The Ambassador in the Soviet Union (Steinhardt) to the Secretary of State
[Received 4:02 p.m.]
159. My telegram No. 144, February 5, 5 p.m. In the course of a more detailed conversation which I had yesterday afternoon with Ritter and Schnurre I received the impression that they are somewhat better satisfied with the general progress of their negotiation with the Soviets of a trade treaty under which Russia will furnish Germany with certain specified quantities of raw materials than was indicated at the time of my previous talk with Ritter. Schnurre told me he felt useful results had been obtained through the method which he had adopted in connection with the present negotiations of bringing with him the representatives of German firms or agencies for the purpose of holding direct discussions with the Soviet combines through whom mutually foreign trade transactions are normally effected, such discussions being aimed at the conclusion of specific contracts for individual commodities and that the work of the delegation at present was the final embodiment of the various contracts already concluded into a single agreement. Both he and Ritter affirmed that they were pleased with the apparent readiness of the Soviets to cooperate fully with them in principle but observed that the slowness and tediousness of the restriction and the insistence of the Soviet officials upon points which they considered of negligible importance has been very exasperating. Ritter apparently now hopes that the treaty will be signed in Moscow within the next week following which Ritter will return to Berlin leaving Schnurre in Moscow to complete various details.
In regard to difficulties of transportation, which have constituted a serious question in endeavoring to estimate the quantities which the Soviets will actually be able to supply to Germany, Schnurre stated that the Commissar for Railways had shown more optimism than the German officials but that no insuperable problems were anticipated in this respect since in addition to the Baltic and Danube water routes [Page 544] there were now eight railway lines directly connecting Soviet and German territory as a result of the partition of Poland.
With respect to the commodities and quantities mentioned in my earlier telegrams on this subject it was intimated by my informants that some of the quantities as for example in the case of oil and cotton might be revised upwards in comparison with the figures previously reported and that a number of additional commodities would be added. Although exact figures were not forthcoming Ritter specifically stated that Germany will receive manganese, apatite, soy beans, timber, flax, nickel, chrome, platinum, and some iron ore, pig iron, and scrap iron.
In regard to soy beans Ritter stated that large quantities were expected to be obtained from Manchuria and shipped across Russia by Trans-Siberian. He said that the Soviet railway authorities informed him that transport difficulties in shipping from east to west on that line were very much less than from west to east as the majority of the Soviet freight cars returned empty from the Soviet Far East. He remarked in connection with flax that Germany had previously imported some 30,000 metric tons of flax a year from what is now Soviet-occupied Poland and that the Germans had expressed their expectation of receiving a corresponding quantity in the future but that as regards this item they had encountered resistance and were less well-satisfied than as to others. He also stated that deliveries of oil, cotton, and foodstuffs had already begun and were now in progress mentioning for cotton a figure of 40,000 metric tons actually received, and for feedstuffs a total of six trainloads a day now being regularly obtained.
In return for the Soviet raw materials to be received by Germany under the agreement Ritter gave me to understand that Germany will deliver heavy machinery of various types and probably some naval equipment. Although no German technicians have as yet arrived in the Soviet Union the German machinery and equipment which are to be delivered are expected to be installed by German specialists under technical assistance contracts.
Repeated to Berlin.