861.24/8–1244
Memorandum by the Chief Liaison Officer, Division for Soviet Supply, Foreign Economic Administration (Hazard) to the Director of the Division (Wesson)10
Negotiations on Financing.
While discussing with Mr. Eremin11 yesterday some routine matters, he opened the subject of the negotiations on the Amendment to the Master Agreement. I report his remarks, not only because they may throw light on the Soviet attitude in these negotiations, but because they outline the Soviet method of negotiating.
Mr. Eremin asked whether the Protocol offerings were to be delayed for the financial negotiations. I said I thought not, but we were disappointed at the delay in these negotiations. He said he [Page 1115] felt this delay partly our fault, as the proposal had been agreed to in principle by both countries and it was only necessary to clarify details. I replied that the details were of such importance that they went to the heart of the agreement—as, for example, an interest rate. I said I thought his people were inclined to underestimate the attention which must be given by U.S. Government officials to reaction in the press. We have to have an interest rate which will not be lower than the cost of the money to the government. Otherwise the people and, therefore, Congress would not stand for it.
He said, of course, I know they carefully studied such things. They felt certain that the people as a whole were so responsive to the part the U.S.S.R. had played in the war that only a small percentage would criticize special concessions. He noted that many corporation presidents had called upon him recently. They said they were Republicans, but they would go farther than the Democrats seemed willing to go in broadening trade relations with the U.S.S.R. He said that I must know myself that U. S. industry was in large measure idle in the types of equipment the U.S.S.R. wants, and that it is certainly to the government’s interest to get business into these plants. (I believe this was said to indicate that a sacrifice in interest might be beneficial if it helped business to continue).
I suggested that if his government held to its position, it might jeopardize the whole agreement. He said he expected that after the negotiators had reached their limits and clearly outlined the extent of disagreement, the highest people would make the decisions for both sides which would be agreement. He thought this would happen in one or two months. I said that the war was running out, and we would have to act promptly.
He replied to this that he did not think we could yet foresee the end. A few weeks ago Moscow had said to the troops they would be in Berlin in a short time, but the Germans had brought up reserves and stalled the advance. There was no telling how much resistance was left. Also he had read of the discussions to the effect that Lend-Lease would be extended after the war. I said these had been denied by Mr. Stettinius. He just looked quizzical.