800.51W89 U.S.S.R./22½
The Ambassador in the Soviet Union ( Bullitt ), Temporarily in Washington, to the Secretary of State
Dear Mr. Secretary: Mr. Troyanovsky, who is still suffering from rheumatism and felt unable to visit the Department, asked me again today if I would call on him. I did so at 2:30 p.m.
1. Mr. Troyanovsky first inquired if we had made any progress in getting ready to discuss the question of claims of the American Government and American nationals against the Soviet Government and the correlated question of credits. I told him that we regretted the delay as much as he did, but that we hoped to be able to take up these questions seriously on Monday.1 I explained to him that we were organizing a bank to handle the matter of credits and that we hoped to have this organization functioning some time during the coming week. He asked if he might come to the Department on Monday in order to discuss the total sum to be paid to the United States by the Soviet Government and the question of normal interest rates on loans and the additional interest rate for the extinguishment of our claims. I told him that we should be glad to see him at any time that was convenient to him and he fixed 11:30.
We had an entirely informal discussion of the matter, prefaced on my part by the explanation that nothing I said must be regarded as binding in any way on the American Government. I told Mr. Troyanovsky that I considered that a payment by the Soviet Government to the Government of the United States of $150,000,000 was an absolute minimum. I pointed out that the dollar had been devalued to 60 per cent of its former value and that $150,000,000, therefore, represented merely $90,000,000 at the old rate of exchange. Mr. Troyanovsky seemed to accept this statement of mine as entirely reasonable and I believe that we should insist on the payment being [Page 64] not a penny less than $150,000,000. We then went on to talk about normal rates of interest and the additional interest payments. I pointed out to Mr. Troyanovsky that on normal credits from England and Germany the Soviet Government had been paying in the case of England 15 per cent and in the case of Germany 14 per cent. He asked me what I called a normal rate of interest to foreign governments in this country at the present time. I replied that I could not conceive of any foreign government obtaining money at less than 7 per cent. I then pointed out that the larger the additional interest rate and the smaller the normal interest rate the better from the point of view of the Soviet Government and told him, for example, that an additional interest rate of 10 percent, with a normal interest rate of 5 per cent, would be of greater value to the Soviet Government than a normal interest rate of 7 per cent and an extra interest rate of 8 per cent. I did not make any statement as to the actual rates which would be the subject of discussion. I was surprised, however, that he did not seem shocked by the example I gave him, which would mean a 15 per cent payment.
2. Mr. Troyanovsky then asked me about the question of visas for our passports. I explained to him that we had only two statuses: (1) the status of officer, and (2) the status of clerk. He said that he was in doubt as to whether or not he could give diplomatic visas to men who were not to go on the diplomatic list in Moscow, even though they should carry diplomatic passports. I said I considered the matter one to be decided entirely by himself and his Government. He asked me about my personal secretary and I said that my personal secretary had merely the status of a clerk. He said that he would like to give him a diplomatic visa. I said that that would be very agreeable. He then said that unless he received instructions from his Government to the contrary before Monday morning he would give diplomatic visas to all our officers and clerks.
3. We then discussed briefly the question of the building site for the embassy in Moscow. I told him that you and the President were both pleased by his letter to me2 offering to give us the magnificent site in the park and any additional property we might wish at an annual rental of $2,000 a year, but that the President would be even more pleased if it should be possible to have an additional promise that at the end of the expiration of the 99-year lease it might be renewed. Mr. Troyanovsky said that he would think the matter over and he hoped to be able to bring to the Department on Monday morning a note stating that the lease would be renewable for another 99 years, at the expiration of the first period.
4. Mr. Troyanovsky then asked me if I had seen the remarks of [Page 65] Ambassador Saito on his arrival in New York, and said that he was convinced from Saito’s remarks and a letter which he had just received from Baron Shidehara that the Japanese were not going to attack the Soviet Union this spring. He read me Baron Shidehara’s letter, which he prefaced by saying “This letter was certainly dictated by Hirota.” In Shidehara’s letter to Troyanovsky, Shidehara said, “It would be absolutely madness for Japan and the Soviet Union to fall into war with each other. I see no possibility of any such eventuality and I am certain that wiser counsels will prevail in both Tokyo and Moscow.”
5. Mr. Troyanovsky also told me that the Soviet Union was considering seriously taking a one-third interest in the Scantic Line; that the Soviet Union had avoided taking a minority interest in any organization and would continue to do so except in the case of the United States, but that there was such confidence in Americans at the present time that the Soviet Union might be disposed to do this.