Foreign Relations of the United States: Diplomatic Papers, 1944, Europe, Volume IV

861.51/3029: Telegram

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

Washington, March 7, 1944—9 p.m.

510. The Department and the Foreign Economic Administrator have given careful attention to the problems of war and postwar needs of the U. S. S. R. for reconstruction which have been the subject of your 506 of February 14, 12 [5] p.m. and other telegrams. The following are our conclusions with respect to policy and procedure:

1. While hostilities continue this Government will accept requisitions for transfer under the master Lend-Lease agreements of considerable amounts of capital goods needed for the improvement, rehabilitation, or reconstruction of transportation, production and other facilities for the fullest and most vigorous prosecution of the war, in liberated areas as in other parts of the Soviet Union. It is proposed that requests for such purposes continue to be handled and screened through the regular mechanism involving the President’s Soviet Protocol Committee and that there be maintained the present limit (with its exceptions) of 18 months from the time of presenting a request as the period within which the materials requested can be delivered and installed in the U. S. S. R.

2. Some of this material may not have been delivered at the conclusion of hostilities. Obviously, however, our lend-lease program must assure an uninterrupted flow of supplies needed for the war until hostilities are actually concluded. In order to assure an orderly liquidation of these war programs at the conclusion of hostilities, it is proposed that we request the Russians to agree to take any equipment in certain categories not delivered at the conclusion of hostilities under a separate contract calling for regular payments on terms of interest and amortization to be laid down. In the first instance the powers of Section 3–C of the Lend-Lease Act will be used to permit such contracts. If an appropriate extension of the powers of the Export-Import Bank mentioned below receives Congressional approval, it may be desirable for that bank eventually to enter into arrangements with Lend-Lease and the U. S. S. R. so that the bank might take over this part of the operation.

3. In the absence of the establishment of a United Nations Bank for Reconstruction and Development, we are considering the possibility of obtaining authority to use the Export-Import Bank for the United States share of the financing of regular reconstruction activities not definable as war essential. This may require, as previously indicated, amendment of the Export-Import Bank legislation both to increase the lending power of the bank and to eliminate default (similar to the Johnson Act) limitations which would stand in the way of extension of credits to the U. S. S. R. and certain other European countries.

4. In order to permit private participation—such as that of private financing institutions and of manufactures of heavy equipment—in the extension of credits to the U. S. S. R. and certain other European countries, it may be necessary to obtain the repeal of the Johnson Act.

5. The Department, the Foreign Economic Administration and other interested agencies are now considering with the President the timing of presentation to the Congress of requests for legislation relating to the Export-Import Bank and the repeal of the Johnson Act. In addition, it is proposed to discuss the use of Section 3–C of the Lend-Lease Act for the purposes mentioned in item 2 above in connection with hearings on the extension of the Lend-Lease Act or the appropriations under it, if these arrangements with the Soviet reach sufficiently tangible form in time. Otherwise, the policy will probably be discussed with the appropriate committees of the Congress before agreements are finally executed.

6. It is proposed to inform the President’s Soviet Protocol Committee of the above policy and procedure decisions and to direct that Committee to establish current Soviet Protocol programs with these considerations in mind, authorizing the fullest transfer under Lend-Lease of supplies needed to assure the most vigorous prosecution of the war in and from the Soviet Union.

7. We would appreciate your further views on this and the results of any exploratory talks you may wish to have with Mikoyan on this subject. You may also wish to request Mikoyan promptly to give you two lists of essential data in all possible detail. The first of these lists should be, as a minimum, the billion dollar list suggested in your 334 of February 1, midnight, and it is suggested that careful explanation of the items be presented so that the President’s Soviet Protocol Committee can determine how much of this list may be handled by the straight Lend-Lease procedure suggested above. The second list should be a broader list of the projects involved in the 15 year reconstruction program mentioned in your 506, so that this Government will have an opportunity to consider the amount and types of equipment involved from the point of view of finance, of our productive capacity, and of the general economic and commercial policy implications of such a program.

Stettinius