Foreign Relations of the United States Diplomatic Papers, 1941, General, The Soviet Union, Volume I

711.61/786½

Memorandum of Conversation, by the Assistant Chief of the Division of European Affairs (Henderson)

[Extracts]²⁸

[Washington,] March 27, 1941.

Participants:	Mr. C. A. Oumansky, Soviet Ambassador;
	Mr. Welles, the Under Secretary;
	Mr. Gromyko, Counselor of the Soviet Embassy;
	Mr. Loy W. Henderson, Assistant Chief, Division of European Affairs.

Section I

Economic Relations

The Ambassador said that he was in a fighting mood. He had with him 31 letters which Mr. Seldiakov had just received from Mr. Philip Young, member of the President’s Liaison Committee, disapproving various Preliminary Negotiation Reports which had been filed with that Committee. All of these letters except one stated that the applications contained in the Preliminary Negotiation Reports could not be approved in view of the defense program. The exception, which related to a request for the construction of three plants for cracking gasoline, stated that the disapproval was due to the objections of the Navy Department. In a number of conversations which he had had with Mr. Welles during the past six months, Mr. Welles had assured him that the refusal of the American Government to permit the sale to the Soviet Union of these three cracking plants was due to the moral embargo, not to the needs of national defense. Mr. Welles had made such assurances to him on August 2, October 24, on January 22, and on other occasions. As far back as August 2 Mr. Welles had been good enough to indicate that in his opinion the time had come when it might be possible to consider the lifting of the moral embargo. On January 22 he had again stated that there were no national defense factors which should interfere with the building of the plants, and the Ambassador had obtained the impression from this remark that upon the lifting of the moral embargo the last obstacle to the building of the plants would be removed. In spite of these assurances, the American Government had continued to refuse to permit American personnel and American materials to be used in the erection of gasoline cracking plants in the Soviet Union.

Mr. Welles replied that the Ambassador’s statements raised two points. The first point was that the Young Committee was continuing apparently to correspond with Soviet representatives regarding Preliminary Negotiation Reports. It had been his understanding that the Young Committee ceased some time ago to concern itself with matters of this kind. He had been informed that all work connected with Preliminary Negotiation Reports received from Soviet agencies, and with regard to priorities for Soviet orders, and so forth, had been transferred to the Department of State and was under the supervision of Mr. Acheson. He asked if Mr. Henderson was in a position to explain why communications relating to Preliminary Negotiation Reports were still being addressed by Mr. Young to Mr. Seldiakov. Mr. Henderson said that he also was surprised to learn that the President’s Liaison Committee was continuing to carry on this work and that he would make inquiries with regard to the matter.

Mr. Welles said that the second point related to the refusal of this Government to approve a Preliminary Negotiation Report covering the building of three cracking plants in the Soviet Union. His assumption was that this refusal had been based upon factors flowing from the passage of the Lend-Lease Bill. He assumed that the Navy Department felt that all workers skilled in cracking processes, as well as the factories in the United States which manufactured cracking machinery, would eventually be needed in connection with the defense work. He had again and again endeavored to make clear to the Ambassador that it was impossible for the American Government to make any definite assurances with regard to the future since future decisions of the American Government with regard to the granting of priorities and export licenses must be based upon events which could not, in view of the uncertainties of the international situation, be foreseen. The passage of the Lend-Lease Bill forced American industry to concentrate to an extent more than ever before upon the production of goods needed in order to strengthen the defense of the United States and to aid the victims of aggression.

The Ambassador said that it seemed to him that there was involved a factor other than that connected with the national defense and the Lend-Lease Bill, namely, a political factor. In their last conversation, Mr. Welles had frankly stated that certain political factors were entering into the refusal of this Government to permit certain articles and materials to go forward to the Soviet Union. Only the American Government, itself, the Ambassador continued, was able to determine the extent to which political factors, rather than national defense factors, were preventing certain machinery from being delivered to the Soviet Union. So far as the Soviet Government was concerned, it was not important whether the refusals which it received to its requests for material and equipment came from Mr. Young’s Committee or from the Department of State. It was important, however, that in spite of repeated Soviet suggestions, refusals to permit the Soviet Government to place orders should not be of a unilateral and blanket nature. Unconditional refusals were still being received by Soviet purchasing agencies without any prior consultation between them and the appropriate organizations of the American Government. In case it was impossible for American factories to accept orders for fulfillment now, arrangements at least might be made for such orders to be placed in future production schedules. Apparently, the American Government was not interested in including Soviet orders in these schedules. The situation at present was so discouraging that Soviet purchasing organizations did not even attempt any longer to replace orders in view of the tendency of the American Government to decline to permit the Soviet Government to have any share in United States export trade. The Soviet Government did not intend to impose itself on, or to beg for a place in, American markets. If there was to be no future in Soviet-American trade, it would like to be told so frankly. It was apparent that even problems which could be solved between the two governments were being held pending. The two Governments, for instance, had come to a full agreement with respect to granting most-favored-nation treatment to the Soviet Government in the purchase of gold.²⁹ Nevertheless, the exchange of notes on this subject was still being delayed.³⁰

The Ambassador added that the suggestions which Mr. Acheson had made during the course of his conversation with him seemed to be good. These suggestions had been carried out meticulously by the Soviet Government and he hoped that some good would come from them. However, even progress with regard to goods which had already been ordered would not solve the problems which were facing the two governments. The Soviet Government was not merely thinking of obtaining deliveries of goods already ordered; it was thinking in terms of the future. Amtorg had bought $2,500,000,000 worth of merchandise in the United States during the past 16 years and now it was idle. In connection with the present situation, he would like to make this clear statement:

“If the fact that we continue our trade with belligerents is an unsurmountable obstacle to the development of trade between the United States and the Soviet Union, let us be good sports and draw the proper deductions. As neutrals, we have the right to carry on trade with the belligerents just as the United States, during the Russian-Japanese War, demanded a similar right.³¹ It is our belief that many common denominators may be found in the long-range policy of both the American and Soviet Governments and certainly in the immediate future there should be common denominators in the economic policies of the two Governments. Much depends upon the attitude of the American Government.”

Mr. Welles replied that he would again endeavor to summarize what he had already stated on previous occasions. In the first place, he was glad to note that the Ambassador had pointed out that if not in the immediate future, at least in the long range, the national interests of the United States and the U. S. S. R. might be regarded as similar. He wished to repeat that it was the desire of this Government to maintain, promote, and increase normal economic relations with the Soviet Government. At a time, however, when the whole United States was exerting all efforts and expending large sums of money in order to assist resistance to the aggressors, it would be absurd for the American Government to take steps to facilitate trade with any country of a nature which might directly or indirectly be of benefit to Germany or the Axis powers. The Soviet Government has been good enough to make a statement a short time ago to the effect that the purchases which it was making in the United States would be used exclusively in the Soviet Union. At the time he had said that this statement was gratifying, as it was. This statement, however, did not take account of the matter of replacement or of indirect benefit accruing to Germany and other Axis powers. In a most friendly spirit, it must be stated that the questions of replacement and of indirect benefit must be taken into account by the American Government. The Soviet Government, however, might purchase large quantities of goods in the United States which did not fall into these two categories of replacement and indirect benefit. The American Government was anxious, so far as possible, to promote the sale of such goods to the Soviet Union.

The Ambassador said that he appreciated the statement which Mr. Welles had made. For the sake of the record, however, he felt that he must remind Mr. Welles that the facts themselves, as established by American Governmental institutions, were the best answer to statements that exports to the Soviet Union might be beneficial to the Axis powers. These facts showed that the Soviet purchases in the United States were less than normal. Of course, the structure of these purchases had changed somewhat during the last year because of certain changes in the international situation. The Soviet Government, for instance, was now buying in the United States commodities which it had formerly purchased through British sources. The United States Department of Commerce, in an analysis of Soviet purchases in the United States, had shown clearly that there was nothing unusual about these purchases and that they were being made to satisfy Soviet needs. In spite of these facts, he felt important to point out that the Soviet Government had the right to maintain trade with belligerent countries so long as such trade was beneficial to Soviet national interests.

Mr. Welles replied that the American Government did not desire to question the rights of the Soviet Government to trade with belligerents. All American activities, however, were now coordinated for the purpose of more effectively achieving the primary aims of American national policy. He was still of the opinion that within the channels which he had just suggested, much trade between the Soviet Government and the United States was possible.

Mr. Oumansky replied that all the suggestions which Mr. Welles had made had been carried out meticulously by his Government. In spite of this fact, nothing had been done so far to defreeze exports to the Soviet Union.

Mr. Welles said that he would discuss with Mr. Acheson later in the day the possibilities of expediting the solution of a number of problems which seemed to be holding up certain exports to the Soviet Union.

. . . . . . . . . . . . . .

Section III

At the close of today’s conversation, Mr. Welles said that he desired to bring up a very important matter which had not hitherto been discussed. The people of the Soviet Union in the years subsequent to 1917 had reason, he believed, to appreciate the work of American relief organizations in that country. Work similar to that of the A. R. A.³² was now being carried on by the American Red Cross. During the course of these conversations, both the Ambassador and Mr. Welles had been seeking to create more friendly feelings between the peoples of the two countries. There had of late been a growing interest among the people in the United States in the welfare of the population of Eastern Poland. There was a feeling that they were in terrible need of certain material assistance. For humanitarian reasons, and for humanitarian reasons only, the American Red Cross was prepared to undertake to extend relief work in this area; it was prepared to purchase supplies in the Soviet Union, in the United States, or elsewhere, in order to carry on this work. This work would be carried on in the closest cooperation with the Soviet authorities. The personnel who would participate in it would go from the United States to Vladivostok; they would have no contact with the authorities of any other country. It was hoped that the Soviet Government, in view of the interest of the United States in these suffering people, and for humanitarian reasons, would permit this relief work to be carried on.

The Ambassador stated that it was his duty to convey to his Government the messages and statements delivered to him by Mr. Welles. He felt, however, that before conveying the remarks which had just been made to him, he should make some of his own. In the first place, he assumed that Mr. Welles, in referring to Eastern Poland, had intended to describe the western part of the Ukraine and the western part of the White Russian Soviet Socialist Republic. In the second place, he must state that it was quite new to him that there was any question of need for relief in these portions of the Soviet Union or in any other portions of the Soviet Union. In the third place, it was his opinion that the Soviet Government was entirely able to furnish all necessary food and clothing to the 190,000,000 people living in the Soviet Union, and to continue to raise the standard of living of its own population without any help from the outside.

Mr. Welles replied that he had not intended to convey the idea that the Soviet Government was not able to furnish food and clothing to its population. This Government, however, had on frequent occasions, in cases of national disaster or subsequent to war or other disturbances, given relief to the population of other countries, even though the Governments of those countries were in a position to mobilize relief from their own sources. Such actions on the part of the American Government and people served to promote international friendly relations and might be considered as gestures of sympathy.

The Ambassador said that the Soviet Government itself had frequently followed the same course. It had, for instance, furnished aid to suffering people in Spain and was at the present time sending supplies to China. There could, in his opinion, however, be no analogy between the sufferings of the people in Spain and China to the conditions which prevailed in the Soviet Union.

Mr. Henderson asked Mr. Welles if in suggesting that relief be extended to the population of what Mr. Oumansky referred to as “Western Ukraine and Western White Russia”, Mr. Welles had intended to convey the idea that this aid would be carried on solely in those areas or whether it was the hope of the American Government that relief could be furnished to such former residents of these areas who had lately moved or been removed to Siberia or other parts of Asia. Mr. Welles said that it had been his intention to suggest that the American Red Cross be permitted to bring relief to these peoples regardless of the portion of the Soviet Union in which they might now be residing. The Ambassador said that he must again emphasize the astonishment with which he had received the suggestion of Mr. Welles. Since the suggestion had been made to him, however, he would convey it to his Government.

Section IV

During the course of the conversation which took place today between Mr. Welles and the Soviet Ambassador, the Soviet Ambassador said that he had made it a policy not to register any complaints with regard to motion pictures shown in the United States. He did, however, wish to draw the attention of the Department to the fact that the Trans-Lux Theatre³³ at the present time was displaying a newsreel showing the destruction by the United States postal authorities of tons of Soviet newspapers and printed matter which had been sent to the United States through the mails. It was possible for spectators in the theatre to identify some of the papers which were burning. He was sure that Mr. Welles could agree with him that the display of such pictures was not likely to improve relations between the two countries. It was unfortunate that just now the American Government should decide to interfere with mail service between the Soviet Union and the United States. It seemed to him that the release of this film which undoubtedly had been taken with the consent of the American Government was aggravating injury which had already been done.

As it was, the situation with regard to Soviet newspapers and magazines coming to the United States was almost unbearable. Although the Soviet Embassy and Consulates were now receiving their mail, Mr. Lukashev, the head of Amtorg, and other Soviet officials in this country, who were not attached to the Embassy or consulates, were not receiving any newspapers or magazines from the Soviet Union. He had been nasty enough to inform the Library at Harvard University that the State Department had forbidden him to lend the Library his collection of Soviet laws. The Four Continent Book Company, although registered as the agent of a Soviet principal, was not now receiving a single magazine or newspaper from the Soviet Union. This situation had arisen at a time when Mr. Welles and he had been endeavoring to improve relations between the two countries.

Mr. Welles said that he would have these matters looked into and would discuss them with the Ambassador at a later date.

Section V

Mr. Welles was compelled to terminate his conversation with the Soviet Ambassador this afternoon upon the receipt of information that the Senate Foreign Relations Committee was expecting him. The Ambassador said that he was sorry that the conversation could not be concluded since he had three other matters which he desired to discuss:

1. The matter of the engineers in the R. C. A.³⁴ Plant.

2. The refusal of the American Government to permit the Wright Aeronautical Corporation to furnish two airplane motors to Soviet agencies.

3. The Baltic ship situation, which was becoming unbearable.

In spite of the suggestions made by Mr. Welles that it would be preferable not to discuss the question of the Baltic ships, he had found it necessary to do so. These ships were being alienated and scattered all over the Atlantic Seaboard. Members of the crew were being thrown in jail; Soviet interests were being ignored. He therefore felt compelled to discuss this matter further.

28. The second section of this memorandum, concerned with the arrest and detention of American citizens in the Soviet Union, is printed on p. 948.
29. See the memorandum of October 23, 1940, by the Under Secretary of State, and footnote 8, Foreign Relations, 1940, vol. iii, p. 398.
30. In a letter dated July 16, 1941, to the Secretary of the Treasury, Henry Morgenthau, Jr., Acting Secretary of State Welles wrote: “In view of certain considerations of an international character the contemplated exchange did not takeplace.” (611.6131/634a)
31. For correspondence on the seizure of American-chartered vessels and American cargoes by Russian naval authorities during the Russo-Japanese war, see Foreign Relations, 1904, pp. 727–777; and ibid., 1905, pp. 742–754.
32. American Relief Administration. Because of crop failures and unstable internal conditions, starvation and epidemics had become widespread within Soviet Russia by the summer of 1921. After private appeals for relief by prominent individuals, the Bolshevik government at last addressed a circular note on August 2, 1921, to all governments requesting assistance against the perils of famine. Arrangements were made for the conduct of American relief through the American Relief Administration, of which Mr. Herbert Hoover was chairman, in an agreement signed at Riga on August 20, 1921, between this organization and Maxim Maximovich Litvinov, at that time Assistant People’s Commissar for Foreign Affairs. This agreement provided for the regulation of the distribution and management of relief commodities and medical supplies by the organization. Although the Congress of the United States voted money for the purchase of supplies and support of the undertaking, this charitable activity was entirely unofficial. Conditions were sufficiently improved so that the American Relief Administration was withdrawn in July 1923. Some correspondence on the beginnings of this relief operation is in Foreign Relations, 1921. vol. ii, pp. 804–828.
33. In Washington, D. C.
34. Radio Corporation of America.