760D.61/1551: Telegram

The Minister in Finland (Schoenfeld) to the Secretary of State

28. President Ryti21 told me today that he felt little concern about relations with the Soviet Union regarding which there have recently been somewhat disturbing rumors. He said that there had been friction with Soviet Consul in Åland Islands who had been aggressive in matters such as number of Finnish coast guards there and demanded destruction of barracks for their use but that apparently under instructions [Page 7] from Moscow, Consul had later been more amenable. President confirmed difficulties previously reported regarding deliveries under trade agreement and regarding Petsamo nickel question. Although it had been agreed in December that conversations on these topics would be continued here, Finnish Government had no objection to accepting later Russian suggestion that they take place in Moscow, which led to despatch of Fieandt22 delegation who departed yesterday. Russian and Finnish views on nickel question were still far apart since Finnish Government did not propose to permit Soviet workers and technical men actually to work the mines though no special difficulty was anticipated in reaching agreement as to division of stock in proposed new corporation for the concession in which Russians desire majority.

Discussing general position, President expressed hope that present belligerents would find basis for peace this spring to prevent long war which would ruin Europe completely. He said he had reason to think that Soviet-German relations23 were by no means good and that German move to the east and south at Russia’s expense was quite possible in early summer if the war continues. Number of German effectives would rise to 6 millions following recruitment of new men now proceeding which would render possible such move against Soviet Union if Germans become convinced of necessity for seizing certain resources in Ukraine and Black Sea areas in preparation for long war.

Speaking of financial situation here, President said internal loan of one billion Finnmarks just opened was assured and that currency deflation would henceforth be progressive as result of taxation and other measures. While dollar credit was desirable, he felt Finland could get along without it, if war does not last too long. Foreign credit is now needed to prevent stagnation of industry through lack of raw material. Were it not for heavy defense expenditures, chiefly for fortification work and material, he had no doubt Finland would manage very well.

  1. Risto H. Ryti became President of Finland on December 19, 1940, succeeding Kyösti Kallio, who resigned because of illness and died on the following day.
  2. Rainer von Fieandt, Director of Nordiska Foreningsbanken; Chairman of the Finnish delegation to the Mixed Committee in Moscow to negotiate a new arrangement for the operation of the nickel mines in Finland.
  3. For correspondence concerning wartime cooperation between Germany and the Soviet Union, see pp. 116 ff.