660M.116/15
The Chargé in Lithuania (Hubner) to the Secretary of State
[Received September 3.]
Sir: I have the honor to refer to the Department’s telegram No. 8 of July 19, 4 p.m. instructing the Legation to request the Lithuanian government to set forth in writing its attitude with regard to the importation into Lithuania of petroleum products of American origin [Page 573] and to the Legation’s telegram No. 21 of August 19, 4 p.m.16 which conveyed the substance of a note dated August 17, 1935, from the Lithuanian government in this connection. The complete Lithuanian text, together with a translation, of the Lithuanian government’s note is transmitted herewith as well as the texts of the Legation’s notes of July 23 and August 10, 1935.17 Reference is also made to the Legation’s telegram No. 19 of July 22, 4 p.m.16 and despatches Nos. 284, 285 and 288 dated July 26, July 27 and August 1, 1935.18
The note states that the Lithuanian government is seeking possibilities for the importation of American petroleum products to an extent commensurate with former American participation in the Lithuanian market and will direct its efforts to this end. Assurance is given that no impediment will be placed in the way of imports of lubricating oils and the hope is expressed that greater latitude may be possible with regard to imports of gasoline.
It is stated that imports of kerosene and gas oil will be beset by difficulties due to the fact that the Lithuanian government, to assist agricultural exports, has been forced to accept an obligation to import kerosene and gas oil (the obligation to which reference is made is the Russo-Lithuanian Commercial Compensatory Agreement which was signed at Moscow during March, 1935,—see the Legation’s despatch No. 284 of July 26, 1935). The note concludes with an expression of the belief that negotiations now in progress between the government and the principal importer of American kerosene (and gas oil) will bring “positive results”. (The importer referred to is the local branch of the Standard Oil Company of New Jersey.)
This note is an admission that the Lithuanian government, as a result of trade obligations which it has been forced by unfavorable economic conditions to undertake, is unable to accord to the commerce of the United States the favorable treatment, in the matter of licenses for imports, to which it agreed in its note of December 23, 1925.19
Although there appears to exist in the note of December 23, 1925, the juristic basis for a refusal by the American government to accept an admission that its imports will not receive the equitable treatment to which they are entitled, it is not readily apparent, in the light of Lithuanian internal difficulties and in view of the fact that present discrimination is the result of the most compelling economic necessities, that further representations will be productive of anything but friction.
[Page 574]It is possible, as it is stated in the note, that “positive results” will be obtained by dragooning the Standard Oil Company into a willingness to refrain from applying for import licenses and to purvey Soviet kerosene and gas oil for the duration of the Russo-Lithuanian agreement (until December 31, 1935) and thus the question of discrimination against American petroleum products, temporarily at least, be painlessly resolved.
The Department’s instructions in the premises are respectfully requested.
On August 14th, Mr. Erich Quitinau, Vice Director of the local branch of the Standard Oil Company of New Jersey, (American Oil Amerikos Zibalo Akcine Bendrove), informed the Legation that to meet its requirements for the next two months his firm had just purchased from the local representative of the Russian petroleum syndicate 700 and 400 metric tons of gas oil and gasoline respectively. It was stated, however, that his firm has declined, pending a final decision of its Hamburg and New York offices, to assure the Lithuanian government of its willingness to continue to distribute Russian petroleum products and the present purchase was made only to satisfy urgent needs.
The local agent of the Vacuum Oil Company has not yet been able to obtain a reversal of the decision made on July 16th refusing the issuance of an import license for 50 metric tons of lubricating oils of British-American origin and accompanied by an American certificate of origin. Reference is made in this connection to the Legation’s despatch No. 285, July 27, 1935, pages 7 to 10.20
Respectfully yours,