800.51W89 U.S.S.B./24: Telegram

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

24. Litvinov, in another long conversation at the hospital today, reiterated his unwillingness to settle on the basis of credits saying “We shall never accept credits in place of a loan. We might agree to spend the entire proceeds of a loan in the United States but what we insist upon is a straight loan like the one the Swedish Government has just granted us so that we can pay for all our American purchases in cash.”

I replied that the message I had received from the President was decisive, that no loan could or would be granted. I added that if his position should be unalterable I would wish to cable the President immediately so that the Export-Import Bank might be liquidated at once and all thought of trade with the Soviet Union abandoned. I then expressed the hope that in the absence of trade our relations might nevertheless remain friendly. Litvinov answered: “We could remain on friendly terms with the United States without mutual trade but I fear that the United States would not remain on friendly terms with the Soviet Union.” I made no reply as it seemed to me that he had caught with sufficient force the implication of my remark. Litvinov then said that he had not yet submitted the question to Stalin but would do so within the next 2 or 3 days in writing as he will be confined to the hospital for at least a week. He said that his Government might wish to make a decision while he was still in the hospital but that he thought decision would be delayed until he could discuss the matter with Stalin personally and perhaps until Bogdanov’s arrival at the end of this month.

It seems to me highly desirable that the Johnson bill should be passed as soon as possible and that the Department should adopt a firm attitude with Troyanovsky and bring to his attention the revulsion of feeling which would be likely to take place in the United States if the Soviet should so soon after recognition fail to continue the policy of cooperation between our two countries.

Previous negotiations with Litvinov have led me to observe that his decisive negations are often followed by acquiescence and I do not consider the present problem insoluble.

Bullitt