Office of the Historian

861.24/5–2145

Memorandum by the Director of the Office of Financial and Development Policy (Collado) to the Ambassador in the Soviet Union (Harriman), Temporarily in the United States

[Washington,] May 21, 1945.

Could I secure advice from you concerning the policy which this Government should follow about retransfers of lend-lease items by the U.S.S.R.: More specifically, do you feel that the recommendation you made to the Department late in March, to the effect that penalties [Page 1006] for retransfers should be applied by stopping shipments of specific items, requires modification because of V–E Day and the subsequent change in lend-lease transfers?

In one sense the need for a strict U.S. policy is greater than ever because the U.S.S.R. has negotiated supply agreements with Bulgaria, Rumania and Finland which provide that the U.S.S.R. will supply these countries with certain goods similar to those being provided through lend-lease.

On the other hand, the sharp curtailment of lend-lease which will be put into effect henceforth, together with stricter screening, will give us a much narrower base upon which to levy penalties. Moreover, the military may regard stoppage of any particular transfers as inimical to the war effort. And finally while the retransfers will be of items already in Eastern Russia the penalties will apply against items to be delivered mostly by way of the Pacific.

The two Recommendations given below have been discussed in the Coordinating Committee. Your opinion will be decisive in securing their acceptance, or rejection, or alteration. You will note that Recommendation 2 puts very complete power in the hands of the Embassy.

1.
The United States Government should again formally ask the U.S.S.R.:
(a)
To provide it with full information, within a reasonable period, concerning past transfers of lend-lease goods and of similar goods to third governments or any other public authority.
(b)
To accept the principle that it will authorize no assignment to a third government or other public authority of items similar to those received from the United States as lend-lease aid until the matter has been referred to and agreement received from the Government of the United States.
2.
In the event that such information and assurances are not secured after a reasonable time, the United States Government will, upon the recommendation of its Embassy in Moscow, cease shipments of specific items which have been transferred without authority.