711.00111 Armament Control/Military Secrets/583

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

The attached letter to the Secretary of the Navy22 involves a question of policy which deserves careful consideration.

The Soviet Government, after rather neglecting its fleet for many years, is now engaged in strengthening its naval forces and building up what the Chief of the Soviet naval forces23 recently described as “a real big fleet, including ships of all classes and standing on the highest technical level.” The Soviet authorities are looking to the United States for technical and material assistance in carrying out their naval program. It is obvious that they have no other resort, since such assistance could not be obtained from Japan, Germany, or Italy; and England and France are apparently fully occupied with their own naval construction.

In June of last year the Soviet Government had organized in New York a company known as the Carp Export and Import Corporation to handle the purchase of material for the construction of battleships and submarines and other naval equipment. The head of this company is the brother-in-law of Molotov, the President of the Soviet of People’s Commissars, and one of the most important leaders in the Soviet Union. The present letter arises out of the efforts of this Corporation to purchase plans, materials, and equipment for a battleship to be constructed in the Soviet Union.

In the proposed letter to the Secretary of the Navy objection is raised on the ground of policy to two aspects of the proposed contract between the Corporation and the Bethlehem Shipbuilding Corporation: (1) the construction of sixteen-inch guns, and (2) the utilization of the facilities of our Navy in the testing of guns and armorplate. If these features are eliminated, no objection is seen to the contract.

In view of the circumstance that such foreign technical and material assistance as the Soviet Government needs in the building up of its fleet can, in the present international situation, be obtained only in the United States, the availability of such assistance in the United States is a matter of considerable importance to the carrying out of the plans of the Soviet Government with regard to the building up of a big navy. It would seem, therefore, that the most careful consideration should be given to any action which we may take relative to this matter. Among the questions to which thought should be given are whether the building up of the Soviet fleet as a result of assistance [Page 466] received in the United States would conflict with any American interest or policy, whether it would be in our interest to look with favor and possibly facilitate the plans of the Soviet Government in this respect, and whether it would be advisable in the circumstances not to take any position based on considerations of policy.

EE24 has initialed the attached letter, since it is considered that, assuming the evolution of the Soviet Government eventually into a purely national Government, the strengthening of the naval forces of the Soviet Union would not run counter to the national interests of the United States, and since the objections raised to two features of the contract in question appear to be well founded.

Robert F. Kelley
  1. For the letter to the Secretary of the Navy, dated March 26, 1937, see p. 467.
  2. Nikolay Gerasimovich Kuznetsov, Admiral of the Fleet.
  3. The Division of Eastern European Affairs.