760D.61/1016: Telegram

The Ambassador in the Soviet Union ( Steinhardt ) to the Secretary of State

95. There is increasing evidence of German concern at the effect of the Finnish-Soviet war on deliveries to Germany from the Soviet [Page 541] Union and the entire Baltic area. The extent of the hostilities has apparently already virtually put an end to timber exports from Finland to Germany and has materially reduced German exports to Finland. The interference with Swedish coastal traffic and the steadily increasing extent of Swedish aid to Finland in respect of manufactured products, foodstuffs, fuel and munitions, with Sweden in turn drawing on Norway, is believed to be seriously embarrassing German imports from Sweden and Norway. Furthermore I understand that the demand for railway rolling stock and motor trucks in Sweden has been so heavy during the past 3 weeks as to have seriously impeded exports from Sweden to Germany particularly iron ore and foodstuffs. In consequence the Finnish-Soviet war has begun to operate throughout the Baltic area as a partial blockade of Germany.

Insofar as concerns direct deliveries from the Soviet Union to Germany, the Soviet authorities have recently taken great pains to conceal the extent of these movements. Members of the German Embassy staff have recently contented themselves with the observation that the Soviet deliveries were about what they had expected and that being thoroughly familiar with Soviet methods they had never expected very much.