800.51W89 U.S.S.R./49: Telegram
The Ambassador in the Soviet Union (Bullitt) to the Secretary of State
[Received 2:10 p.m.]
81. Litvinov absent yesterday. Shall see him today and without committing our Government in any way shall attempt to discover how far he will go.
I am grateful for the suggestion in your 73 in regard to clarification of certain points in your 72. It will be valuable to me to have more detailed instructions on the following points:
- 1.
- Last sentence of paragraph number 1. Litvinov promised to pay the indebtedness only by extra interest on credits. To obtain from him a promise to pay a fixed amount of indebtedness unless he is promised a fixed amount of credits for fixed periods I believe will be impossible. Is the bank prepared to fix definitely the amount and duration of credits to be extended regardless of credits which may or may not be extended by American corporations or individuals and regardless of conditions in the Soviet Union?
- 2.
- As you know Litvinov is violently opposed to any interest on the acknowledged indebtedness and denies all obligation to pay interest. [Page 95] In view of his attitude would the Department consider acceptable 2 or 3 percent interest on the indebtedness.
- 3.
- Paragraph numbered 2, first sentence. Litvinov will argue that the facetiousness [sic] in regard to the Soviet Government becoming unstable or war occurring will prevent a fixed agreement as to credits hence a fixed agreement as to payment of indebtedness.
- 4.
- Does the word “support” mean that the bank itself will discount Amtorg obligations to an amount double the agreed indebtedness or that the bank will merely assist in financing an indefinite proportion of credits to double the amount of the indebtedness?
- 5.
- Litvinov has been demanding a 20-year credit period if the bank insists that no credit shall run longer than 5 years as indicated by the second sentence of paragraph numbered 2. Is the bank prepared to agree to re-lend immediately all repaid amounts and to keep outstanding a continuous line of credit of any fixed duration to an amount double the total indebtedness? Or, alternatively, might the bank extend credits for a period substantially longer than 5 years?
- 6.
- What amount of Amtorg obligations is the bank prepared to discount at once?
- 7.
- If Litvinov should acquiesce in a 5 percent normal interest rate plus 5 percent to be applied to both principal of and interest on debt would such a settlement be satisfactory to the Department?
- 8.
- Paragraph numbered 4, second section. Can the bank indicate a minimum amount of each credit which it would be prepared to carry?
At the present moment it will be difficult if not impossible to tie the Soviet Government to a definite fixed engagement unless the bank is ready to make a definite commitment. If we wish to reach a settlement now we must face this refractory fact.