The Chargé in Lithuania (Stafford) to the Secretary of State
[Received May 15.]
Sir: I have the honor to transmit herewith a memorandum prepared by Mr. Basil F. Macgowan, clerk in the Consulate, of a conversation relating to Lithuanian trade practices and restrictions which he had with Mr. Bronius Garsva, of the Ministry of Finance. It is of interest as revealing the Government’s policy of attempting to balance the trade with individual countries and of encouraging importation from those which are important buyers of its own products, to the detriment of less important customers.
American purchases in this country are not sufficiently large to induce a change in policy to the disadvantage of European countries, particularly Great Britain, and in matters of this kind it does not appear probable that the Government would take into consideration the important invisible exports from the United States in the form of remittances and pensions. Nor could the fact that the balance of trade was in favor of Lithuania in 1933 and continues so be expected to constitute a determining factor, simply by reason of the comparatively small volume of the trade exchange.
Therefore as conditions do not appear to warrant any system of government guarantee, individual American firms might find it profitable to consider the policy of marketing Lithuanian products in return for orders placed here. I refer especially to firms interested in government purchases of equipment and supplies.
Charges of discrimination of American goods made by certain local merchants are more general than specific. In fact, the only actual complaint to the Consulate is that made by the local agent of the Chevrolet automobile who reported that his bid for certain cars for the use of a government department, although lower, was not accepted and the order was placed with the British firm manufacturing the Morris car. He was asked for data upon which an investigation might be conducted but neglected to supply them.[Page 621]
Officers of several government departments when asked why more American equipment was not purchased have stated that they were not permitted to do so, indicating a policy to place orders, regardless of bids, where the Government considered best for the economic good of the country.
Perhaps the plan for purchases by the Ministry of National Defense, mentioned in the strictly confidential portion of the attached memorandum, is worthy of more consideration than the Legation is at present inclined to give. Nevertheless, one of the most important divisions of that Ministry has let it be known that it is not bound to the restrictions on purchases and would buy the equipment which its experts recommended. This was shown in its recent orders for American-made aircraft defensive apparatus and the fact that it was ready and willing to purchase a type of American artillery had not the American firm been found to be unprepared to manufacture and deliver within a reasonable time, greatly to the disgust of the Lithuanian commission which went to New York to inspect the arm and witness demonstrations of its operation, (Please see consular despatches No. 459 of January 29, 1934, No. 460 of January 31, 1934, and No. 492 of March 26, 1934).1
In the purchase of the aircraft defensive instruments the purchasing officer, in order to comply with the insistence of the Finance Ministry, finally consented to accept the American offer upon a reduction in the stipulated price by 10 per cent or the supplying of auxiliary appliances to approximately the same value. The company agreed to the latter. It is not a practice that may be followed consistently, although there is no reason to believe that it will not be resorted to again under favorable conditions. American firms, of course, could prepare their price quotations accordingly.
Government bids for equipment employed by technical departments, such as for railway and construction use, are perfunctory and often so worded as to bar material other than that previously decided upon and from firms with which satisfactory arrangements have been made.
The Legation has been assured by both Mr. Garsva and Mr. Jonas Norkaitis, Director of the Trade Division of the Ministry of Finance, that even should the license system, now affecting 11 products none which is imported from the United States, be extended no licenses would be refused to those desiring to import American goods. Nevertheless, applicants for licenses are known to have been persuaded by the licensing authorities to purchase from favored countries and while not refusing the requested permits, the effect has been the same. There [Page 622]is no reason to believe that American goods would not be adversely affected in the same manner.
The Legation will continue to observe the situation in the interest of American trade, however small, and would welcome any suggestion which the Department might decide to offer.