611.611/5: Telegram

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

287. The Department has been informed by several American flax buyers that the Soviet Government on one pretext or another has refused to release for export flax tow, hackled flax, and scutched flax urgently needed in this country. Refusal at one time was based on unavailability of tonnage from Murmansk or Black Sea ports. However, when non-Soviet tonnage was provisionally arranged for by [Page 915] American buyers, Soviet authorities allegedly maintained that flax was not available. Recent negotiations conducted through Amtorg68 with officers of the Commissariat of Foreign Trade in Moscow over the possibility of exporting flax via Vladivostok, which at first gave promise of success, have now been temporarily suspended without explanation. One importer maintains that shipments via Vladivostok at this time are quite feasible from the financial point of view because of decreased freight and insurance rates across the Pacific and recent increases in the flax prices and that flax has been exported from Vladivostok on several occasions in the past.

In view of the apparent willingness of American buyers to meet price requirements and to arrange for tonnage, please endeavor, unless you perceive some reason for not so doing, to ascertain the precise reasons for the refusal of the Soviet Government to export flax to this country. At a time when there must be enormous surplus stocks in the Soviet Union it appears that in refusing to sell flax to American buyers while selling large quantities to Germany the Soviet Government is discriminating against American trade. You may, in your discretion, take occasion when discussing the matter to point out that vessels plying between the United States and Vladivostok are frequently compelled to leave Vladivostok in ballast or only partially loaded and that return cargoes of commodities such as flax would tend to balance trade from a transportation point of view. For your own information it may be stated that the Maritime Commission has disapproved several Amtorg charters because of lack of return cargo.

Any assistance you may appropriately render on behalf of American flax buyers will of course be greatly appreciated. Flax is needed here for national defense purposes.

Hull
  1. Amtorg Trading Corporation, official purchasing and sales agency of the Soviet Union in the United States, 210 Madison Avenue, New York, N. Y.