711.61/835
Memorandum of Conversation, by the Under Secretary of State (Welles)
The Soviet Ambassador called to see me this morning at his request. The Ambassador stated that his Government had instructed him to say that he felt the time had come when some definite answer from the United States Government to the memorandum of the Soviet Ambassador dated January 493 should be given. The Ambassador said that economic relations between the two countries which had given some hope of improvement in November and December last had now taken a course for the worse and that his Government believed that there appeared to be very little hope for any improvement in commercial relations between the two countries. The Ambassador stated to me that he had handed to Mr. Young’s Committee94 a list of orders which the Soviet Government desired to place with the United States amounting to a total of some 59 millions of dollars. He stated that the Soviet Government had recently adopted a 15 year economic development plan and that it was quite impossible for the Soviet Government to proceed with the realization of this plan until it knew where orders for the machinery, et cetera, required for industrial development might be placed. The Soviet Government consequently felt it was entitled to learn from this Government whether the desired orders could or could not be placed in the United States. If not, the Soviet Government would seek to place its orders elsewhere.
The Ambassador further stated that he felt that there were most positive evidences of discrimination against the Soviet Union. He again referred to the fact that this Government had granted a general licensing system to Canada and had refused to give any such system to the Soviet.
I again stated to the Ambassador as firmly as possible that I would not admit in any sense that there was any discrimination involved in this attitude on the part of this Government. I said that the licensing system was applied to all foreign nations and that the sole difference in our treatment of Canada and our treatment of the Soviet Union was one of method and not one of principle. I again reminded the Ambassador that our conversations from the outset had been based upon the statement which I had made to him in our first conversation, [Page 701] namely, that all of our conversations, held for the purpose of improving the relations between the two countries, must be premised upon the understanding of the Soviet Government that the policy of the United States was to furnish all practical assistance to Great Britain, the British Dominion, and other countries which were suffering from aggression. I said that if this policy were recognized as it should have been by the Soviet Union, the Soviet Government must clearly understand that when it came to a consideration of what orders could or could not be placed in this country, and of what licenses could or could not be granted, there had first of all to be determined by the authorities of the United States what the national defense requirements of the United States might be, and second, what material assistance could be rendered to Great Britain and the other nations in the category which I had set forth; that it was only after such determination had been reached that any decision could be had concerning such questions as the placement of orders and the determination of priorities for Soviet agents.
The Ambassador said that he recognized this fully and was under no misapprehension. He insisted, however, that certain officials within the Government were antagonistic to the Soviet Government and were making it impossible for the Soviet Government to obtain material within the United States which was not required in any way for our own defense purposes or for those of the nations we were assisting. He mentioned specifically oil drilling machinery which he maintained was manufactured on such a scale in the United States as to render a surplus available for export to the Soviet Union. I merely stated that I would look into this matter.
Baltic Ships Question
The Ambassador then continued with further complaints about details of this character and started in with a long drawn out complaint with regard to the Baltic ships question.
I told the Ambassador that I regretted very much that I did not have time to take up this complicated question today, but that I would be glad to speak with him at some future interview with regard to this matter. I said, since the Ambassador had referred to the false allegations carried in the American press claiming that the Soviet Government was importing products from the United States and the other American Republics for the purpose of transshipping them to Germany, that I would like to brush aside all of these questions of detail and get down to fundamental points, at least for the present. I said to the Ambassador that it was quite true that there was a very large element of public opinion in the United States which did in fact believe that a very large percentage of the imports received by the [Page 702] Soviet Union from the United States was in fact destined either for transshipment to Germany or to replace similar supplies exported from Russia to Germany.
The Ambassador assured me that this was not the case.
I said that if that were the fact, did the Ambassador not consider it desirable and expedient for his Government to make a public statement to the effect that not a pound of material imported from the Western Hemisphere would be transshipped to Germany and would be utilized solely for domestic consumption. I said I wished to make it clear that I was not suggesting any bargain between the two governments in this matter, but merely a unilateral and public declaration by the Soviet Union to that effect, with the further understanding that the Soviet Union would commit itself to abide by such a declaration. I said that if such a declaration were made and were actually carried out, it would of course change materially public opinion in the United States in that regard and remove a great part of the objection on the part of public opinion to the facilitation to the Soviet Union by American authorities of products ordered by the Soviet Government in the United States.
The Ambassador at first desired to argue as to whether this would not be a violation of Soviet neutrality, et cetera, but suddenly stopped and said that he would communicate this suggestion to his Government.