611.6131/521: Telegram
The Chargé in the Soviet Union ( Kirk ) to the Secretary of State
[Received August 5—6:08 p.m.]
232. My 230, August 5, noon.29 I have just seen Litvinov and repeated to him the observations and views which were set forth in particular in the Department’s 94, June 24, 7 p.m.; 120, August 2, 6 p.m., and 124, August 4, 5 p.m., paragraph 1, and which had already formed the bases of my representations to officials of the Foreign Office and also presented for his perusal informal memoranda based on those telegrams. I stressed the definite and constantly increasing value to Soviet trade and [of] the trade agreement policy of the United States Government and emphasized the importance to the progress of commercial relations between the two countries of declaring an increase in the minimum guarantee of purchases by the Soviet Union.
Litvinov replied that he appreciated the strength of these arguments but said that the foreign trade authorities of the Soviet Union had decided that no such increase could be declared unless the United States should grant customs reductions in order to benefit Soviet imports, that the Government had confirmed that decision after a long delay and that as matters now stood there was no present possibility of obtaining a modification of the Government’s position. I particularly requested him to attempt, in the few hours remaining, to obtain authorization to consent to an increase in the guarantee but he declared that it was absolutely impossible. I was accordingly constrained to accept that refusal and consent to effect the exchange [Page 619] of notes on the basis of a minimum guarantee of purchases of American goods “to the amount of at least $40,000,000”.
The following exchange of notes accordingly were signed at 5:00 o’clock this afternoon.
- 1.
- The principal exchange in accordance with the text contained in the Department’s 120, August 2, 6 p.m., dated August 5, 1938 without the clause mentioned in paragraph 7 of the above-mentioned telegram. As stated in my 226, August 4, 4 p.m.,30 “Council of People’s Commissars” was substituted by [for] “Soviet of People’s Commissars”.
- 2.
- Exchange of letters concerning purchases as in current agreement with same minimum guarantee of $40,000,000. My letter of inquiry was dated August 2, 1938 and Litvinoff’s reply dated August 4, 1938.
- 3.
- Exchange of letters concerning coal sale and quota both dated August 5, 1938 following the texts prescribed in paragraphs 9 and 10, Department’s telegram No. 120, August 2, 6 p.m. The Foreign Office was informed that proclamation by the President would take place as of August 5 and it was agreed that approval by the Council of People’s Commissars would be of the same date.
In conclusion, I might add that Litvinov expressed an interest in a more comprehensive commerce with the United States and mentioned the possibility of exchanging notes at a subsequent date to the general effect that in the event that some arrangement might be arrived at whereby additional facilities might be accorded to Soviet imports into the United States, the economic organizations of the Soviet Union would be willing to increase the minimum guarantee of purchases beyond the amount stipulated in the letter of agreement concerning purchase signed today. I informed Litvinov that, as previously stated, my Government maintained that the increase in minimum guarantee was justified on the basis of the present and assured benefits to Soviet trade from our trade agreement policy, and pointed out that his proposal did not recognize that position. I agreed, however, to refer this suggestion to the Department for its information and for possible consideration in setting an appraisal of the Soviet attitude towards commercial accords in connection with any press statement that might have to be issued on the occasion of the present renewal of the commercial agreement.
In the absence of instructions, I shall reply to any inquiries as to the renewal of the commercial agreement merely to the effect that the current agreement has been renewed for 12 months and that any announcement that may be made will be issued in Washington.
[The text of the agreement effected by exchange of notes signed August 5, 1938, and effective August 6, 1938, is printed in Department of State Executive Agreement Series No. 132; 53 Stat. 1947. For text of press release issued by the Department August 6, 1938, see Department of State, Press Releases, August 13, 1938, page 110.]