840.51 Frozen Credits/339: Telegram
The Chargé in the Soviet Union (Thurston) to the Secretary of State
[Received 9:30 p.m.]
885. I was requested by Assistant Commissar Lozovski87 to call at the Commissariat for Foreign Affairs this evening. Upon my arrival he stated that he had been directed to lodge a strong protest against the withholding from the Soviet State Bank by American banks of gold acquired by it from Estonian, Latvian and Lithuanian banks. He then handed to me the following memorandum stating that an early reply is desired and commenting that the American action is illegal and serious. I stated that I would bring the memorandum of protest to the attention of my Government and advise him promptly of such reply as I might be instructed to make to it. With respect to his comment on the illegality of our acts I stated that while there is room for differences of opinion regarding such matters I could not accept his employment of the term “illegal” as my Government does not engage in illegal activities:
“The Government of the U. S. S. R. directs the attention of the Government of the United States to the actions of the Federal Reserve [Page 396] Bank, New York, a bank which has permitted an arbitrary suspension of the transfer of gold belonging to the Soviet state to the State Bank of the U. S. S. R.
The above-mentioned gold was acquired by State Bank of the U. S. S. R. from the Lithuanian, Latvian and Estonian banks on the basis of sale purchase agreements and was subject to transfer to the deposit of the State Bank of the U. S. S. R. by virtue of telegraphic orders of July 13, 1940 of the Lithuanian, Latvian and Estonian banks, orders which are unconditionally binding upon the Federal Reserve Bank. Nevertheless, instead of immediately fulfilling the above-mentioned instructions of the banks of Lithuania, Latvia and Estonia the Federal Reserve Bank after a completely unjustified delay of 3 days informed the State Bank of the U. S. S. R. by a telegram of July 16, 1940 that it was soliciting the permission of the Federal Treasury of the United States for transfer of the gold to the State Bank of the U. S. S. R. Along with this the Federal Reserve Bank referred to ‘Executive Order No. 8484 of July 15, 1940’ which prohibits operations involving property in which Latvia, Lithuania or Estonia or citizens of those countries, have an interest, from being conducted without permission.
No further communication concerning a change in the situation which has arisen of suspension of the transfer of the gold to the account of the State Bank of the U. S. S. R. have arrived from the Federal Reserve Bank up to the present time.
The Soviet Government considers the actions of the American institutions to be directed against the Soviet Union’s realization of its legal property rights to the said gold as undermining the foundations of normal commercial relations and as contrary to the elementary principles of international law.
The Soviet Government in particular notes that:
- 1.
- The Federal Reserve Bank had no legal bases whatsoever for suspending the execution of the operations of transferring the gold to the State Bank of the U. S. S. R., operations with which the Bank was already commissioned on July 13, 1940 by the Banks of Lithuania, Latvia and Estonia. The references of the Federal Reserve Bank to the ‘Executive Order No. 8484 of July 15, 1940’ as a basis for non-fulfillment during the course of July 13th, 14th and 15th of the said instructions are absolutely unconvincing inasmuch as these instructions had already been received prior to the issue of the order.
- 2.
- With regard to the contents of ‘Executive Order No. 8484,’ contents cited in the communication of the Federal Reserve Bank, it is necessary to point out that neither this nor any other order can limit the rights of the U. S. S. R. to the receipt of the property which it has purchased or to the disposal of this property as property of a sovereign state which possesses immunity by virtue of its sovereignty.
On the basis of the foregoing the Soviet Government makes to the Government of the United States of America a determined protest against the violation by the aforesaid institutions of the United States of America of the interests of the Soviet Union and of the latter’s legal right to the gold purchased from the banks of Lithuania, Latvia, and Estonia for an appropriate equivalent.
The Soviet Government expects an immediate transfer of the gold which it has purchased from the Banks of Lithuania, Latvia and [Page 397] Estonia to the State Bank of the U. S. S. R. and charges the Government of the United States of America with all responsibility for the losses inflicted upon the U. S. S. R. by the actions of the American institution.”
- Solomon Abramovich Lozovsky, an Assistant People’s Commissar for Foreign Affairs of the Soviet Union.↩