The Acting Secretary of State to the Embassy in the Soviet Union
753. Re your 980, March 24, 5 p. m.1 1. No specific laws now in force would prohibit credits to Soviet Union or other governments by U.S. Govt. Johnson Act applicable only to private loans as distinguished from those by U.S. Govt.
2. Limitation on making new loans to Soviet Union lies in limited funds available to Exlm Bank which could legally make loans. Any very large loan would require additional legislation either increasing authority of Exlm Bank or special Congressional authorization such as employed for loan to U.K.2
3. Lend-Lease Act contains full authority to allow credit to Soviet Union for the payment of obligations arising out of lend-lease transactions. Pipeline Agreement of Oct 15, 1945 contains this type of credit.[Page 672]
4. Surplus Property Act also contains full authority for credit to Soviet Union for purchase of property declared surplus. Most lend-lease material which must be returned to U.S. at end of war could be declared surplus (such as small naval vessels) and sold under Surplus Act to Soviet Union under agreed credit terms.
5. War-built merchant vessels salable only under Merchant Ship Sales Act of 1946 and may be sold on credit terms specified in that Act. Other merchant vessels transferred under lend-lease to USSR can be declared surplus and sold for credit under authority of Surplus Property Act.
- Not printed. The Embassy had asked urgently for full information whether any provisions of the Johnson Act, or other acts, would prohibit credits to the Soviet Union, or other foreign powers, under any circumstances. (861.51/3–2447)↩
- The Financial Agreement with the United Kingdom was signed at Washington on December 6, 1945. Provision was made in it for extension of a line of credit of $3,750,000,000 until December 31, 1951. A joint resolution by Congress authorizing the Secretary of the Treasury to carry out the agreement with the United Kingdom was approved July 15, 1946; 60 Stat. 535. For text of the agreement, see Department of State Bulletin, December 9, 1945, p. 907, or 60 Stat. 1841.↩