861.24/1–2849

Memorandum by Mr. George E. Truesdell of the Division of Eastern European Affairs to the Assistant Secretary of State for Economic Affairs (Thorp)1

secret

In the lend-lease settlement negotiations with the Soviet Government, the Soviets have offered to purchase the 36 war-built liberty ships remaining in their custody at U.S. prices and terms which were stated to the Soviets to be those of the Merchant Ship Sales Act of 19462 with effective date of sale retroactive to September 2, 1945. A list of the prices of these vessels as of September 2, 1945 computed under the terms of the Merchant Ship Sales Act was handed to Soviet representatives on June 25, 1947 (US–USSR LL SET D–33).3 The U.S. side has agreed to such a sale as a part of an over-all settlement provided it is concluded promptly. In reviewing the methods of computing the agreed prices with the Maritime Commission it was determined that the prices given the Soviets are in accord with Maritime Commission practice with the exception that no adjustment was included for desirable features, which it is understood would have increased the price in nearly every instance. The attached table (D–111)3 sets forth the computations used by the Maritime Commission in establishing the prices of these vessels in accordance with the Merchant Ship Sales Act. Copies of this table may be given to Soviet representatives when the occasion demands.

In their note of December 9, 1948 the Soviets have offered to purchase the remaining merchant vessels and tugs (47 pre-war-built dry cargo vessels, 1 pre-war-built tanker, 2 war-built tugs and 1 old tug) for $13 million. Our original asking price for the 47 dry cargo vessels and one old tanker (Maritime prices) was $15,439,000 as of September 2, 1945. Maritime Commission prices for the 3 tugs total $965,000 but this amount has been considered high and has not been communicated to the Soviets. Although no final decision has been made, it is the consensus in the Department that we should accept the Soviet offer of $13 million for the 48 old ships and 3 tugs as a part of a prompt over-all settlement. Since our sales prices have been computed with September 2, 1945 as an alternative to a charge for charter hire, it is assumed that, if the Soviet offer is accepted, interest will be charged in the same manner as contemplated for the Liberty ships. However, a 2% rate, that proposed for the over-all settlement, has been used arbitrarily for the purposes of this memorandum.

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The table below sets forth the cash and credit payments required from the Soviet Government on the bases of the factors outlined above:

36 Liberty Ships:
 Cash down payment
(25% of $20,159,920.83)
$5,039,980.21
 Payments past due Sept. 2, 1946–48
(3×$876,407.28)
2,629,221.84
 Interest past due Sept. 2, 1946–48
(3½%×3 of total)
2,116,791.69
  Total 9,785,993.74
51 Other Ships:
 Agreed price—cash 13,000,000.00
 Interest to date of sale
9/2/45 to 3/2/49, 2%
910,000.00
  Total 13,910,000.00
  Total Cash 23,695,993.74
14 Annual payments beginning 9/2/49 of $876,407.28 each
1 Annual payment due 9/2/63 221,016.68
Interest on unpaid amounts annually at 3½%.
  1. Mr. Lehman Patton Nickell, the adviser on shipping in the Office of Transport and Communications, was also associated in the transmission of this memorandum to Mr. Thorp.
  2. Approved March 8, 1946; 60 Stat. 41.
  3. Not printed.
  4. Not printed.