611.6131/449: Telegram

The Ambassador in the Soviet Union (Davies) to the Secretary of State

162. Department’s No. 85, July 8, 6 p.m., and my No. 161, July 9, midnight. With reference to other points in Department’s telegram under reference I have to report as follows:

1. Department’s section 3. Soviet Government has no objection to retaining the Department’s wording regarding proclamation by the President but desires to add following phrase to proclamation sentence “and approval by the Soviet of People’s Commissars,” with arrangements for simultaneous publication [of] proclamation and approval.

2. Department’s section 4. Foreign Office states that the following letter would be satisfactory.

“With reference to the agreement concerning commerce between the United States of America and the Union of Soviet Socialist Republics [Page 419] which has been signed today, I have the honor to state that the Embassy has been informed that in view of the wording of section 1 of the agreement, the authorities of the Treasury Department of the United States will hold that Soviet coal will be exempt from the excise tax during the 12 months of the agreement, subject, however, to possible adverse action by the courts.”

3. Department’s section 5. Embassy has suggested the following draft letter.

“In reply to your inquiry regarding the intended exports of Soviet coal to the United States during the ensuing 12 months, I may state, [that] according to information received by me from the People’s Commissariat for Foreign Trade, the economic organizations of the Union of Soviet Socialist Republics intend to export to the United States during the year beginning July 13, 1937, not more than 400,000 tons of Soviet coal.”

The Foreign Office has of course approved of this draft in form but not, as was pointed out in my telegram under reference, in substance.

4. Foreign Office suggests that if negotiations are not concluded by July 13th, documents should be appropriately predated in order that no gap ensue between the old and new agreements.

Davies