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

611.611/20

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

[Washington,] March 28, 1941.

During the course of a conversation on other matters I informed Mr. Gromyko⁷¹ that we had today received from Mr. Steinhardt a telegram which was somewhat surprising. I said that last autumn the Soviet Ambassador had stated that the Soviet Government was prepared to sell flax to the United States. At that time, American flax importers who had been accustomed to purchase flax regularly in the Soviet Union were negotiating with Lenexport (the Soviet flax exporting combine) in Moscow with the purpose of purchasing various types of flax. According to our information, Lenexport at first had stated that it could not sell flax because no transportation facilities were available. The American importers had thereupon arranged with certain Finnish vessels to transport flax from Murmansk to an American port, and had so informed Lenexport. Lenexport had taken the position that it had no flax for sale at the time. Negotiations for the purchase of Soviet flax had continued intermittently since that time between American importers and both Lenexport in Moscow and Amtorg in New York. Thus far, for some reason or other, the Soviet Government had been unwilling to sell any flax. A short time ago the Department had asked the American Embassy at Moscow to inquire informally with regard to the reasons responsible for the failure of American importers to obtain flax in the Soviet Union. The American Embassy had discussed the matter with the People’s Commissariat for Foreign Trade and, according to a telegram which the Department had received today from the Embassy, the Commissariat for Foreign Trade had stated that it was willing to deliver 3000 tons of flax of various types f. o. b. Murmansk on condition that the United States would take steps to see that quantities of jute and/or Manila hemp to the same value would be delivered to the Soviet Union c. i. f. Murmansk. We were rather surprised at the attitude displayed by the People’s Commissariat for Foreign Trade. Mr. Welles⁷² and Mr. Oumansky⁷³ for the period of more than six months had been endeavoring to find means in the present international situation of improving trade relations between the two countries.⁷⁴ At no time had the Government of the United States assumed a bargaining attitude during these negotiations. The American Government had taken exceptional measures in order to make sure that the Soviet Government could obtain equipment and materials, some of which, in fact, was needed in the United States. The American Government at no time, for instance, had intimated that the Soviet Government could purchase gasoline if it would sell to the United States flax or any other commodity. Millions of dollars worth of machine tools had left the United States during the last six months although some of them could well have been used in American industry. At this very moment officials of the American Government were inspecting lists of Soviet requirements which had been furnished them by Soviet purchasing agents in the hope that ways could be found for American industry to satisfy some of them. The American Government had freely permitted articles, the export of which would not be considered adverse to the interests of the United States, to go forward to the Soviet Union with no thought of holding them up until the Soviet Government would display a willingness to sell certain commodities to the United States. I said that it would be appreciated if the Soviet Embassy in Washington could explain the situation to the Soviet Government and point out to it that in our opinion it would be to the interests both of the United States and the Soviet Union for each country to continue to sell to the other country commodities which could be exported without injury to the interests of the exporting country and to the advantage of the importing country.

Mr. Gromyko said that he was sure that the Ambassador would be glad to convey the views expressed to him to his Government. He wished to point out, however, that there might well be a shortage of flax in the Soviet Union.⁷⁵ The Soviet Government had recently assumed large commitments for the export of flax to other countries.

I pointed out to Mr. Gromyko that the Soviet Ambassador a number of months ago had informed the American Government that flax was available for export to the United States. Since that time, American firms had been continuously endeavoring to purchase flax from the Soviet Union. It was hard for me to believe that in spite of the interest displayed by both the Government and the business men of the United States in Soviet flax, the Soviet Government would proceed to enter into contracts providing for the sale of all surplus flax to other countries. I added that although I was not an expert in flax matters, I was also inclined to believe that it would be difficult for continental Europe to absorb all of the Soviet flax surplus. I said that there was one other point I wished to emphasize. Although the United States industries needed flax, their need was not desperate. Already the difficulties of obtaining flax in the Soviet Union had caused American industrial interests to encourage the planting of flax in various parts of this hemisphere. In a comparatively short time this hemisphere, which in the past had purchased, direct or indirect, large quantities of flax from the Soviet Union or from territories now occupied by the Soviet Union, would be self-sufficient so far as flax is concerned. Flax had been one of the relatively few commodities which the United States in the past had been able to purchase from the Soviet Union. It would be regretted if, because of the attitude of the Soviet Government at this particular time, trade between the United States and the Soviet Union in this material would be transferred to other channels.⁷⁶

71. Andrey Andreyevich Gromyko, Counselor of the Soviet Embassy.
72. Sumner Welles, Under Secretary of State.
73. Konstantin Alexandrovich Umansky, Ambassador of the Soviet Union.
74. For correspondence concerning difficulties affecting relations between the United States and the Soviet Union, and attempts to alleviate them, see pp. 667 ff.
75. Ambassador Steinhardt had reported in telegram No. 617, March 27, 1941, that on the previous day the Council of Peopled Commissars had published a resolution which introduced “obligatory deliveries of flax and hemp in the majority of the regions of the Soviet Union raising these crops” which tended to confirm “previous press reports to the effect that the 1940 flax and hemp crops were unsatisfactory.” (611.611/13)
76. Ambassador Steinhardt, in his telegram No. 646, April 1, p. 733, expressed the opinion that hints by Soviet Ambassador Umansky that the inability of the Soviet Government to purchase what it desired in the United States would cause it to increase purchases from Germany were “sheer bluff”.