The Chargé in Estonia ( Carlson ) to the Secretary of State

No. 283 (Diplomatic)

Sir: I have the honor to refer to the Department’s instruction (No. 21) to the Tallinn Legation dated December 12, 1934,2 Department’s file number 660i.116/23, as well as to earlier correspondence3 on the subject of the treatment being accorded to American trade under the present foreign trade policy and practices of the Estonian authorities.

In the instruction under reference, the Legation was requested to seek an early interview with the Estonian Minister for Foreign Affairs and to point out to him that the American Government was viewing with anxiety the increasing difficulties which American trade was encountering in Estonia. At the same time the Legation was requested to leave with the Minister for Foreign Affairs a memorandum embodying remarks contained in the above-mentioned instruction on the subject of the exchange of commodities between the United States and Estonia.


In compliance with the above instructions, an interview was arranged with Foreign Minister Julius Seljamaa on January 3, 1935, at which time the enclosed memorandum4 was handed to him. At the same time oral representations were made to the Foreign Minister with regard to difficulties resulting from the direct intervention of the Estonian authorities in the field of American-Estonian trade with a [Page 180] view to restricting trade from the United States and directing to other countries, particularly Great Britain, the importation of commodities formerly obtained in the United States. In its conversation with Foreign Minister Seljamaa, the Legation stressed, in particular, the policy and practices pursued by the Estonian Government to discriminate against imports from the United States in the administration of the import license and foreign exchange restrictions.

In reply, Foreign Minister Seljamaa took up a recent Estonian publication* containing, among other things, a table showing Estonia’s foreign trade totals with individual countries for the past three years. He pointed to the figures for Great Britain which indicated that, according thereto, the Anglo-Estonian commodity exchanges had given favorable balances for Estonia of Ekr.6 10,132,000 ($2,753,000), Ekr. 7,550,000 ($2,051,600) and of Ekr. 17,639,000 ($4,793,000) in the first eleven months of each of the years of 1932, 1933, and 1934. He also pointed to corresponding figures for the United States which showed unfavorable foreign trade balances for Estonia of Ekr. 1,942,000 ($527,700), Ekr. 1,521,000 ($413,300) and of Ekr. 3,373,000 ($916,600) for the same period. The Minister thereupon asked with a slight expression of emotion whether the United States was not satisfied with a foreign trade situation which gave it such a decided advantage. Estonia, for its part, he said, was not satisfied, and an increasingly large number of voices were being raised calling for a correction of the status of Estonia’s commercial dealings with the United States. Still somewhat under the influence of his emotions, the Foreign Minister added that the “great” United States could not well expect “little” Estonia to do more than it was doing at present as far as the importation of American goods was concerned.

The Legation thereupon assured the Foreign Minister that the Government of the United States was by no means referring to difficulties encountered in Estonia by American trade which had their origin in the restrictive measures introduced by Estonia to safeguard its financial system during the economic depression. It did, however, have reference to the difficulties which American trade was experiencing in Estonia because of the existing trade policies which tended to divert trade away from the United States and direct it to other countries, particularly Great Britain.

Foreign Minister Seljamaa was visibly moved as he defended the existing status of the trade relations between Estonia and Great Britain. He said that British purchases of Estonian export products [Page 181] were of such fundamental importance to the entire Estonian economic structure that Estonia could not well run any risks which might tend to curtail this trade outlet. Great Britain was also aware of this situation and was making use thereof by bringing pressure to bear upon Estonia with the view of increasing the consumption in Estonia of British-produced goods. Minister Seljamaa went on to say that, in this very vital question, Estonia had no alternative but to yield to the British requests. He added that, in his opinion, it should not be difficult for the United States to realize the importance to Estonia of the latter’s export trade with Great Britain.

The Legation explained in detail the broader points of view which the Government of the United States held on the subject of international commodity exchanges and expressed the hope that the Estonian Government would accord to American goods about to be imported into Estonia the same equality of treatment which was extended to Estonian goods on the American markets. The Legation also requested for American trade the treatment to which it was entitled under the existing treaty of friendship, commerce and consular rights between the two countries.

Minister Seljamaa went on to explain that for the time being, Estonia was obliged to adhere to the principle of balanced foreign trade accounts with all countries with which it had trade relations and that it could not well depart from the practice of directing its imports to those countries with which it had favorable foreign trade balances. He stated, in conclusion, that, in its reply to the memorandum which had just been presented, the Estonian Government would probably review the present status of the trade relations between Estonia and the United States with the view of bringing about a situation more favorable to Estonia.

. . . . . . . . . . . . . .


The Legation did not hear again from the Estonian Foreign Office about the above subject until January 23, 1934 [1935]. On that date a telephone message was received from Mr. Wirgo7 stating that the Foreign Office reply to the Legation’s memorandum was ready. The reply was handed to the Legation later in the same day. A copy of the reply, which is also in the form of a memorandum, is attached hereto.8

[Page 182]

In handing the Estonian memorandum to the Legation, Mr. Wirgo said that the principle of balanced foreign trade accounts was of such vital importance to Estonia that it could not be abandoned. Consequently Estonia would be obliged to continue to pursue the policy of directing its imports to countries with which it had favorable foreign trade balances and, in the first place, to Great Britain and Germany.

Mr. Wirgo went on to say that, since the Legation’s memorandum of January 3, 1935, had been presented, he had made careful investigations of the charges of discrimination against American goods advanced by the Legation. In consequence he was able to assure the Legation that from now on the lesser employees at the Bank of Estonia and at the Ministry for Economic Affairs would refrain from all attempts to direct trade away from the United States to any other country. The foreign exchange situation in Estonia had improved very greatly of late, and it was now possible to grant currency more freely than before. In the future no difficulties would be made in regard to requests made for foreign exchange with which to pay for American goods when imported in small quantities. When, however, larger quantities were involved, the authorities reserved the right to handle the matter in the light of the balanced foreign trade account principle.

Mr. Wirgo thereupon went on to say that, in its reply to the Legation’s memorandum, the Ministry for Foreign Affairs expressed its readiness to listen to proposals having for their object the increase of Estonia’s exports to the United States. An advance in the volume of such exports constituted, he believed, the only certain means of removing the difficulties in the way of the free entry of American goods into Estonia. He pointed out that the present treaty of friendship, commerce and consular rights between Estonia and the United States would expire in 1936. An opportunity for the revision of the above treaty would thereby be afforded. In passing he wished to call attention to the very favorable results which had been derived from the foreign trade clearing agreements between Estonia and France and between Estonia and Latvia.

The Legation expressed to Mr. Wirgo, in behalf of the Government of the United States, its appreciation of the efforts which he had put forth to facilitate the admission of American goods into Estonia. It stated, however, that it had nothing to say on the proposals which he had advanced, whereupon the conversation came to an end.

. . . . . . . . . . . . . .

Respectfully yours,

H. E. Carlson
  1. Ibid., 1934, vol. ii, p. 131.
  2. See instruction No. 12, July 24, 1934, to the Chargé in Estonia, ibid., p. 129; and report No. 43 from the Consulate at Tallinn, October 6, 1934, ibid., p. 130.
  3. Not printed.
  4. “Välisministeeriumi Väliskaubanduse Osakonna Teated” (Bulletin of the Foreign Trade Bureau of the Estonian Foreign Office) No. 22 of December 31, 1934, Pages 223–224. [Footnote in the original.]
  5. Estonian Krone, 3.77 to $1.00 on the Tallinn exchange in 1935.
  6. Edward Wirgo, Director of the Foreign Trade Bureau of the Estonian Foreign Office.
  7. Not printed.