861.24/529: Telegram
The Ambassador in the Soviet Union (Steinhardt) to the Secretary of State
[Received August 5—2:30 p.m.]
1437. The British Commercial Secretary60 has informed a member of my staff as follows: The negotiations for supplies desired by the Soviet Government, other than military, are being carried on in Moscow between the Commissariat for Foreign Trade and the members of the British Mission. When quantities have been agreed upon the technical specifications are to be settled in London between the Soviet Trade Delegation and the appropriate Government Department. He said that the matter was being handled there chiefly by the Ministry of Economic Warfare.
As I have previously reported the British agreed immediately upon the outbreak of the war to furnish certain supplies without waiting for the conclusion of negotiations. The Commercial Secretary said that 12,000 tons of rubber and 2,000 tons of tin are now being loaded in [Page 185] Malaya for shipment in Soviet vessels and that an additional 10,000 tons of rubber are being shipped from England.
He said that the negotiations in Moscow have chiefly revolved around the question of payment. The British proposed that the balance remaining after deducting British purchases in the Soviet Union from Soviet purchases from Empire sources be settled by payment of 40 percent in dollars with other 60 percent to be covered by sterling credits. He said that lately the Soviets have been making considerable difficulty and negotiations are virtually at a standstill. The British are concerned lest the Soviet Government play the United States off against them in these negotiations and he indicated that he feared that Mr. Hopkins’ visit61 might have some connection with Soviet reluctance to conclude an agreement on the basis suggested. He said that his personal opinion was that it might be best for the British not to conclude an agreement at this time but to handle the matter on some temporary basis.
The Commercial Secretary stated that the Soviet Government has given them no information as to their gold holdings or their sterling or dollar balances. He thinks their dollar balances might amount to 100,000,000 and that their sterling balances are considerably smaller. The British have proposed payment in dollars because they have certain payments to meet in dollars that are not covered by the Lease Lend Act62 and they feel that for political reasons it would be preferable for the Soviet Union to ship gold to us than to have it come through Britain.
He said that the Russians are asking for large quantities of supplies but that they will furnish little or no information concerning their production or consumption. He said that so far as aluminum is concerned he did not believe the British would release any until at least some information was forthcoming.
In reply to a question the member of my staff said that he had no information concerning the financial arrangements that were being considered in connection with American assistance to the Soviet Union but pointed out that Hopkins had stated to the press in reply to a similar question that there would be no delays whatever in the furnishing of supplies. He also pointed out that negotiations were being carried on in Washington and that he doubted whether any information would be available on the matter until Mr. Hopkins returned to Washington.