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

660C.119/6–148

Memorandum of Conversation, by Mr. Edward G. Posniak of the Division of Investment and Economic Development

secret

[Washington,] June 1, 1948.

Participants:	ITP—Mr. Martin
	CP—Mr. Armstrong
	ED—Mr. Posniak

Mr. Martin reported this morning that despite the recommendation of the Advisory Committee (see Memorandum of Conversation of May 27¹) Secretary Sawyer has refused to approve the export licenses for coal cars, locomotives and other equipment under the Eximbank credit to Poland. It is not clear whether this represents merely a temporary delay to insure proper timing for public relations reasons or a basic substantive position, which may require another Cabinet discussion or a meeting between Mr. Sawyer and Secretary Marshall. Mr. Martin said that Mr. Sawyer had taken a similar attitude with regard to granting licenses for the USSR, refusing to act on them despite the Advisory Committee’s recommendation. Mr. Martin characterized the situation as “another crisis”, which would require another meeting of the Advisory Committee (probably tomorrow afternoon) with top level representation of all Departments concerned. At the same time, Mr. Martin indicated, Mr. Sawyer is “going overboard on Finland”, being willing to approve licenses for any and all shipments to that country. This, of course, might be due to the relatively favorable press reaction to the Commerce announcement last week.²

Mr. Martin also stated that Mr. Harriman had made a strong plea, presumably with Mr. Sawyer, for reducing the number of items in the Class 1 category, advocating that the criterion to be used in establishing the list should be what the western European countries can accept by way of restricting their exports to eastern Europe under Section 117d of the ECA Act.³

Mr. Martin said that there had been a meeting Saturday morning (May 29), which he did not attend, in the office of Undersecretary of the Army Draper, attended by Mr. Thorp, Mr. Blaisdell of Commerce, Mr. Harriman and Mr. Foster⁴ of ECA, and representatives of NSRB and NME. It was apparently agreed at this meeting that the basic policy statement on trade with the Soviet bloc, approved by the Advisory Committee, would go to the National Security Council for approval.⁵

In conclusion Mr. Martin summed up the situation by stating that in his opinion it was now imperative that Secretary Marshall discuss the entire question of trade with the Soviet bloc with Secretary Sawyer, since previous efforts to have the matter discussed between Mr. Sawyer and Mr. Thorp had not been successful.

1. Not printed.
2. On May 26, 1948, the Department of Commerce licensed the export of $3,890,000 worth of machine tools and machinery to Finland.
3. The reference here is to the Economic Cooperation Act of 1948, Title I of the Foreign Assistance Act of 1948, Public Law 472, April 3, 1948, 80th Congress, 2nd Session, 62 Stat. 137.
4. William C. Foster, Deputy Administrator of the Economic Cooperation Administration.
5. Possibly a reference to document Ad Hoc/Doc. 31 (Final), May 4, 1948, p. 536. No further action was taken by the National Security Council with respect to trade with Eastern Europe during the remainder of 1948.