860C.51/2–1346
The Assistant Secretary of State for Economic Affairs (Clayton) to the Chairman of the Board of the Export-Import Bank (Martin)
My Dear Mr. Martin: It is understood that a formal application has been recently filed by the Polish Provisional Government with the Export-Import Bank of Washington for credits to purchase 500 locomotives and 20,000 gondola cars, which would call for a credit of $90,000,000 to $100,000,000. It is felt that the circumstances call for a policy statement by the Department of State for the guidance of the Export-Import Bank.
The Department refers to the objections which the Polish delegates have informally raised to certain undertakings which it has been proposed should be given concurrently with the granting of any such credit, and to the refusal, in violation of the 1931 Treaty of Friendship, Commerce, and Navigation, (the validity of which the Polish Government has repeatedly reaffirmed) to permit the entry of Americans into Poland to inspect American-owned properties. A copy of the draft Aide-Mémoire which has been presented to Dr. Rajchman of the Polish Reconstruction and Supply Mission, relating to the proposed undertakings referred to above, is enclosed for your information.45
Two additional considerations of importance have arisen recently, which cannot fail to influence the policy of this Government in the granting of credits to Poland. First, the recent nationalization law, with respect to which this Government has made certain proposals for the purpose of assuring adequate compensation for property owned by United States citizens. No reply has yet been received. Second, the statement of the Polish Foreign Office to the Warsaw Embassy that no action on the proposed bilateral air agreement will be taken until the basic economic problems under consideration in Washington have been resolved. This statement must be interpreted to mean that favorable consideration of the proposed air agreement will depend upon the action of this Government with respect to credits.
It is the opinion of the Department of State that if the Polish Provisional Government gives adequate undertakings substantially in the sense of the enclosed Aide-Mémoire and permits the entry of Americans into Poland in conformity with the 1931 Treaty, this Government would be justified in making credits available through the Export-Import Bank up to a maximum of $50,000,000. While the Department is not at this time disposed to withhold the granting of [Page 394] a $50,000,000 credit pending satisfactory action in the two additional considerations enumerated above, developments of this kind indicate the necessity of obtaining concrete assurances from the Polish Government before we extend any more substantial credit. It is not felt, however, that larger or additional credits should be made available by the Bank until such undertakings have been satisfactorily implemented, and until the Polish Government has taken satisfactory action with respect to the two additional considerations enumerated above.
There appears to have arisen some doubt, however, whether the undertakings mentioned above will be obtained from the Polish Government. The Department considers it desirable, therefore, to indicate its views as to the policy that should be pursued in the event that such a contingency should occur.
The Department has been informally advised by members of the Polish Mission that it has objections to certain of the proposed undertakings, and in particular the Department understands that there will be the strongest objection to the proposed reaffirmation of the Potsdam election commitment. This reluctance to reaffirm the commitment may well be a reflection of the possible plans of the Polish authorities. Recent information from Ambassador Lane indicates growing police repression, increased restrictions on the press, and an apparent determination on the part of the present Polish Government to evade the Potsdam commitment to hold free and unfettered elections. This Government, by virtue of the Yalta and Potsdam Agreements, has a responsibility which it is determined to carry out so far as possible, that free and unfettered elections shall be held. While it is the earnest desire of the Department of State to facilitate the granting of credits to assist Polish reconstruction and to give practical evidence of American friendship for the Polish people, it is nevertheless felt to be incompatible with responsibilities of this Government to grant a credit as large as $50,000,000 unless the conditions mentioned above are substantially met.
This being the situation, it is felt that if the Polish Government should be unwilling to give adequate undertakings substantially in the sense of the enclosed Aide-Mémoire, or should continue its present violation of the 1931 Treaty, this Government should refuse to grant an Export-Import Bank credit up to the maximum of $50,000,000. In view, however, of the friendship that is felt for the Polish people and the desirability of making this evident in concrete form, the Department would be disposed in such a contingency to favor the granting of a credit of not more than $25,000,000. If such a limited credit should be granted, it is felt that it should be accompanied by a public statement, which in view of its bearing on our foreign relations it is felt should be issued by the Department, affirming the friendship of [Page 395] this Government for the Polish people, stating the reasons why it has not been possible to make larger credits available, and indicating that if and when the desiderata mentioned above can be substantially obtained this Government would be happy to give sympathetic consideration to a request for further credits.
On the other hand, if the Polish Government should give the undertakings we seek and should reconsider its refusal to grant Americans entry as provided in the 1931 Treaty, the question of later Export-Import Bank credits in addition to the $50,000,000 mentioned would be determined by the circumstances existing at that time, with particular reference to whether these undertakings had been satisfactorily implemented after the granting of the original credit, and whether satisfactory action has been taken with respect to the two additional considerations enumerated above.
The above statement of policy is for the purpose of making known confidentially to the Export-Import Bank certain considerations which it is felt have an important bearing on the problem of giving all possible assistance to the Polish people consistent with the international responsibilities and declared objectives of this Government.
It is understood of course that any credits extended to the Polish Government with respect to purchases of surplus property abroad are not covered by this letter and are not involved in any negotiations with the Export-Import Bank.
Sincerely yours,