After the usual preliminary amenities incident to the occasion of my call
on the Premier by reason of my departure and transfer to Belgium, we
entered upon a friendly and interesting talk. Stalin was particularly interested in
President Roosevelt and asked many questions
[Page 568]
about him. He also referred in
terms of much admiration to your Washington speech.
We discussed a matter which I am committed to report upon orally only to
you and to the President. Stalin
also brought up the battleship matter which is now pending in the
Department, and finally discussed the possibility of a settlement of the
Kerensky debt.
A complete and detailed statement of what occurred is set forth in the
memorandum hereto attached and made a part hereof. Subsequent
developments with reference thereto are also described therein.
Both this despatch and the memorandum have been dictated under great
pressure in the last few hours in Moscow just prior to my departure, and
are not at all satisfactory to me as a statement of what occurred, but
time presses and I think the memorandum will give you an accurate
picture of the situation.
The fact of the conference was announced by the Soviet press and to
eliminate the possibility of unwarranted implications I was obliged to
issue a short statement to the press, a copy of which I herewith
enclose.73
The situation created nothing short of a sensation in the Diplomatic
Corps here. It was regarded as a unique occurrence in diplomatic history
here. I was overwhelmed with requests for appointments. On the occasion
of the dinner which Foreign Minister Litvinov gave on the evening of June 7 in honor of our
departure (which was again quite unprecedented) and particularly at the
reception to the Diplomatic Corps which followed, I was approached
repeatedly and delicately questioned with reference to what had
occurred. To all inquiries I answered quite frankly that the meeting had
been entirely unexpected and had been a complete surprise to me; that I
had enjoyed a very interesting visit; in which we had discussed many
matters, of a general nature. I thought it better to say this much
rather than to leave the situation clothed in mystery and possibly
thereby cause unwarranted implications to be drawn with reference to the
significance of the matter in connection with this international
situation.
Enclosed herewith and pursuant to the regulations of the Department you
will please find a copy of the talk which Mr. Litvinov made upon the occasion of his
dinner, and a memorandum which was prepared by the joint secretarial
staff of the Embassy setting forth the extemporaneous remarks which I
made in reply74 which I asked them to prepare
because of the pressure of matters incident to my departure on the
afternoon of this day.
[Enclosure 1]
Memorandum by the Ambassador in the Soviet
Union (Davies)
Arrangements having been made that the writer should make his formal
calls prior to departure on President Kalinin and Premier Molotov on this day,75 the writer proceeded to the Kremlin at
4:30 p.m.
Considering that it would be advisable to have some member of the
staff who also understood Russian accompany me, I suggested that
Colonel Faymonville, who
speaks Russian very well, go with me. Mr. Barkov, Chief of the Protocol
Division of the Foreign Office, however, advised that that was not
acceptable and when the suggestion was then made that the senior
member of the staff should go with me, it was intimated that
protocol required that on farewell calls the Ambassador would
proceed alone. That made no impression on my mind at the time, but
later became significant.
At the former Catherine Palace, inside the Kremlin wall, I was met by
Mr. Barkov, the Secretary of
Protocol, and was escorted by him to the apartment of President
Kalinin, where we were
received by the Secretary. Upon entering the President’s inner
office, Mr. Kalinin came
forward cordially to greet me at the door. During our visit
President Kalinin sat at his
desk. Mr. Barkov, who was
also present, Mr. Vinogradov,
of the Foreign Office, who acted as interpreter, and I were seated
immediately in front of the desk. After the usual social amenities
connected with the announcement of my departure were passed,
President Kalinin stated that
he could quite understand that it might be more agreeable for me at
my new post than it would be here. He recognized, he said, that the
life of the diplomat in Moscow was not altogether agreeable and had
its limitations; for the reason that contacts between officials of
the Soviet Union and the Diplomatic Corps did not generally obtain
as they did in other countries. He, therefore, could quite
understand that I would enjoy the change involved in going to
Brussels. I replied that, from an intellectual viewpoint, I had
enjoyed this post tremendously. From that angle, I would regret
leaving Moscow. Quite frankly, however, the living conditions that
obtain in Belgium would be more agreeable. I stated further that I
was in entire agreement with his frank statement that the position
of members of the Diplomatic Corps here was difficult because of the
conditions which he had described. Further, I ventured to say, that
while this situation contained disadvantages for the Diplomatic
Corps, it also had real disadvantages for the Soviet Government;
that there was much wisdom in the statement of the old French
philosopher who had said: “You cannot hate the man you
[Page 570]
know”; that even though
certain Ambassadors and Foreign Ministers might be hostile to this
regime, if, through contacts, they came to know the men who were
running this Government, it might serve to modify the harshness of
their judgments; and certainly, that as to those members of the
Corps who were friendly this situation placed them at a disadvantage
in not being able to communicate from time to time with the heads of
government, as was done in other countries, and thus have the
benefit of the point of view of the responsible officials. I stated
further that the point of view and outside perspective of friendly
foreign diplomats might also be of no small help and real value to
Government officials here. To this President Kalinin rejoined that the condition
which he had referred to was bred by world conditions; that the
people of Russia believed that they were surrounded by aggressive
and hostile states, particularly Japan and Germany; that in the
opinion of his Government such feeling was justified and that this
basic fact materially prevented free intercourse with the Diplomatic
Corps. Another reason for this condition, he said, was that the men
in responsible power here, unlike the governing classes of some of
the capitalistic classes [countries?] were
“of the first generation”, were confronted with new and great
problems, were working overtime and did not have the time for
luncheons, dinners or other social engagements which the Diplomatic
Corps were accustomed to employ for such contacts. Time, he thought
would remedy this condition.
President Kalinin spoke of
President Roosevelt’s speech at Chicago and
also of Secretary Hull’s
speech at Nashville76 and expressed the hope that it was
an indication of the United States possibly becoming more active in
the protection of the World Peace against the “unruly members of
world society”.
In conclusion he stated that he was familiar with the work which the
American Ambassador had done in the Soviet Union in connection with
studying for himself the various industries and enterprises of the
country and of the various phases of Russian life; that they
appreciated the objectivity of this attitude; and (to my
embarrassment) that he and his associates considered that the
American Ambassador, though he might differ from them was,
nevertheless, an “honest man”, and that they much regretted that he
was leaving this post.
Upon leaving President Kalinin’s apartment I asked Mr. Vinogradov whether he was going
with me to Premier Molotov’s
apartment. He said, “No”, that another interpreter would be
available there. Mr. Barkov,
however, accompanied me down the long corridor to another section of
the building where he presented me to a secretary of
[Page 571]
the Premier. Shortly thereafter a Mr.
Khaletski (interpreter) came in and I was
ushered into the room of the Premier. Here again on entering I found
the Premier coming forward from his desk to greet me. Scarcely had
we been seated, when I was startled to see the door, through which I
had entered, at the far end of the room open, and Mr. Stalin come into the room alone. I
had seen him on public occasions heretofore and on one occasion had
an opportunity to shake hands with him, but I had never had an
opportunity to study the man at close range. As he came in, I
noticed that he was shorter than I had conceived and that he was
quite “slight” in appearance. He did not look robust, nor strong as
he appeared to be on the occasion of the May Day Celebration. There
was a suggestion of the sagginess of an old man in his physical
carriage. His demeanor is kindly, his manner almost deprecatingly
simple; his personality and expression of reserve strength and poise
very marked.
As we arose, he came forward and greeted me cordially, with a simple
dignity. We then sat down at a large table—a kind of directors’
table.
I broke the ice by stating that I had returned to Russia because of a
desire, on the occasion of my departure, to express my respects
formally to President Kalinin
and Premier Molotov, and to
express my appreciation of the courtesies that this Government and
its officials had extended to me. Meeting Mr. Stalin, I then said, was a great
surprise, and that I was very much gratified to have this
opportunity. I then went on to say that I had personally inspected
typical plants of practically all of the heavy industries of the
Soviet Union, as well as the great hydraulic developments of the
country; that these extraordinary achievements, which had been
conceived and projected in the short period of ten years, had
commanded my great admiration; that I had heard it said that history
would record Stalin as the
man who was responsible for this achievement and that he would be
recorded as a greater builder than Peter the Great, or Catherine; that I was honored by
meeting the man who had builded for the practical benefit of common
men.
To this, Stalin demurred and
stated that the credit was not his; that the plan had been conceived
and projected by Lenin, who
had projected the original Dnieperstroi Dam project; that the
ten-year plan was not his work; that it was due to the three
thousand able men who had planned this work and those others of his
associates; and above all that it was the “Russian People” who were
responsible, and that he disclaimed any personal credit therefor. He
gave me the impression of being sincerely modest.
After about twenty minutes of conversation discussing my inspection
tours of the industrial regions, in the course of which he displayed
[Page 572]
a knowledge of my work
as Commissioner of Corporations77 and Chairman of the Federal Trade
Commission,78 I
started to leave. Stalin
asked whether I had to keep another appointment. When I said “No”,
he suggested that I do not hurry away. I then asked him what were
his views on the European situation. He replied that the outlook for
European Peace was very bad, and the summer might induce serious
trouble. He then went on to say that the reactionary elements in
England, represented by the Chamberlain Government, were determined upon a
policy of making Germany strong; and thus place France in a position
of continually increasing dependence upon England; also with the
purpose of ultimately making Germany strong as against Russia. He
stated that in his opinion Chamberlain did not represent the English people and
that he would probably fail because the fascist dictators would
drive too hard a bargain. He said that the Soviet Union had every
confidence that it could defend itself. Early in this discussion, I
broached the particular matter which President
Roosevelt had discussed with me orally
during my visit last January. To my surprise, in view of previous
information, it was favorably received. I was committed not to
disclose these discussions to anyone except the President and the
Secretary of State.
He then asked me whether he could ask me some questions, to which I
replied, “Of course”.
He then asked whether I was familiar with the pending negotiations
which the Soviet Government were having with the Government of the
United States in connection with the proposed contract for the
construction of a Soviet battleship by an American firm. He said
that the Soviet Government had difficulty in understanding why the
matter could not go forward; that they were prepared to expend sixty
to one hundred million dollars for the building of a battleship, and
were prepared to pay cash, both for the battleship to be built in
the United States and for the technical aid of American firms to aid
them in building a duplicate in the Soviet Union; that this would
afford employment to the unemployed, which would be desirable as he
was informed that the shipyards were only 60% occupied with present
contracts; that the Soviet Government could not understand why the
matter could not go forward. To this I rejoined that he was
misinformed as to the extent of unemployment as far as shipbuilding
was concerned; that the Government of the United States had recently
embarked on a huge shipbuilding program which would undoubtedly tax
our shipyards to the utmost; that there were also restrictions
imposed by law that would prevent the giving of plans for
battleships, or giving access to manufacturing plants which were
building battleships
[Page 573]
to
foreign countries, unless the Army and Navy would declare that this
would not be prejudicial to the military or naval defense of the
United States; that I was familiar only in a general way with the
negotiations which had been projected entirely in Washington and
knew of them only through the reports that had been sent to us as a
matter of official routine; that, quite frankly, it was difficult
for me also to understand just what the difficulty in the situation
was from the reading of the reports, but that I thought the matter
had recently given indications of going forward more rapidly. To
this Stalin rejoined that if
the President of the United States wanted it done he felt sure that
the Army and Navy technicians could not stop it, and that it could
be lawfully done. To this I rejoined that in all probability the
President of the United States knew nothing about the matter; that
if he did, it was quite probable that among the many domestic
problems which confronted him in connection with the closing session
of the Congress, he had not been able to give foreign affairs his
personal attention.
I then asked him which agency of the Soviet Government was
negotiating this matter—whether it was the Soviet Embassy in
Washington, Amtorg,79 or
the corporation called “Carp”.80
He asked me whether there was any prejudice against Carp. To this I said that I did not
know. He answered that Carp
was an American corporation; that its president was an “American
patriotic citizen” (a reference, I believe, to Molotov’s brother-in-law), and that
it had been considered that it might facilitate the matter, if the
contract were executed by such a corporation. I replied that, in my
opinion, there was no prejudice against any agency of the Soviet
Union, but that as a practical matter it would clarify the situation
for the authorities of the United States to know clearly that the
agency presenting the matter spoke authoritatively, and had both his
confidence and that of the Soviet Government. I then asked the
specific question whether the Carp Corporation was the agency to
deal with. To this he replied, “Yes”.
Stalin then said that there
was another matter that he desired to ask me about; and that was a
situation that had to do with the possible settlement of the debt of
the Kerenski Government to the Government of the United States. He
stated that it was their information that there was a group of
bankers who had close contacts with President
Roosevelt, who were interested in doing
business with the Soviet Government and who were prepared to finance
credits to the extent of two hundred million dollars over a period
of time for the
[Page 574]
purchase
of goods in the United States by the Soviet Government, provided the
consent of the Government of the United States could be had thereto,
and provided a portion of it were to be employed in the payment of
the Kerenski debt. He said that the amount that had been discussed
in settlement of this debt was $75,000,000; that the Soviet
Government might pay $50,000,000, provided credits could be arranged
upon a reasonable basis of interest and provided the Kerenski
obligation could be discharged by a payment of 10% of [or?] 15% of the amount of the credit upon the
execution of the agreement with the balance of payment spread over a
period of time in annual installments. He suggested originally that
the credit terms should be for ten years and that the debt should be
extended over a period of twenty years. To this I rejoined that as
it appeared to me, the proposition would appear to be more equitable
if the proposed liquidation of the debt was to be made in a shorter
period and certainly during a period not longer than the term of the
credit. Thereupon, with a chuckle, he suggested he might concede the
point and make the period of payments of the debt fifteen years and
also have the credits term also for fifteen years. With a laugh, in
which he and Molotov joined,
I suggested that this was most extraordinary as a “concession”.
Then, seriously, I said that in a large matter such as this and in
negotiation between two “big” principals, I would assume, that if
President Roosevelt and his Government could
agree upon the larger major issues involved, that there would be no
haggling over relatively minor factors, and that I would therefore
assume that the proposal made ultimately would provide for payment
of the debt during a period which would be at least not longer than
the period of the credit term. He smiled and seemed to acquiesce. I
then said I first wanted to disabuse his mind of any impression that
any private group of bankers was “close” to President
Roosevelt in this matter; or in any other
public matter.
Proceeding, I stated that I was very glad that he brought this debt
matter up; that, with permission I wanted to trespass upon his
patience and ask him to listen to my statement as to this debt
matter, which was rather a long story of negotiations, which
originated with the President and Mr. Litvinov’s agreement in 1933, and which had finally
resulted in failure and some misunderstandings and bitterness. I
then detailed the facts briefly as follows: That in 1933 when there
were many Japanese attacks on the eastern border of the U.S.S.R. and
when it was much to the interest of the Soviet Union to secure
recognition by the United States, certain agreements were entered
into which also served the interests of the United States; namely,
an arrangement whereby the Soviet Government would settle the claims
of American citizens and those of the Government of the United
[Page 575]
States against the Soviet
Union; that because Mr. Litvinov was obliged to leave before the arrangement
could be fully closed, the matter was left to be worked out as to
detail; that for guidance, a memorandum in the nature of a
gentlemen’s agreement,81
which set forth the understanding in principle was written and was
initialed by the President and Mr. Litvinov, which expressed the terms under which
these debts were to be paid, and that a loan or credit should be
made to the U.S.S.R. by the Government or its nationals; that at the
time this memorandum was made and the negotiations were being
conducted there was pending in the Congress of the United States a
proposal introduced by Senator Johnson, which provided that the Government of the
United States should in the future make no loan to any foreign
government which had not paid its debt to the Government of the
United States; that this was very well known to everyone and was
much discussed, and it was in anticipation that this bill would pass
and become a law82 that the parties entered into an
understanding that the loan or credit which was to be made to the
U.S.S.R. would be either by the Government of the United States or
its nationals; that the understanding was that the Soviet Union
would pay to the Government of the United States a sum to be agreed
on somewhere between $100,000,000 and $150,000,000 and that the
Soviet Government was to be provided with credits in the nature of a
loan to an amount of approximately $200,000,000 to be expended in
the United States through some agency; that the Export Bank to aid
private nationals to arrange such credits was organized for that
purpose;83 that subsequent thereto for a
period of a year and a half negotiations were had looking to the
implementing of this undertaking and formally concluding this
agreement; that there developed misunderstandings in these
negotiations; that finally an offer was made by the Government of
the United States, which in my opinion fulfilled in all respects
every honorable obligation that had been undertaken by the
President; that this offer had been rejected by Ambassador
Troyanovski upon the direction of his Government in 1935 upon the
ground that it was not in accordance with the understanding because
it offered not a loan by the Government of the United States but by
the nationals of the United States and upon the further ground that
the control of the purchases in the United States was not placed in
a Soviet agency but that the purchases were subject to the control
of this American agency; that what was offered was a credit and not
a loan.
I stated further that the total of claims against Russia of both
[Page 576]
private citizens and of
the Government of the United States with interest, which included
claims of private persons against the Tsarist regime, the claim of
the Government against the Kerenski Government and the private
claims against the Bolshevik Government amounted in the gross to
approximately $900,000,000 or $1,000,000,000; that the offer of
settlement in the sum of $100,000,000 by the United States was most
generous as it would provide less than ten cents on the dollar to
the private American claimants, particularly in view of the fact
that American nationals were providing an agency that would make
possible the extension of a $200,000,000 credit for purchases in the
United States by the Soviet Government; that the attitude of the
Soviet Union in this respect had been a great disappointment to the
President of the United States; that this matter was one of the
matters in difference pending between the two Governments when I
came here and that I would say (with undiplomatic frankness) that my
instructions were not to bring up or urge the matter of debt
settlement but to strongly take the position that we had done
everything that we were honorably committed or required to do and
that so far as we were concerned it was a closed book, unless and
until the Soviet Union wished to reopen the matter and fulfill its
honorable obligations; that I was therefore very glad that before my
departure to hear from him that the Soviet Government was seeking to
find a way to settle at least a portion of this debt situation.
To this he rejoined that the Soviet Government could not settle with
the United States the private claims of American citizens against
either the Tsarist regime or against the Soviet Government without
being obliged under treaties to make equally favorable settlement
with England and France as to similar claims, and that this would
entail too great a burden. What he had in mind was a formula that
would eliminate this difficulty. The Soviet Government could
differentiate a debt of the Russian Government to the United States
Government from a debt claimed to be due to private citizens of the
United States. Therefore the Soviet Government could settle the
Kerenski debt without such incidental and attendant difficulty with
France or England.
I then asked him exactly what the proposition was; and asked him to
please state it in detail. It was to pay $50,000,000 on the Kerenski
debt, provided a credit, above referred to, were extended to the
U.S.S.R. for a period of ten years in an amount of at least
$150,000,000, or more if possible. Payments on the debt to be 10% of
the total amount of the credit to be paid upon the execution of the
contract and the balance to be paid in equal annual installments
over a period of twenty years. The rate of interest would be the
usual going rate, both as to credits and also on the debt
obligation. I asked whether he knew what the amount of the Kerenski
debt was; that
[Page 577]
I did not
have it in mind. He replied that he did not know; that the Kerenski
records were not clear; to which I rejoined that I could readily
ascertain because I knew our records were clear because it was our
money that they had received. This caused a general laugh.
Upon my inquiry Stalin stated
that this payment would have to be in complete liquidation of all
claims. To this I rejoined that if that was the proposition, in my
opinion, it would be useless to even think of submitting it because
the sum was even less than the amount of the previous proposed
agreements. I then asked whether it would be possible for them to
confine the proposal to the Kerenski debt as a governmental debt and
leave the other claims for the future. To this he at first demurred.
I then said that my only object in bringing this point up was to
frankly give them my view as to what, in my opinion, would make it
useless to even submit a proposal, and that the proposal, in my
judgment, would not even be considered unless the arrangement could
be made without prejudice to other claims. I explained that in our
practice in drawing contracts we frequently resorted to that
principle, namely, that a single matter in difference between
parties could be settled, with an express reservation that such
settlement did not prejudice, or estop either party from asserting
any other claim in the future. He said that was agreeable.
Of course, throughout this discussion it was understood that the
remarks and inquiries I made were designed simply to explore the
exact terms of the offer. It was clearly stated that I, of course,
was not purporting to say what would or would not be acceptable to
my Government.
[Enclosure 2]
Memorandum by the Ambassador in the Soviet
Union (Davies)
Following the meeting with Stalin and Molotov and the discussions then had on June 5th, I
took counsel with Secretary Henderson and Counselor Kirk. We discussed the situation from all
angles.
It was fortunate that Mr. Henderson had participated in the original debt
negotiations and was personally familiar with all phases of the
matter, and that some time ago he had also, at my request, prepared
an able epitome of the history of the negotiations, together with a
very clear analysis of the difficulties which arose, and upon which
the negotiations foundered.
It was apparent that if this debt development were to be successfully
worked out, it would be necessary to obviate those difficulties
which prevented former success, and that therefore the proposal
[Page 578]
should be clarified and
amplified to disclose exactly how it was proposed to work out the
arrangement.
Accordingly, on June 8th, I asked for another conference, which was
arranged for one o’clock of that day. In order to prevent possible
publicity which might arouse speculation on the part of the press
and unwarranted assumptions, I asked Colonel Faymonville, driving his own car,
to take me to the Kremlin, rather than use one of the chauffeurs
here. I saw Mr. Molotov alone
and explained the situation as above, and suggested that I desire to
clarify in my own mind certain phases of their proposal and for that
purpose had prepared two memoranda as a basis of discussion. These
are hereto attached, Nos. 1 and 2.
The conference lasted about an hour and fifteen minutes. Mr.
Molotov stated that he
would wish to give the matter some more thought and that he would
let me hear from him later. I left Memorandum No. 2 with him.
Before leaving, I suggested that in as much as my relations with his
Government had been entirely with the Foreign Office, I desired to
have his consent to my taking the matter up with Foreign Minister
litvinov, to explain the situation to him, so that after my
departure negotiations could be conducted through regular diplomatic
channels on both sides. To this he said he had no objection and that
he would ask Mr. Litvinov to
get in touch with me.
On the following morning, June 9, I received a telephone call from
Mr. Molotov’s secretary
asking whether I could come over to see the Premier, as he had an
answer to the “proposals” which I had left the day before. I
immediately (and quite sharply) said that I had made no proposals,
that I had simply asked questions and left a statement of what I
understood the terms of their proposal were and had asked them to
verify that understanding and that the memorandum which I had left
with them would disclose that very clearly; that I was neither
empowered to make a proposal nor would I make a proposal. He
apologized profusely and stated that his English was faulty and
understood thoroughly that it was not a proposal that we had made;
that what he had meant to say was that Mr. Molotov wished to discuss the
questions raised in my memorandum further.
Pursuant to this telephone call, I again called upon Premier
Molotov at seven o’clock
on the evening of June 9. Colonel Faymonville again drove me over to the Catherine
Palace, which is inside the Kremlin walls. Premier Molotov said that he had taken up
the questions which I had submitted with all of his government
associates and that they had agreed upon the terms of a definite
proposal, which he had set forth in a reply to my questions. He
handed to me a letter signed by himself, which was in the Russian
language and addressed
[Page 579]
to
me, setting forth seriatim the terms of the offer. After the
memorandum had been translated, I stated that frankly I was very
much disappointed by the document; that it was not either in terms
of credit or amounts what I had understood the original proposal
made by Mr. Stalin to be;
that I feared it indicated a disposition to introduce a bartering or
trading atmosphere into the negotiations, which, in my opinion,
would be fatal, certainly if projected at this stage of the
developments; that the only hope of getting anywhere, in my opinion,
was to project this matter on a basis where the desirability and
feasibility of the proposal could be established between the heads
of the governments on broad lines in principle, and that if that
were accomplished there was no reason to believe that a large-minded
approach between two big principals would not permit relatively
small matters to prevent the accomplishment of the main objective
and that they would not permit antagonisms over small matters and
conflicts in personality to develop through a desire to “outtrade
the other fellow.”
The Premier then stated that the memorandum was not in any sense a
hard and fast proposition; that he agreed with me as to how the
matter should be projected; that he would keep the situation from
developing into a hardened state; that this would serve to make a
start and to clarify the situation until he had heard further from
me.
I then asked to have the Russian memorandum translated by them into
English so that I could have their version of the meaning. They said
they would have it for me and would deliver it promptly.84
Premier Molotov then went on
to say that the U. S. S. R. was in no serious need of credits; that
they had been offered very large credits by Germany in the very
recent weeks, which they were not going to accept under any
conditions; that their balance of trade was favorable, etc.; that
his Government and Stalin
were, however, really desirous of getting this debt matter cleared
up because of their high regard for the United States, etc., and
that therefore they were initiating the matter in this manner; that
they would like to know from me as soon as possible what the
reaction of the President and the Secretary of State would be to the
possibilities of some arrangement along the general lines of our
discussion; that, in any event, whether it was finally successful or
not, one thing at least would have been accomplished, to wit, the
manifestation of their good will and, finally, in any event there
would always be a kindly feeling in their minds with reference to
these discussions and these negotiations which had been discussed by
the heads of the Government and by Mr. Stalin with the American Ambassador.
[Page 580]
Then to my surprise, he said that he thought it would be better if
the matter were kept out of the usual diplomatic channels for the
present. He stated that the matter had originated on the business
side of the Soviet Government’s activities in the United States with
Mr. Rossov, head of Amtorg,
and that he thought it would be better to hold the matter
exclusively in that atmosphere until it had progressed into stages
where there was a possibility of having a definite agreement made.
He therefore stated that the matter would not be taken up by
Ambassador Troyanovski and he would prefer not to have it discussed
with him or with the Embassy in Washington. He also said that they
desired that I should not take up the matter for the present with
Foreign Minister Litvinov. To
this I demurred on the ground that it would be difficult for me to
communicate with him, except through our diplomatic channels, or
through their Foreign Office. He said for the purpose of the
immediate present he would find means of communicating with me and
that I could communicate with him through Mr. Rossov in New York.
Again I suggested that I felt that both the conventionalities and in
fact my personal obligations required that the matter should be
projected through our regular staff and through Mr. Litvinov. He stated that this would
come in good time if the matter developed and that he would assume
any responsibility for the situation so far as Mr. Litvinov was concerned; that he
would take the matter up and explain it to Mr. Litvinov himself, if necessary.
In order that they should not obtain the idea that I had returned for
details because of any possible lively interest on the part of the
Government of the United States on the assumption that I had
communicated the matter to the President and to the Secretary of
State, I stated to Mr. Molotov that I had not set forth the details of the
debt proposal but had covered it and the discussions generally in my
cable to the Department; that I had requested the Secretary of State
and the President personally to be permitted to return to the United
States to take my oath there and receive instructions before going
to Brussels; that I had received such permission and was, therefore,
going to the United States and would report the entire situation to
my Government, in the hope that it would start negotiations that
might finally be successfully concluded.85
[Page 581]
He stated that his Government and he were very glad that I was
returning to the United States and would explain not only the
proposal but interpret the spirit which actuated his Government.
He also emphasized that at present he thought that the less publicity
had and the fewer people that knew about this situation until the
matter were agreed upon in principle, the better. With this I agreed
heartily.
There will be attached hereto as Enclosure No. 3 the translation of
the memorandum furnished to me as soon as I receive it.86
