661.6231/301: Telegram

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

53. I have learned from the German source known to the Department that the Germans are extremely well satisfied with the terms of the Soviet-German agreements which were signed in Moscow yesterday and regard them as “a triumph for Schnurre”. My informant stated that the total annual trade turnover between the two countries under the new economic agreement would appreciably exceed that under the former agreement but added that this was chiefly due to the fact that the former trade between Germany and the Baltic States was included within the framework of the new accord. He confirmed the figure which I have previously reported of an increase to two and a half million tons a year in Soviet grain and fodder deliveries to Germany. This represents the principal item of increase. He stated that a good many of the other principal items (see my 186, February 17 [18], 1940)14 were substantially unchanged. In this connection he referred specifically to petroleum products, cotton, iron, timber and flax. He stated that timber deliveries had been fixed considerably below last year’s figure, remarking that Germany had not taken the full amount allotted to that period. He added that the negotiations as I have previously reported had been simplified this year because large supplies of various articles had been acquired by Germany from occupied territory. What Germany had not found in Europe, he said, was grain and this accounted for the large increase in this category which is envisaged under the new agreement. Certain other minor items have also, according to his statement, been [fixed?]. Germany will supply machinery of all kinds to the Soviet Union including machine tools.

With respect to compensation for German properties in the Baltic States my informant said that a global figure had been agreed upon to cover nationalized properties and also the property of German citizens, as well as persons of German nationality to be resettled under the resettlement agreement signed yesterday. This he was convinced will be met in part by crediting to Germany the amount due to the Soviet Union in the balance of payments under last year’s agreement, in part by a similar credit expected to result from the new economic agreement, partly by payments in merchandise and partly by a similar arrangement under the agreement which it is anticipated will be entered into in 1942.

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My informant reiterated that the delay in the signing of the agreements had been occasioned by the desire of both Governments to settle the outstanding Baltic questions concurrently with the conclusion of a new economic agreement and that no political problems or other difficulties of a serious nature had intervened but that many of the details connected with the questions of resettlement and of compensation for persons resettled had required time to adjust satisfactorily.

I expect to lunch with Schnurre on Monday15 at which time I hope to obtain further details.