800.51W89 U.S.S.R./116½
Memorandum by the Chief of the Division of Eastern European Affairs (Kelley)63
| Conversation: | The Ambassador of the Soviet Union, |
| Mr. Troyanovsky; | |
| The Assistant Secretary of State, Mr. Moore; | |
| Mr. Robert F. Kelley. |
Mr. Moore opened the conversation by stating that, without standing on ceremony, he had taken the initiative in proposing this conference, since he felt that both sides were anxious to reach a settlement of the matter of debts and claims. He pointed out that when recognition was accorded, it was hoped that it would contribute both to the promotion of world peace and to the development of trade between the two countries, and while we had no illusions as to the amount of trade which might be developed, he thought that every effort should be made to realize the objectives which had been had in view. He referred to Mr. Troyanovsky’s last proposal and said that the main point at issue was the loan demanded by the Soviet Government. He did not think there would be great difficulty in reaching an agreement in respect to the amount of indebtedness, interest rates, et cetera, but that it was hardly worth while discussing these matters so long as the Soviet Government insisted upon the granting of a loan as a condition of its paying the indebtedness which might be agreed upon. Mr, Moore emphasized that it was out of question for the Government of the United States to extend a loan to the Soviet Government, either as proposed by Mr. Litvinoff or as proposed by Mr. Troyanovsky. If [Page 141] the Soviet Government insisted on this requirement, there was no possibility of reaching a settlement of the matter.
It was stated to Mr. Troyanovsky that the Bank had contemplated financing credits of varying lengths according to several categories of goods—possibly a year to a year and a half for consumers’ goods, two to three years for light capital goods, and four to five years for heavy capital goods. It was pointed out to him that these terms were much more favorable than the Soviet Government was receiving in other countries. It was suggested that it was possible that the President might agree to grant special terms in exceptional cases, say for equipment for large industrial projects; but it was emphasized that the maximum terms even in such cases could not possibly exceed six to seven years, and such terms would be granted only in very extraordinary cases. It was made clear to Mr. Troyanovsky that this matter had never been discussed with the President, and it was not known whether he would approve of any exceptions to the five year maximum. The suggestion was set forth merely as a possibility.
Mr. Troyanovsky argued at great length that the main difficulty was the effect of any agreement with the United States on the relations of the Soviet Union with other countries, and that what the Soviet Government granted the United States would have to be accorded to other countries. This was the reason, he said, that the Soviet Government desired a loan. It was suggested to him that, since it was impossible for the United States to grant a loan, some other device might be worked out which would serve this purpose just as well. He was asked whether he could not give thought to this and propose some other formula which would meet the difficulty in question, Mr. Troyanovsky replied that he had exhausted his powers of invention in his last proposal, but that he would be glad to consider, of course, any proposal along this line which we might suggest.
There was a brief discussion of the rates of interest, and Mr. Troyanovsky stated that his Government was prepared to pay a total interest rate on credits of seven per cent, four and a small fraction of which would cover the interest charges and expenses of the Bank, two and a half per cent constitute a sinking fund to liquidate the agreed indebtedness, and the remaining fraction would be sufficient to liquidate the interest of one per cent which the Soviet Government proposed to pay on the agreed indebtedness. He declared that we had been willing to accept a similar low interest rate in the case of our debt agreements with other countries.
In concluding, Mr. Troyanovsky said that he would be very glad to have another meeting if any suggestions occurred to us, but he did not hold out the slightest possibility of his Government yielding on the question of a loan.
- Photostatic copy obtained from the Franklin D. Roosevelt Library, Hyde Park, N. Y.↩