761.56/12–1550
Memorandum of Conversation, by the Assistant Secretary of State for Economic Affairs (Thorp)
| Participants: | Secretary of the Navy Matthews |
| Assistant Secretary of State Thorp | |
| Mr. Bonbright—EUR | |
| Mr. Truesdell—EE | |
| Mr. Murphy—LL |
Today at my request I had an appointment with Secretary of the Navy Matthews to discuss the 400 odd lend-lease Naval vessels held by the U.S.S.R. I explained that, as a result of a note we sent to the Soviet Ambassador last June proposing the resumption of “across-the-table” discussions on both an over-all lend-lease settlement and the question of the naval vessels, the Soviet Government had replied at the end of November suggesting the date of December 20, I said that several very important factors, including that of the naval vessels, would require discussion with Congressional leaders and possibly with the President so that, in responding to the Soviet note, we suggested a date of January 15 and we were still awaiting their reply. I outlined to Mr. Matthews the history of our endeavors to conclude a satisfactory over-all settlement of Russia’s lend-lease account including disposition of the naval vessels of various types, and indicated [Page 1332] that it was my purpose today to ascertain the present position of the Navy with respect to these vessels. I said that I was keenly aware of public opinion and Congressional interest in this matter and believed that our efforts should be directed toward obtaining the return of all of the Naval vessels. However, I also pointed out that, while this undoubtedly would be the most desirable result to be achieved, we should not lose sight of the fact that by demanding the return of all vessels we might end up by not getting any.
Mr. Matthews said that he realized this but that the Navy Department was bound at this time to act in accordance with a directive of the Secretary of Defense to the effect that the Department of State should enter negotiations with the intention of dispossessing the Soviets of all operable vessels and that is the Navy’s position. He indicated that he was sympathetic with our position of responsibility for dealing with the problem but that in the face of public opinion, Congressional reaction and Navy strategic concepts, the Navy could not and would not concur in any position or policy which would have the effect of consenting to the sale or transfer of any of these vessels to the Soviets.
After saying that I was in accord with this view as a matter of general principle and protection of the national interest, I indicated that, as a practical matter, it was most likely that during the course of negotiations we would have to recede from such a position and what I was seeking today was advice as to the extent to which a demand for the return of all the vessels could be modified during negotiations. I referred to the Soviet lend-lease account and the vessels as, in reality, being a bad debt and said that it might be best to take the maximum that we could get rather than to remain inflexible in trying to get all of the vessels back with the result that we would undoubtedly get none of them. I pointed out that I was not advocating a course of action at this time but rather was seeking the views of the Navy as to the most advisable way to proceed in the negotiations.
Mr. Matthews again said that, unless the Secretary of Defense or the President decided otherwise, the Navy would be bound to adhere to its present position that we should demand the return of all of the naval vessels.
During the discussion Mr. Matthews mentioned that the Soviet note of November 24 referred only to the sale of Naval vessels and Mr. Murphy responded by saying that, in our reply to the Soviet note, we took exception to this by pointing out that, while we referred to an earlier note in which we had indicated a willingness to sell 242 vessels and requested the return of 186 vessels, we would enter these negotiations with the objective of discussing the disposition of all naval vessels in the light of the provisions of Article V of the Agreement. I left Mr. Matthews a copy of this note to the Soviets dated December 9, 1950.
[Page 1333]The discussion ended with my indicating appreciation for the Navy’s views and Mr. Matthews said that he did not envy the Department’s position of trying to work out a satisfactory method of winding up this lend-lease account and particularly the vessel question.