Obviously the Soviet Government should have no difficulty in meeting as due the annual interest charge of $700,000 on the $10,000,000 worth of seven per cent bonds placed in the United States through the Soviet-American Securities Corporation.37

E. L. P[acker]
  1. It is understood that most of these imports are concentrates which have been refined at the Tacoma, Washington, smelter of the American Smelting and Refining Company. Soviet gold production in 1934 was estimated at $150,000,000; the 1935 figure is expected to reach $225–$250 million. [Footnote in the original.]
  2. In this connection it is of interest to note that our total imports from the Soviet Union have practically balanced our exports therefrom in the years 1932, 1933, 1934 and so far this year. The figures for nine months in 1935 (given above) are roughly the same, both as to exports and imports, as the 1934 totals and are somewhat higher than the corresponding figures for 1932 and 1933. The latter year is the only year in many years when American imports from Russia (Soviet Union) have exceeded our imports [exports] to that country (excess: $2,600,000). At the present time there is practically no Soviet commercial indebtedness in the United States. The total Soviet commercial indebtedness abroad is now approximately $100,000,000 as compared with approximately $700,000,000 (pre-devaluation) in 1931. [Footnote in the original.]
  3. Ambassador Bullitt reported in telegram No. 488, November 20, 1935, 9 a.m., that Soviet Ambassador Troyanovsky, then in Moscow, had told him that Soviet purchases in the United States would total more than $50,000,000 in 1935, and that $100,000,000 would be purchased during 1936, if the United States, or American bankers, would make the Soviet Union a loan of $50,000,000 for 5 years at 4½ percent. (861.51 Soviet American Securities Corp./139)
  4. On December 9, 1935, Mr. Packer made a marginal note which read: “From later information, it seems probable that Sherover’s recent statement re $10,000,000 of these bonds having been sold here should have stated R[uble]s 10,000,000. E. L. P.Miles M. Sherover was President of the Soviet American Securities Corporation, 30 Broad Street, New York, N. Y.