Memorandum of Conversation, by the Assistant Secretary of State for Economic Affairs (Thorp)

Participants: The Polish Ambassador1
Mr. Litynski2
Mr. Thorp
Mr. Ness (OFD)3
Mr. Oliver (EP)4
Mr. Elbrick (EE)5

The Ambassador said that he had visited Warsaw recently to take up with the Polish Government the various problems involved in Polish-American relations, particularly the question of the signing of a nationalization agreement and a lend-lease settlement.6 He said that he had expressed himself as favoring the early conclusion of these two agreements but that he had encountered certain difficulties with the members of the Polish Government. He explained that the Government, and particularly Minister of Industry Minc, was “disillusioned and disappointed” over the lack of progress in connection with the various matters which Poland had taken up with the United States. He referred particularly to Poland’s failure to obtain a cotton credit and post-UNRRA relief and to the unsatisfactory results of the Surplus Property Agreement negotiated in April 1946.7 With respect to the last, he said that while Poland had made purchases up to approximately 60 per cent of the total credit of 50,000,000 dollars before it was terminated, the Poles were unable to obtain vitally needed equipment such as bulldozers, shovels, etc. He went on to say that this unfavorable atmosphere had been increased in the eyes of the Polish Government by the fact that since the introduction of American export controls, Poland had not been able to obtain export licenses for much needed equipment which would play an important part in the economic recovery of Poland and western Europe. Accordingly, and in the fear that American export policy might amount to a virtual embargo of shipments to Poland, the members of the Polish Government had been extremely reluctant to proceed any further with negotiation [Page 532] of the nationalization agreement and the lend-lease settlement. However, he had succeeded in obtaining the Government’s authorization to conclude the nationalization agreement and to begin discussions looking to the signing of a lend-lease settlement as soon as the question of export licensing has been “clarified”.

I said that I thought that there was no need to go over the various matters of the past which he had mentioned, and on which we held different views. I thought that we should confine our discussion to current matters, and I told the Ambassador that I felt that it would be most desirable to effect some tangible demonstration of our mutual desire to improve Polish-American relations. I said, however, that I felt that it was improper to link the question of the nationalization and lend-lease negotiations with that of export licenses, and that in our view there are no grounds for making one contingent upon the other. I asked him, therefore, if it would not be possible, in order to save time, to proceed immediately to a discussion of the lend-lease settlement while awaiting the clarification of the export license procedure.

The Ambassador said that he had already explained the “margin” of discretion which the Government had given him. He emphasized the fact that he is in a position to conclude without delay the nationalization agreement as drafted in March 1947 and to undertake discussions looking to a lend-lease settlement as soon as the question of export licenses had been “solved”. He indicated that even this authorization had been difficult to obtain from the Polish Government. He said that he would appreciate an explanation of our export licensing policy.

I told the Ambassador that this matter had been the subject of continuous study for some weeks and that our policy is still in the formulation stage. I said that, as he doubtless knew, our present export control had its origin in the international political situation. A series of events culminating in the recent change of government in Czechoslovakia had had a disquieting effect on the American public, and, as he must have read in the American press, there are some who fear that a war is inevitable. Under the circumstances, and influenced by public opinion, it had been necessary to institute certain export controls to prevent the shipment of any materials which might augment the military potential of the eastern European bloc of states. It is clear, therefore, that licenses would not be granted for war materials. It is also clear that there many items of international trade which obviously could not be considered as helping the war potential, and these would, of course, receive export licenses. Between these two extremes, however, there is a wide range of items which provide the [Page 533] subject of the study which this Government is now making. I said, therefore, that within the limitations of the policy now being formulated, this Government hopes and expects that trade will be continued with eastern Europe. I stressed the fact that popular pressure for the implementation of export controls is due, as he would understand, chiefly to the present tension in international affairs. I said that I wished to explain this matter to him frankly, perhaps more frankly than I should, in order that he might understand the situation thoroughly.

The Ambassador said that he appreciated my frankness. He said that Poland, too, is interested in retaining its trade relations with western countries as evidenced by the fact that it has recently negotiated, or is now negotiating, trade agreements with western European countries. He explained, with the help of Mr. Litynski, that the items for which the Polish Government is so vitally interested in obtaining export licenses are necessary for the industrial development of Poland, particularly the coal industry. He said that the acquisition of these items would not only permit Poland to increase its trade with western countries but would also aid Poland in paying compensation to Americans under the proposed nationalization agreement. He said that these items fall into two main categories: (1) a blooming mill which would aid in the production of coal cars and other transportation equipment; (2) items for which orders had been placed under the Export-Import Bank credit of $40,000,000. He said that the license for the blooming mill had been refused and that the Embassy had not yet appealed the case, which it must do within 60 days. Of the total Export-Import Bank credit, some $12,000,000 worth of equipment, approved by the Export-Import Bank, remained to be shipped, but no export licenses had as yet been forthcoming. He asked if we could designate someone within the Department of State with whom Mr. Litynski could discuss these matters.

I said that I could not agree to the linking of these two questions of export licenses and nationalization and lend-lease agreements and that we could not even suggest to those responsible that the two agreements be taken into consideration in connection with the licenses. I said that I wished to make it clear that we considered these matters to be separate and we felt that they should be treated entirely separately. I asked the Ambassador whether he meant to say that further discussion of the nationalization agreement and lend-lease settlement could not proceed until such time as the export license question has been clarified.

The Ambassador said that during his visit to Warsaw, the State Department had been anxious to learn whether any action would be [Page 534] taken to prejudice the interests of American property owners prior to the signing of the nationalization agreement. He said that Minister Minc had given assurances that no such action would be taken, and he made particular reference to the Giesche Company (Silesian American Corporation). He said that this “breathing spell” should relieve our anxiety on this point and should be sufficient evidence of the Polish Government’s good intentions. He repeated his request that Mr. Litynski be permitted to discuss the whole matter of export licenses with a designated officer of the Department.

I told the Ambassador that matters had not yet reached a point where I could inform him definitely on this point. I said that I would be glad to arrange such a meeting but that it might be several days or perhaps longer before things are sufficiently crystallized to enable the Department to discuss these matters in detail.

Willard L. Thorp
  1. Jozef Winiewicz.
  2. Zygmunt Litynski, Commercial Counselor of the Polish Embassy in Washington.
  3. Norman T. Ness, Director, Office of Financial and Development Policy (OFD).
  4. Covey T. Oliver, Acting Chief, Division of Economic-Property Policy (EP).
  5. C. Burke Elbrick, Assistant Chief, Division of Eastern European Affairs (EE).
  6. Previous documentation on the problem of economic assistance to Poland is presented in Foreign Relations, 1947, volume iv .
  7. Regarding the agreement under reference here, see footnote 5, to the memorandum of conversation by Armour, January 30, p. 518.