Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)

Mr. Butler, Counselor of the British Embassy, called in order to give the Department certain information in connection with reports of possible discussions between the British and Soviet Governments for a trade agreement. He said that the British Government had approached the Soviet Government with a view to seeing whether an agreement was possible. He said that the British had had three ideas in initiating this effort: [Page 604]

To try if possible to get an agreement whereby if Great Britain furnished supplies to Russia they would be assured they would not go into Germany or replace Russian production that went into Germany.
To get supplies from Russia that otherwise might be sent to Germany.
To try to get an agreement for controlling the traffic through Vladivostok.

He said that the Soviet Government had stated that the form in which it might be willing to consider it was a “barter agreement”. The Russian Government avoided other aspects of the matter. He said at the same time the Russian Government had indicated a wish for “personal contact” and had hinted that the establishment of personal contact might be useful for the discussion of political questions as well as of economic. Accordingly Sir Stafford Cripps was being sent. He said however that Cripps was being sent merely for preliminary exploration and without any authority to sign an agreement.

Mr. Butler promised to keep the Department informed.

I thanked him for this information and said that I had no comment to make, certainly not before consulting other Divisions of the Department. One American interest which I knew we would feel it important for Great Britain to bear in mind was to avoid impairment of our normal sales to Russia, especially of our agricultural products.

The Counselor then asked whether we have received word from London regarding conversations between the British and Japanese Governments along the lines that Ashton-Gwatkin3 had explained the British Government had in contemplation. I said that so far as I knew no word had been received from London. He explained that as a matter of fact the discussions had not actually assumed any importance up to the present. The Counselor of the Japanese Embassy in London3a had been authorized to discuss the question with the Ministry of Economic Blockade and had had one talk. In that talk the Japanese Counselor had stated that Japan would be more interested in the type of payments agreement that the British Government was suggesting if the whole Empire were included. The British Government had replied that this would raise problems of Imperial relationships and would be very difficult. The Japanese Counselor is now awaiting further instructions.

The Counselor promised to keep the Department further informed on this subject so far as he could.

  1. Frank Trelawny Arthur Ashton-Gwatkin, Policy Adviser in the British Ministry of Economic Warfare.
  2. M. Okamoto.