800.51W89 U.S.S.R./112½
Memorandum by the Chief of the Division of Eastern
European Affairs (Kelley)59
[Washington,] August 24, 1934.
| Conversation: |
The Ambassador of the Soviet Union, Mr. Troyanovsky, |
|
The Secretary of State, Mr. Hull; |
|
The Assistant Secretary of State, Mr. Moore; |
|
Mr. Robert F.
Kelley. |
Mr. Troyanovsky handed to the
Secretary the attached memorandum, which he termed a compromise
proposal. He said that he had worked it out himself and endeavored to
combine the viewpoints of both Governments.
The Secretary read the memorandum aloud and stated that the twenty-year
credit referred to in the memorandum was in actuality a loan, and that
terms of that length of time were unheard of in commercial
[Page 136]
transactions. After
questioning Mr. Troyanovsky with
regard to various phases of his proposal, the Secretary stated that the
proposal amounted in its essence to the United States granting the
Soviet Government a loan equal to the amount of its indebtedness to the
United States, and in addition a revolving credit of an equivalent
amount. Congress would certainly never approve of such a transaction,
and it would be severely criticised by public opinion.
Mr. Troyanovsky was asked what
interest he proposed to pay on the agreed indebtedness, and he said
that, although his Government did not think that it should pay any
interest, he proposed the payment of one per cent.
Eventually the Secretary said that the best way to leave the matter was
that if suggestions should occur to either side which might be
considered helpful, they would be brought to the attention of the other
side.
Following the conference the attached statement was read to the
press.
[Annex 1]
The Ambassador of the Soviet Union (Troyanovsky) to the Secretary of State
Memorandum
The Soviet side is convinced of the correctness of its understanding
of the Gentlemen’s Agreement initialed on November 15, 1933 by
President Roosevelt and Commissar for Foreign
Affairs Litvinoff, and is prepared to
substantiate the complete justness of its interpretation.
Desirous, however, of reaching a friendly settlement of the questions
at issue, the Soviet side is prepared to take one further important
step to meet the wishes of the American side.
The Soviet side is willing to accept one half of the total amount of
credit, i. e., $100,000,000, in the form of commercial credits to be
advanced on conditions especially arranged, and only $100,000,000 in
the form of a financial credit with a maturity of twenty years.
This signifies that a credit account for $100,000,000 would be opened
for the Soviet Government at the Export-Import Bank, which credit
would be repaid in twenty years. The Soviet side would draw upon
this account to pay for goods purchased by it in the United
States.
The other $100,000,000 of credit would be placed at the disposal of
the Soviet Government through the same Export-Import Bank in the
form of commercial credits to be used in accordance with conditions
especially agreed upon.
[Page 137]
The Soviet Government furthermore expresses its agreement that the
Export-Import Bank should finance the purchases made by the Soviet
side against this commercial credit account to the extent of 75 per
cent only of the purchase price, on condition that the remaining 25
per cent should be financed by the seller. The Soviet Government
also agrees to the establishment of different maturities of credit
for different categories of goods purchased against this second
$100,000,000. The minimum period for such credits, however, should
in no case be less than five years, and should be established in
advance in the main agreement between the State Department and the
Embassy of the U. S. S. R.
This second $100,000,000 credit should be placed at the disposal of
the Soviet Government in the form of a revolving credit, renewable
during twenty years as partial repayments of the credit are
made.
The Soviet side will pay on the first as well as on the second
$100,000,000 an aggregate interest of 7 per cent a year.
From the time of the conclusion by the contracting parties of an
agreement on the lines of this memorandum, all claims of the
Government and nationals of the United States of America based on
pre-revolutionary debts and obligations and all analogous claims of
the Soviet side against the Government and the nationals of the
United States of America, will be considered mutually eliminated as
provided by the Gentlemen’s Agreement of November 15, 1933.
[Washington,] 24 August,
1934.
[Annex 2]
Statement Read at Press Conference by the Under
Secretary of State (Phillips), August 24, 1934
Secretary Hull was in this
morning and, with Assistant Secretary Moore and Mr. Robert F.
Kelley, Chief of the Division of Eastern European
Affairs, met the Soviet Ambassador, Mr. Troyanovsky, in the Secretary’s office.
The matter of the settlement of the claims of the United States and
its nationals against the Soviet Government has been under
discussion in Moscow and Washington for many months. Very promptly
our government presented a written proposal of a basis for the
negotiation of an agreement. Since then there has been a discussion
of details rather than of principal questions involved. Today,
however, the Soviet Ambassador presented a counter-proposal in
writing, in view of which it is not possible to be optimistic that
any agreement will be reached.
