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

No. 81

Sir: With reference to the Department’s unnumbered instruction of August 1, 1939,79 requesting the Embassy, on behalf of the Department of Commerce, to furnish information as to the contract requirements of the Soviet Government in respect of purchases from foreign nationals, I have the honor to inform the Department that since all economic activity in the Soviet Union is under the control of the State and since the Soviet Government enjoys a complete monopoly of foreign trade, all Soviet purchases of foreign merchandise and services are effected through specially authorized Soviet organizations.

Orders placed by the Soviet Government with foreign firms are ordinarily concluded in the Soviet Union or abroad after at least preliminary negotiations have been opened abroad with a number of firms. Such negotiations are usually carried on in the United States through the Soviet Government’s principal purchasing and selling agency, the Amtorg Trading Corporation of New York City. In this connection it should be pointed out that for several years no representatives of foreign firms have been permitted to reside permanently in the Soviet Union. Moreover, the Soviet Government does not desire to transact business through intermediaries, such as commission agents and brokers and does not permit such agents to engage in any commercial activity on its territory. It may be pointed, out also that the Soviet Government does not purchase merchandise or services from foreign firms on the basis of public bidding. A small number, however, of representatives of foreign firms are permitted to proceed to Moscow for the purpose of concluding contracts concerning which, as previously stated, negotiations usually have been opened by Soviet organizations abroad such as the Amtorg Trading Corporation. Although such factors as price, quality, credit, and terms of delivery determine to a large extent the purchase abroad of goods and services by the Soviet Government, it should be noted that that Government [Page 784] often places orders for political purposes. In fact, prior to the outbreak of the present war, it was the avowed policy of the Soviet Union, when effecting foreign purchases, to take into consideration the political relation existing between itself and the foreign country or countries where the orders could be placed. It is likely that such a policy will be followed by the Soviet authorities under war conditions with even greater vigor than has been the case heretofore.

Respectfully yours,

Laurence A. Steinhardt
  1. Not found in Department files.