861.24/12–2346: Telegram
The Secretary of State to the Ambassador in the Soviet Union (Smith)
2170. From Clayton. USSR having failed to respond our note of September 14 and aide-mémoire of Oct 31 proposing early initiation negotiations Washington regarding lend-lease settlement and disposition [Page 861] of lend-lease merchant vessels, and requesting return three naval ice-breakers, unless you perceive good reason to contrary Secretary desires you make vigorous representations these matters earliest opportunity with highest level Foreign Office.52
[Here follows text of the United States note of September 14, 1946, printed on page 854.]
Aide-Mémoire handed Soviet Chargé by Clayton on Oct 31 reviewed note of Sept 14 and asked when a reply might be expected.
[Here follows the fifth paragraph of the memorandum of December 3, 1946, by Under Secretary of State for Economic Affairs Clayton, printed on page 858.]
Presently impossible to revert to previous position since loan of billion dollars to USSR a remote prospect. We must insist on separate discussion lend-lease settlement.
Total lend-lease aid to USSR amounted approximately $11 billion, second largest amount rendered any nation. This amount represents aid rendered to V–J Day, September 1945. Disposition of most of residual materials in USSR lend-lease “pipeline” ($244,000,000) was effected under an agreement dated October 15, 1945. Reverse lend-lease aid from USSR was negligible, amounting to about $3,000,000. Settlements have been effected with the UK, France, India, Belgium, Australia, New Zealand, and Turkey. Negotiations are now in progress for settlements with Netherlands, Norway, and Union of South Africa.
USSR has never provided inventory of lend-lease articles as of V–J Day notwithstanding our several requests, but we have not insisted since US estimates regarded here as adequate for settlement purposes and we do not want preparation of inventory statement to provide USSR with excuse for delaying settlement.
If your representations of no avail, full publicity would be given to the details of our efforts to arrange the initiation of settlement discussions under agreement of June 11, 1942, and to lack of cooperation of USSR regarding merchant vessels and the ice-breakers.
Return of both merchant and naval vessels is a statutory requirement, although sale of merchant vessels can be effected after their constructive return pursuant to applicable statutes. Certain naval vessels also can be sold if declared surplus by US Navy after return. If representations of no avail the President would be requested to declare the emergency ended for purposes of article V of the Soviet Master Agreement so that the legal position would be perfected for demanding [Page 862] the return of lend-lease naval and merchant vessels. The right of recapture by US extends technically to all lend-lease articles not lost, consumed, or destroyed. General exercise of this right would of course be impracticable.
The Amer press is generally aware of US invitation of Sept 14 to begin lend-lease settlement discussions and is expected shortly to press for statement of progress.
Additional background is contained in economic section of policy and information statement for USSR as of Sept 16, forwarded to Durbrow by Hilton on September 19, 1946. More complete background and copies of documents are being forwarded by air pouch.
The Foreign Office may confront you with some comment about undelivered “pipeline items” under the agreement of October 15, 1945. Department regards failure of last deliveries under Pipeline Agreement irrelevant to initiation of lend-lease settlement discussions, but following information given you as background.
Congress in appropriating funds for lend-lease purposes last July included a proviso prohibiting use of any funds so appropriated for any expenditure incident to shipment abroad of any lend-lease articles after Dec 31, 1946. In order to continue deliveries USSR was asked by letter dated Nov 27 to provide funds for accessorial charges and administrative expenses and informed that unless these funds are provided deliveries must cease on Dec 31 and outstanding contracts will be cancelled. USSR representatives have indicated that their reply will be made known on Dec 23 or 24. You will be advised. The value of articles expected to remain undelivered on Dec 31 is estimated at between 20 and 30 million dollars including refineries now in the process of delivery. The cessation of deliveries may be construed by USSR as a violation of the Oct 15 agreement. However, agreement provides that “All articles and services undertaken to be provided by the Govt of the US under this Agreement shall be made available under authority and subject to the terms and conditions of the Act of Congress of March 11, 1941, as amended, and any acts supplementary thereto.” Also door remains open for additional action by next Congress. Also any damages to USSR claimed as result of cessation of deliveries may be taken into account in settlement negotiations. We regard the Nov 27 proposal to USSR as reasonable and free of hardship on USSR. [Clayton.]
- Ambassador Smith replied in telegram 4472, December 27, noon, from Moscow, that he had asked for an appointment with Foreign Minister Molotov and would advise the Department as early as possible of the result. He agreed on the need for pressing for an answer. (861.24/12–2746)↩