861.24/1–1345

The Administrator of the Foreign Economic Administration (Crowley) to the Secretary of State

Dear Ed: Ambassador Harriman’s cables of January 4, 1945, and January 6, 1945, concerning Molotov’s proposal for a long-term credit arrangement with the Soviet Union raise a number of questions which may be discussed with the President at the forthcoming conference.

These questions are so important I would like to suggest that you and I speak with the President about them for a few minutes.

I am enclosing a rough draft of the points which we would like to see made in the reply of this Government to Molotov’s proposal and Ambassador Gromyko’s note of January 4, 1945.

I know that you appreciate the importance of having the President informed of our united views on this subject.

Sincerely yours,

Leo T. Crowley
[Enclosure]

Draft Reply to Molotov’s Proposal for Long-Term Credit Arrangements With the Soviet Union and Ambassador Gromyko’s Note on the Fourth Protocol

1)
Projects financed under the Lend-Lease Act77 are part of this Government’s war supply program. They must be segregated and processed entirely apart from projects which may be financed under long-term credits for postwar requirements.
2)
With regard to the question of long-term credits for postwar projects, this Government is now making a study as to the ways and means of accomplishing this. However, it will require some time to effect the necessary legislative enactments and a determination of the amounts that may be available for this purpose. These are conditions precedent to the formalization of a definite agreement. This Government feels that such long-term credits will be an important element in the development of postwar relations between the two countries and is pleased to receive from the Soviet Union at this time as much information as possible as to the magnitude and scope of Soviet requirements and terms of repayment the Soviet Government is prepared to offer.
3)
The proposed amendment to the Master Agreement offered the Soviet Government some months ago78 provides the only method now [Page 952]possible for this Government to render greater aid to the Soviet Union, than is being currently rendered under Protocol arrangements.
4)
Within the authority contained in the Lend-Lease Act and taking into account the amount of lend-lease funds available at that time, this Government offered in the proposed amendment the maximum program of projects which could then be undertaken to meet the requirements of the Soviet Government. The terms of credit, the price of the goods and other conditions set forth in the amendment were arrived at after giving due consideration to the views of the Soviet representative, Mr. Stepanov,79 who registered his non-concurrence. On more than one occasion it was indicated to Mr. Stepanov that the terms offered were final.
5)
This Government does not understand Ambassador Gromyko’s request that we should put into production industrial equipment which the Soviet Government agrees to pay for under terms of long-term credit, inasmuch as no agreement has been reached with the Soviet Government with respect to the terms of the lend-lease credit offered in the amendment to the Master Agreement. It has been and is the position which this Government must necessarily take that before any further long-range industrial equipment can be put into production under the Lend-Lease Act, agreement must be reached on the terms of the credit proposed in the amendment.
6)
Much time has elapsed since the amendment to the Master Agreement was offered to the Soviet Government. Since then, the increased tempo in the war both in Europe and the Pacific has brought about greatly increased demands on the internal economy of this country in the categories of manpower, production facilities and raw materials. The diversion of these to the production of capital goods and semifinished products to meet Allied requirements has become increasingly difficult.
7)
To guide our future approach to these problems we should receive without further delay a definite indication from the Soviet Government as to its acceptance or rejection of the proposed amendment to the Master Agreement. The answer will have a definite bearing on the extent of Soviet requirements it will be possible to include in the war production program for the next fiscal year and on estimates of the required funds now being prepared for early submission to the Congress.
  1. Approved March 11, 1941; 55 Stat. 31.
  2. See note of December 19, 1944, to the Ambassador of the Soviet Union, Foreign Relations, 1944, vol. iv, p. 1157.
  3. Mikhail Stepanovich Stepanov, Assistant People’s Commissar for Foreign Trade.