861.24/9–2544
Memorandum by the Assistant Chief of the Division of Eastern European Affairs (Durbrow) to the Deputy Director of the Office of European Affairs (Matthews)
Subject: Negotiations with Soviet Government regarding Supplementary Agreement to the Master Lend-Lease Agreement.
Mr. Matthews: Late in 1943 Mikoyan, the People’s Commissar for Foreign Trade, approached Ambassador Harriman in Moscow to make inquiry regarding the possibility of obtaining, as soon as possible, long-range industrial equipment for the Soviet Government. After going into the matter, Mr. Mikoyan was informed that, under the present laws and regulations of the United States, it would not be possible until these laws had been amended to extend large credits to the Soviet Union for the purchase of long-range industrial equipment. Mr. Harriman, however, advised Mr. Mikoyan that he would nevertheless study the question and endeavor to see what arrangements could be made.
After going into the matter carefully, a formula was worked out early in 1944 by which the Soviet Government could be permitted to order under the lend-lease act industrial equipment which, if delivered before the termination of hostilities against the common enemy, would contribute to the Soviet war effort but which would also be useful to the Soviet Union for peacetime purposes. In this formula, which has been worked out within the framework of Section 3(c) of the Master Lend-Lease Agreement, provision is made for the putting into production of such long-range equipment with the proviso that the Soviet Government will accept and pay for 1) certain designated war supplies, [Page 1149] also useful for peacetime purposes, which shall not have been delivered to the Soviet Government prior to the determination by the President that the resistance of the common enemy has been overcome and which are in inventory in this country or contracted for, 2) certain designated industrial equipment which takes a long time to produce and has a long useful life. (In the latter case the Soviet Government will obligate itself to pay for this equipment on a credit basis regardless of whether hostilities had ceased or not with the credit payments becoming due only after the cessation of hostilities.)
After working out this formula, a memorandum was adressed to the President on March 6, 1944 outlining the proposed agreement to him. After the President had approved the procedure a telegram was sent to Ambassador Harriman outlining the provisions of the proposed agreement, and on May 24 a draft text of the agreement was transmitted to the Soviet Embassy for consideration of the Soviet Government.
The Soviet Government accepted the proposed draft as a basis for negotiations and on July 27, 1944 negotiations were initiated with Mr. M. S. Stepanov and other Soviet negotiators for the purpose of concluding the proposed agreement. After protracted negotiations, the United States representatives presented to Mr. Stepanov on September 14, a final draft of the agreement which incorporated all the changes to which the United States Government had consented.40 Mr. Stepanov was informed that in submitting the final American draft to his Government, he could either request instructions to sign the agreement in Washington, or if he desired, he might proceed to Moscow to discuss the draft with his colleagues and sign the agreement there. As yet Mr. Stepanov has not communicated further with the Department.
During the entire negotiations members of the American delegation were in constant communication with representatives of the Treasury Department and in particular with Mr. Clifton Mack, Director of the Procurement Division of the Treasury Department, as well as Mr. Harold Glasser41 and Mr. Harry White. Mr. William Batt and other officials of the War Production Board have also been consulted in connection with the negotiations together with appropriate officials of Army Procurement.
Before initiating negotiations with the Soviet Government, Mr. Dean Acheson and Mr. Oscar Cox42 discussed the proposed Agreement with the Senate Foreign Relations Committee and Senate Appropriations Committee as well as the House Foreign Relations Committee and House Appropriations Committee. No objections were raised by the members of Congress to the proposed agreement.