861.24/5–3045: Telegram
The Acting Secretary of State to the Ambassador in the Soviet Union (Harriman)
1208. Your 1812, May 30, 6 p.m. We have continued handling and discussing Russian lend-lease and credit policies along the lines discussed with you here. We will inform you separately regarding exact volume of industrial equipment cancelled or diverted.66
FEA advised the Soviet Purchasing Commission on May 18 that it is prepared to continue deliveries on partially shipped industrial plants covered by approved requisitions. The Commission has been advised, however, that further deliveries on the plants for which proportionately small deliveries have been made should be made on cash payment of the total cost of the plants including the cost of patent rights. Plants in this category would include the Third Protocol oil refineries not the Second Protocol refineries, and would include also the tie plate mill and the glass bulb plant. The Purchasing Commission has not yet replied.
With respect to credits, the Department’s views remain substantially as stated in Dept’s 173 and 183 of January 26 and 27, in departmental memo of April 1967 handed to you in Washington and in your helpful 1127 of April 11. At present no arrangements other than cash payment can be made whereby delivery of equipment excluded by President’s directive of May 11 regarding lend-lease may be effected. On May 19 FEA asked the Soviet Purchasing Commission whether it desired to purchase on a cash basis any of these supplies ineligible for straight lend-lease and the procedure for cash payment on delivery was explained to the Commission in a letter of May 30. The Commission has not yet replied.
Hearings are taking place in the Senate Finance Committee on the repeal of the Johnson Act (re private credits) and early action is expected. The Department and Treasury have indicated no objection to a Chase Bank proposal that it buy $6,000,000 of Soviet gold at Vladivostok for shipment to U.S.
State and Mr. Crowley are recommending that the President during next few days send a message to Congress requesting expansion of Export-Import Bank to $3,500,000,000 and elimination of default restrictions. This amount would include about a billion for possible negotiation with the Soviets if events so warrant. The Congressional Committees would be so informed in executive session.
[Page 1012]With respect to Molotov’s note of January 3 or 4 (your 29), Dept’s 183 authorized you to reply. Since then this Government has withdrawn the 3-c offer, and the suggested interim arrangement re Schedule 2 (point 5) is no longer appropriate. You are again authorized to reply with appropriate modifications in light of new conditions.