Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

761.56/12–1250

Minutes of Informal Meeting of the USSR Lend-Lease Settlement Committee, Department Officers Only¹

secret

[Washington,] December 12, 1950.

Present:	Mr. Thorp	E
	Mr. Corbett2	OFD
	Mr. Murphy3	OFD:LL
	Mr. Cardozo4	L/E
	Mr. Bonbright	EUR
	Mr. Rernhardt	EE
	Mr. Davis5	EE
	Mr. Truesdell	EE
	Mr. Katz	EE

Mr. Thorp opened the discussion with some comments to the effect that, to look at the matter realistically, the Soviet Union’s lend-lease obligation to the United States was a bad debt. He said that, in the light of this situation, it might be advisable for the United States to settle now for whatever amount we can negotiate with the Soviets even though such amount would be less than the amount we have been regarding as a fair settlement. He coupled this with a clear indication that, in his judgement, any settlement with the Soviets must be based on the actual return to the United States of the maximum possible number of naval vessels.

Mr. Cardozo stated that some of the lend-lease settlements with other Governments were not settled in accordance with any hard and fast principles or formulae and suggested that perhaps we should not adhere inflexibly to the announced principles which we have been using to arrive at our figure for a reasonable settlement of the Soviet account.

Mr. Thorp mentioned that, if it were possible to obtain a lump sum cash settlement, we should be in a position to accept an amount substantially below that originally contemplated. All present agreed that such a settlement would be in the interests of the United States and that, if it were at all possible, the deal should be closed on that basis. It was doubted however that the Soviets would agree to such a settlement and reference was made to what appears to be the unwavering Soviet position that it must be accorded the most favorable credit terms, viz the U.K. Settlement terms.

The discussion then shifted to the question of the vessels and Mr. Bonbright and a number of others present said that any kind of a monetary settlement which did not encompass the return of all or most of the naval vessels would not be in the national interest and would most certainly be unfavorably received by the public and Congress. It was agreed that any settlement to which the United States agrees must bring about the actual physical return to our custody of the maximum number of naval vessels. After considerable discussion on the possibility of obtaining the return of the maximum number of naval vessels and the negotiating strategy that might be employed to this end, it was agreed that consultations should be held with Congress and with the Department of the Navy before a final position is established.

Mr. Thorp indicated that he would like to discuss this aspect of the problem with the highest Naval authorities and it was agreed that arrangements would be made for an interview with Secretary Matthews in the next few days, if possible.

Mr. Thorp said that he would also discuss the matter with those Congressional members with whom he deals on economic matters.

The meeting closed with the understanding that Mr. Murphy would undertake to arrange a meeting between Mr. Thorp and Secretary Matthews or some other top level person in the Navy so that a sound and satisfactory position on the question of naval vessels could be worked out.

1. This meeting was held in the Department of State, beginning at 10 a. m.
2. Jack C. Corbett was Deputy Director of the Office of Financial and Development Policy.
3. Francis T. Murphy was Chief of the Lend-Lease and Surplus Property Staff in the Office of Financial and Development Policy.
4. Michael M. Cardozo was Assistant Legal Adviser for Economic Affairs.
5. Richard H. Davis was the Officer in Charge of U.S.S.R. Affairs in the Office of Eastern European Affairs.