860D.00/878: Telegram
The Minister in Finland (Schoenfeld) to the Secretary of State
[Received 3:15 p.m.]
165. Prime Minister Ryti told me today that principal task of his reorganized Cabinet would, of course, be reconstruction and rehabilitation requiring large expenditures for which not only foreign help but an internal capital levy would be necessary. There would necessarily be considerable reduction in the standard of living and the Government must try to prevent such reduction to a level where social unrest would threaten Bolshevism which though the Russians had failed in their effort to impose it on the Finnish people might in that event become a real danger.
The Prime Minister said there had been not far from 60,000 casualties during the hostilities including some 18,000 killed and approximately the same number seriously wounded. Caring for dependents of the dead and for the incapacitated would involve heavy expense. There was also problem of increasing domestic production of consumption goods in order to reduce volume of such imports besides the problem of the reorganization of export industries. At my request he promised to provide me with statement showing estimated cost of the program which he said had not yet been worked out.
Ryti asked me particularly to convey to you his appreciation of your démarche at Moscow just before his first conversation with the Soviet authorities which he said had been very valuable. He thought it had induced the Soviet Government to desist from their proposed mutual assistance pact which had at first been included in the Russian terms. Neither the British, the French, nor the Swedish diplomatic representatives at Moscow had the slightest influence on the Russians, nor had the Germans, though they claimed to have been helpful, exercised such influence as they might have. He said that only the action of our Ambassador had been effective in moderating Russian demands.
Answering my inquiry regarding proposed defensive alliance with Sweden and Norway, the Prime Minister said that he regretted the public announcement made on the subject by Tanner on March 13 [Page 323] which had caused needless difficulties, but he was optimistic about the result of the negotiations. Swedish military authorities strongly favored the plan and Ryti said he had recently received their preliminary military scheme. This called for organization of Finnish defense line along the new lake frontier which had been found by the general staff here to be less unfavorable than was generally thought. The Swedes would take care of the northern regions. Ryti expected no further encroachment by the Russians for at least 6 months as the gains they had achieved had been very costly, but much would depend on the course of the war between the powers. Molotov had told him at Moscow that the Soviet Government was very anxious to keep out of the war. Meanwhile demobilization of the Finnish Army would proceed gradually and by careful selection in the light of the needs of the national economy, and the youngest classes were being called up to relieve economically more valuable men and to keep the forces up to strength.
After seeing the Prime Minister I had a conversation with Tanner who is now Minister of Public Welfare. He said he expected to be obliged to make many calls upon us for help and I answered that I was confident there would be every disposition on our part to render all possible assistance.