811.20 Defense (M)/441
Memorandum by the Acting Chief of the Division of European Affairs (Atherton)
Under instructions from the Under Secretary, Mr. Henderson and I were present in Mr. Morgenthau’s90 office this afternoon at four o’clock to meet with Mr. Jesse Jones91 and the Soviet Ambassador. Before the arrival of the latter Mr. Morgenthau stated that it was over a question of the possible purchase of manganese and other ores from the Soviet Government by the United States in return for which consideration would be given by the Soviet Government to increasing its export of arms and munitions to China. Mr. Morgenthau stated that subsequent to the conversation the other day on this subject the Soviet Ambassador had informed the Treasury that he had received instructions from his Government. When the Soviet Ambassador arrived he stated that the instructions of his Government empowered him to inform Mr. Morgenthau that the United States would be permitted to purchase from Soviet Russia manganese, platinum, chromium, asbestos and other raw materials mentioned with the exception of mica. He then outlined at some length a route via the Caspian Sea, the Iranian Railway and the Persian Gulf, by which these ores could be exported. But, continued Mr. Oumansky, I am further directed to say that this sale of ores to the United States can in no way relate to Soviet-Chinese trade. Mr. Morgenthau said that he was very pleased with this message and it would be something for the consideration of the United States authorities before the matter would be further pursued. Mr. Jones then asked in what quantities these ores were available. The Soviet Ambassador replied that he felt that the emphasis was misplaced in that, naturally the Soviet Government would want to know in what quantities the ores were required by the United States. He thereupon withdrew. After his departure Mr. Morgenthau [Page 222] said he hoped the representatives of the State Department would convey to Mr. Hull the substance of the Soviet Ambassador’s remarks, which he felt were very encouraging and, after reference to Mr. Jones the latter said he shared this opinion. Mr. Morgenthau then inquired of the State Department officers their opinion and the reply was given that, in so far as these materials were desired by the United States there was no more advantage in buying in the Soviet market than anywhere else.
Mr. Morgenthau then asked the two officers whether they did not think that at a moment of tension between the United States and Japan when Mr. Hull was contemplating reprisals, that an announcement of an embargo on scrap iron, etc. to Japan coupled with a statement that with an increase of commercial trade between Soviet Russia and the United States had already taken place, would be in the nature of a diplomatic success for the United States. The State Department officers replied that the situation was not dissimilar to that which existed recently when an attempt was made to conclude a trade agreement between Great Britain and the Soviet Union. The Soviet Union, it was understood, had entered into these negotiations only after having previously consulted with Berlin because it was in need of foreign exchange or certain commodities controlled by Great Britain. In the present state of the world when undoubtedly both Tokyo and Berlin would have full knowledge of any conversations of the Soviet Ambassador in Washington, there was no basis for considering purchases from Soviet Russia in any light other than the advantage to be derived by the United States in securing such raw materials as it may need. At the end Mr. Morgenthau said, however, that he felt the conversation with the Soviet Ambassador had been very satisfactory and opened the way for Mr. Hull to carry on the negotiations if he felt it would be advantageous to do so.
In conclusion, Mr. Morgenthau said that he would like the State Department officers present to inquire of Mr. Hull what the next step would be and he felt the time element was important.