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  4. Document 380

611.6131/461: Telegram

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

Moscow, July 20, 1937—3 p.m.
[Received July 20—11:25 a.m.]

180. Department’s 103, July 19, 7 p.m. Foreign Office officials state that they are prepared to conclude agreement on the basis suggested in the Department’s telegram under reference, subject to two further conditions. These are:

(1)
that first sentence of the paragraph cited in section (b) of the Department’s telegram be prefaced with the words: “subject to the requirement that no arbitrary discrimination shall be effected by the United States of America against exportations to the Union of Soviet Socialist Republics and in favor of those to any third country”.
(2)
that note containing the Soviet assurance with regard to the intention to purchase goods to the value of $40,000,000 be supplemented with a reservation to the effect that if, as a result of adverse action by the courts, Soviet coal should nevertheless become subject to the excise tax at any time during the 12 months of the agreement, the plans for purchases in the United States will be altered to envisage a figure of only $30,000,000. They have not yet worked out a draft of the language in which this idea would be embodied, but want to know whether we would object to it in principle.

It should be explained that some days ago they asked us whether it would be possible to add to our letter about the Treasury action on Soviet coal imports a statement to the effect that if the question of Soviet coal were to be decided adversely by the courts, our Government would use its influence to obtain the reversal of any such adverse decision. We told them that such a statement, which would seem to be equivalent to an undertaking on the part of the Executive Branch of the Government to bring pressure to bear on the Judiciary, was out of the question and that the proposal was not even worth telegraphing to Washington. The present suggestion for a conditional undertaking concerning the $40,000,000 purchase sum is now being made as an alternative to this earlier proposal.

Davies