Foreign Relations of the United States, Diplomatic Papers, 1945, Europe, Volume V

861.24/9–2445

The Foreign Economic Administrator (Crowley) to the Chairman of the Government Purchasing Commission of the Soviet Union in the U. S. A. (Rudenko)

Washington, September 24, 1945.

Dear General Rudenko: Reference is made to the memorandum which you submitted to me at our meeting on August 28, 1945 containing the terms on which the Government of the U.S.S.R. agrees to purchase lend-lease articles available for transfer to the U.S.S.R. out of articles on hand or on order in the United States. Your memorandum contained the following proposal with respect to the purchase of lend-lease supplies:

[Here follows text of the memorandum of August 28, 1945, from the beginning through section II, except for the second and third unnumbered paragraphs; the memorandum is printed in full on page 1034.]

On September 19, 1945, General Wesson transmitted to you a draft of the text of an agreement which this Government proposes.¹³ This draft dealt with the above points raised in your memorandum as follows:

1. The list of articles prepared as the result of conferences between representatives of this Administration and the Purchasing Commission has been attached to the draft agreement as Schedules I–A and I–B. The agreement provides for the transfer to your Government of such of these articles as were in inventory or procurement in the United States but not transferred prior to September 10, 1945 and as the Government of the United States determines are available for transfer to the U.S.S.R. General Wesson and his staff have explained to you that the total amount of articles which may thus be determined to be available for transfer to the U.S.S.R. under the agreement will probably be substantially less than $400 million. This will probably be the case even after other requisitions and contracts not covered by the present list in Schedule I of the draft agreement are added to the list.

2. The terms of amortization proposed by your Government have been adopted in the draft agreement submitted to you.

3. The rate of interest proposed by your Government has been adopted in the draft agreement.

4. The deduction in contract price proposed by your Government has been adopted in the draft agreement to arrive at the fair value of non-foodstuffs in the aggregate.

5. In lieu of payment of actual costs of storage and inland transportation, the draft agreement proposed that your Government pay a flat percentage, 10%, of the fair value of non-foodstuffs, in other words, 9% of the contract price. The reason for proposing a flat percentage instead of actual costs of storage and inland transportation is that it is administratively impracticable for the Procurement Division of the Treasury Department and the War and Navy Departments to determine such actual costs for each of the tremendous number of items listed in Schedule I of the draft agreement.

With regard to point II of your memorandum, we have advised you that to prepare a complete and detailed inventory of articles available for transfer to the U.S.S.R. would take several weeks and we believe that the draft agreement makes the preparation of such an inventory unnecessary.

At our meeting on September 20, 1945, it was agreed as follows in order to expedite the issuance of instructions to call articles forward for shipment and the signing of the agreement:

1. Accounting and other representatives of this Administration and the Purchasing Commission will meet to study the factors comprising a flat percentage charge for storage and inland transportation in order that a mutually satisfactory formula may be arrived at.

2. Legal and other representatives of this Administration and the Purchasing Commission will meet to discuss the technical provisions of the draft agreement and arrive at mutually satisfactory language for such provisions.

With the exception of these two matters and subject to their resolution as stated above, it is my understanding that the draft agreement is acceptable to your Government. I should appreciate your confirmation of this understanding.

Sincerely yours,

Leo T. Crowley

13. The draft agreement had been submitted by Mr. Crowley to Assistant Secretary of State Clayton under cover of a letter of September 13, not printed.