800.51W89 U.S.S.R./27: Telegram
The Ambassador in the Soviet Union ( Bullitt ) to the Secretary of State
[Received 11:54 p.m.]
33. Litvinov today informed me that the Council of People’s Commissars had decided that it would arrange the matter of indebtedness to the Government of the United States and American nationals by way of a long-term credit operation and that the Soviet Government would not insist upon a loan. He said that he was authorized to make the following proposal: that a 20-year credit should be extended by the Export–Import Bank for double the amount of the sum to be paid in settlement of claims by the Soviet Government; that if the amount should be fixed at $75,000,000 the credit should be for $150,000,000; that if the sum should be $100,000,000 the credit should be for $200,000,000. He proposed that a credit to this undetermined amount should be opened by the Export-Import Bank to be drawn upon by the Soviet Government if, as and when the Soviet Government needed cash to pay for purchases made in the United States. He asserted that the Soviet Government desired to make all purchases in the United States in cash. I recurred to this point three times during our conversation but he insisted that this was so.
He proposed that the interest on such a credit should be 4% during the first 4 years without extra interest payments applied to liquidation of debts and that the interest should be 4% plus 3% additional interest for the subsequent 16 years. The additional 3% over a period of 16 years would thus cover 96% of the recognized claims. I told Litvinov that I was certain that the sum mentioned for extra interest payments, 3%, would prove to be entirely inacceptable but that I would communicate his proposal to my Government and would refrain from further comments to him until I had received instructions from Washington.
[Page 76]I should have taken a stronger line of opposition to Litvinov’s proposal except for the fact that it marked a retreat from his position that there must be a loan or no settlement.
I reminded Litvinov of his promise to the President that he would recommend a payment of $100,000,000 in settlement of claims. He said that he was still ready to do so if the President should insist but that the documents which had been turned over to the Soviet Embassy in Washington had revealed the fact that the Kerensky government had received almost none of the funds placed at its disposal by the Government of the United States and that Bakhmeteff and Ughet had used these funds for the support of themselves and various armed attacks on the Soviet Government.13 He mentioned specifically Yudenich 14 and Denikin.15 He said that he would have a dossier ready for me on this subject within 2 or 3 days which he was sure would appeal to the fair-mindedness of the President.
Litvinov said that he did not expect to leave Moscow for the meeting in Geneva on April 10 but I suspect that he will do so at the last minute and I suggest that the Department should if possible let me have its views in regard to his proposal within the new [next?] few days.
Litvinov said further that he hoped the Government of the United States would not interpret the Johnson bill to mean that it would be unlawful for anyone to extend ordinary trade credits to the Soviet Government. I should be greatly obliged for information on this point. Litvinov added that it was necessary to make many purchases immediately which purchases would be made by Arcos in London if they could not be made by Amtorg in the United States.
I am informed by a private source that the Swedish Parliament may refuse to vote the proposed credit to the Soviet Government. If this rumor should prove to be true we shall find Litvinov more amenable.
- See correspondence concerning the liquidation of the obligation in the United States of the Russian Provisional Government, Foreign Relations, 1922, vol. ii, pp. 877 ff.↩
- See Foreign Relations, 1919, Russia, pp. 666 ff.↩
- See ibid., pp. 750 ff., and Foreign Relations, 1920, vol. iii, pp. 571 ff.↩