660M.116/5
The Minister in Lithuania (MacMurray) to the Secretary of State
[Received February 28.]
Sir: Referring to your telegram No. 5, February 6, 5 p.m., to this Legation, and to a similar telegram to the Legation at Riga,4 I have the honor to recall that, in a despatch (No. 611) from Riga, January 31st last,5 I reported that such degree of discrimination against American trade as exists in Estonia6 and Latvia7 is not wilful but a consequence of inescapable exigency arising out of the fact that England and Germany (which afford virtually the sole markets for their products) will buy only relatively to the takings of their own goods. The resulting tendency to use the complicated system of import and exchange controls so as to throw business towards England and Germany does not seem to me to constitute [Page 567] an actual violation of the most-favored nation provisions of our treaties. And even though for my own part convinced of the existence of such a tendency, I feel that we are not in a position to substantiate a complaint by concrete evidence. Nor have we means of pressure available, since we enjoy a favorable balance of trade with both countries. My own judgment is therefore strongly against any attempt to force an issue with them, which cannot be expected to give any satisfactory result, and which would risk driving them into definite and uncompromising adherence to the principle and the practice of bilaterally balanced trade, and impelling them to take (as the Estonian Government is already considering) action at the first available opportunity to terminate their commercial treaties with us and so disembarrass themselves of our importunities.
As regards Lithuania, however, it is to be feared that the tariff and other restrictive measures promulgated on February 7 and reported in my telegram (No. 8) of February 8, 2 p.m.,8 may be so administered as to serve the purpose of reducing imports from the United States. While motivated by the same compulsion, such a development could be justified by no such plea of necessity as in the case of the other two Baltic States, since the balance of trade with us is already somewhat in Lithuania’s favor; and the balance of payments is even more favorable to her because of remittances from Lithuanians in the United States (estimated at about $2,500,000 each year) and payments to veterans amounting to almost $240,000 a year.…
While the problems of discrimination in the three Baltic States are relatively trifling in the material sense, they may afford a possibility of such treatment as would be in itself effective in some degree and might have an influence in this quarter of Eastern Europe. To realize this possibility, however, it seems to me necessary to conform to the requirements of the tactical situation. That, in my judgement, would dictate our ignoring (at least for the time being) the really weak trial cases we have against Estonia and Latvia, and awaiting the development in Lithuania of a situation which (as we apprehend) will furnish us a case at once more flagrant and tactically more advantageous for effective action. The success of protests in that case would strengthen any subsequent representations to the other two Baltic countries; whereas a sterile dispute with Estonia and Latvia would not only avail us nothing, but would actually impair the force of our representations here. It is therefore my urgent recommendation that we should, in this matter, refrain from further action until we have a demonstrable case against Lithuania.…
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Respectfully yours,