Memorandum by Mr. C. Thayer White of the Division of Commercial Treaties and Agreements to the Acting Chief of the Division of European Affairs ( Atherton )

Mr. Atherton: Apparently it is considered desirable on political grounds to provide for the extension beyond August 5, 1941, of the commercial arrangement with the Soviet Union despite the fact that under present conditions renewal of the arrangement probably could not be justified on economic grounds.

The attached draft telegram83 follows in general the suggestions contained in Eu’s84 memorandum of July 1.85 It authorizes our Embassy at Moscow, if approached by the Soviet Government, to indicate that this Government would be agreeable to the renewal of the 1937 agreement,85a without the related notes, for an indefinite period, i. e. subject to termination by either party at any time on thirty days’ written notice. If political considerations suggest that this Government should take the initiative, the telegram can easily be changed to that end.

As indicated in the telegram, proclamation by the President of the exchange of notes continuing in force the agreement of 1937, despite the absence of the accompanying related notes, should continue to assure exemption of Soviet coal from the import tax. Moreover, the inclusion of a thirty-day termination provision should give the United States adequate protection against the possibility that Soviet coal would be imported at a rate substantially above the 400,000 tons for twelve months specified in the present Soviet note limiting exports of coal to the United States.86 Finally, it is believed that under existing circumstances a commitment on the part of the Soviet Union to purchase in the course of a year $40,000,000 or more of American goods would be meaningless, and that the general commitment in the 1937 agreement by the Soviet Government to increase substantially the amount of its purchases in the United States should therefore not be made more specific by means of a related note.

In the absence of a commitment to purchase a specified amount of American goods in a twelve-month period, and the general character of the commitment in the 1937 agreement, it is not anticipated that the Soviet Government would desire a reservation to its promise to increase [Page 922] its purchases in the United States similar to the reservation included in the 1940 agreement. However, if such a request should be made by the Soviet Government, a safeguarding clause could be included.

  1. Infra.
  2. Division of European Affairs.
  3. Not printed.
  4. For text of exchange of notes signed August 4, 1937, see Department of State Executive Agreement Series No. 105, or 50 Stat. 1619.
  5. See telegrams No. 937, July 31, 1940, and No. 978, August 6, 1940, from the Chargé in the Soviet Union, Foreign Relations, 1940, vol. iii, pp. 449 and 456, respectively.