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

861.24/12–2047

Memorandum by the Director of the Office of Financial and Development Policy (Ness) to the Assistant Secretary of State for Economic Affairs (Thorp)

[Washington,] January 2, 1948.

On December 11, 1947 a note was sent to the Soviet Embassy² requesting the immediate return to the United States, not later than sixty days thereafter, of eight lend-lease merchant vessels: 3 war-built liberty tankers, 4 war-built T–2 tankers, and 1 dry cargo vessel. This note affirmed a previous request for the return of these vessels included in the “Outline of Main Points of Settlement Proposed by the U.S. Side” presented to Soviet negotiators on June 25.³ In a reply dated December 20,⁴ the Soviet Government has taken the position that the question of the return of these vessels is one for decision in the general lend-lease settlement. If the Soviet position is accepted or no response is made, which would be tantamount to acceptance, an indefinite delay in the return of the vessels may be expected and the Soviets may assume that the question of the sale of these vessels remains open for consideration in the negotiations. Adverse Congressional and public reactions may be expected if we fail to take all possible steps to accomplish the early return of these vessels.

Although technically the Department has authority under the Lend-Lease Act to sell merchant ships without restriction, adherence to the laws and practices governing such sales by the Maritime Commission is considered a necessary basis for sales to the U.S.S.R. in the lend-lease settlement. The Merchant Ship Sales Act of 1946 prohibits Maritime Commission sales of liberty tankers to other than U.S. citizens and requires the approval of the Secretary of the Navy to all such sales of the other war-built lend-lease ships now held by the U.S.S.R. The Secretary of the Navy⁵ has not approved the sale of the 4 T–2 tankers to the U.S.S.R. but strongly recommended their return. More recently the Maritime Commission has recommended, in view of the current tanker shortage, that all U.S.S.R. lend-lease tankers be returned.⁶ Previously, however, the one pre-war-built lend-lease tanker remaining in Soviet custody was offered for sale to the U.S.S.R. in the settlement negotiations and has not been requested for return. The one dry cargo vessel requested for return was requisitioned from the Italian Government during the war and we are now committed to its return to the Italian Government.⁷

Article V of the Soviet Master Lend-Lease Agreement provides that the Soviet Government will return to the United States at the end of the emergency such articles as are determined by the President to be of use to the United States, So long as the emergency referred to in this Article has not been terminated, technically all lend-lease articles transferred to the Soviet Government, with the exception of naval craft, remain subject to disposition in the lend-lease settlement. Documents to effect the determination of the end of the emergency for the purposes of the Master Lend-Lease Agreements are now in preparation for immediate use.

Signature of the attached note is recommended.⁸

[Annex]

The Secretary of State to the Ambassador of the Soviet Union (Panyushkin)

Washington, January 17, 1948.

Excellency: I have the honor to acknowledge the receipt of the Embassy’s note No. 250 of December 20, 1947 which is in reply to my note of December 11, 1947 requesting the return to the United States of eight lend-lease merchant vessels.

The Government of the United States cannot agree that the question of the return of these eight merchant vessels be subject to any further discussion in the course of the general lend-lease settlement. As stated in my note of December 11, 1947, these vessels cannot be transferred to the Government of the Union of Soviet Socialist Republics in connection with the settlement of lend-lease. The Government of the United States expects the Government of the Union of Soviet Socialist Republics to return these vessels to United States ports not later than sixty days after December 11, 1947, i.e. on or before February 9, 1948, as specified in my note of December 11, 1947 and in conformity with the commitments of the Government of the Union of Soviet Socialist Republics undertaken in the Agreement between our two Governments on June 11, 1942.

Accept [etc.]

For the Secretary of State:

Willard L. Thorp

2. Foreign Relations, 1947, vol. iv, p. 711.
3. Ibid., p. 696.
4. Ibid., p. 717.
5. The Secretary of the Navy at this time was James Forrestal. See his letters of May 8 and June 11, 1947, to Secretary of State George C. Marshall, ibid., p. 685 and p. 694.
6. The Chairman of the Maritime Commission Vice Adm. William W. Smith in a letter to Secretary Marshall dated November 25, 1947, not printed, had written: “In view of the critical world-wide oil situation and tanker shortage which the State Department is well aware of, the Maritime Commission strongly urges that none of the tankers now in possession of the U.S.S.R. be sold to that Government. It also strongly urges that every effort be made to have the Soviet Government return all of the tankers in question without further delay.” (861.24/11–2547)
7. This old dry cargo vessel (formerly the Italian Monte Fiori, then the United States White Clover, now the Soviet Lev Tolstoy) had been seized by the United States from Italy during the war and had been transferred to the Soviet Union on April 30, 1945. It was returnable to the Italian Government pursuant to the authority contained in the provisions of Public Law 370, 80th Congress, 1st Session; approved on August 5, 1947, 61 Stat. 784, 786.
8. Infra.