Foreign Relations of the United States, 1948, Eastern Europe; The Soviet Union, Volume IV

Executive Secretariat Files

Memorandum by the Secretary of State¹

secret

[Washington, March 26, 1948.]

Control of Exports to the Soviet Bloc

The problem of limiting Soviet war potential by controlling Soviet imports from the United States cannot be considered without reference to Soviet imports from other sources. At present imports from Western Europe substantially exceed those from the United States and are expanding at a rapid rate. Control of imports from the United States, therefore, is of only partial effectiveness in dealing with the problem.

The trade between Western Europe and Eastern Europe is an important factor in the European Recovery Program. Grain, timber and coal are to be obtained from Eastern Europe. This trade was recognized by the Senate Foreign Relations Committee in its recent report on ERP, as well as in the latest statement by Mr. Hoover.² Soviet Bloc trade with the ERP countries amounted to about $1½ billion in 1947. A curtailment of this trade would mean increased demand on the United States, both in terms of money and in terms of physical supplies, much of which could not be supplied without the institution of drastic domestic controls.

Under these circumstances, we should maintain a selective control under which certain key commodities are denied export licenses from the United States to the Soviet Bloc. At the same time, the principal alternate sources in Western Europe and Canada should be persuaded to curtail similar shipments to the Soviet Bloc. The commodities should be those the denial of which would affect production in key segments of the Soviet and satellite economies. An interdepartmental committee started work on this subject. It should be instructed to prepare an analysis of Soviet requirements from abroad with a view to rating them in terms of their strategic value to Soviet economy.

It is likewise important that our restrictions on trade should not cause the Soviet Bloc to limit the strategic materials which they have been supplying to us. It is believed that this can be accomplished by our refusing to issue export licenses unless we are assured of the supplies which we desire. This would mean that we deal with the Soviets on a strictly quid pro quo basis with respect to the significant items of trade between the two countries.

Such a program meets the three main requirements of the situation:

1. It does not destroy East-West trade;

2. It limits exports of significant items to the Soviet Bloc; and

3. It gives greater assurance that the United States will obtain the strategic materials which it wants from the Soviet Union.

1. The source text was included as Appendix B to document NSC 46, Report to the National Security Council by the Secretary of State on Understandings on Export Control in East-West Trade, May 3, 1949. A notation on the source text states that this memorandum was presented to the Cabinet by Secretary Marshall on March 26 and that it was approved.
2. Former President Herbert Hoover.