661.6231/187: Telegram

The Chargé in the Soviet Union (Kirk) to the Secretary of State

21. I am informed in strict confidence by a member of the German Embassy here that as a result of negotiations which have been proceeding in Berlin a commercial arrangement will shortly be concluded between the German and Soviet Governments for the expansion of German-Soviet trade. Although full details of the proposed agreement are not yet available to the German Embassy here it is believed that it will involve the extension of credits guaranteed by the German Government in excess of 200 million marks to be utilized by Soviet trade organizations for the purchase of German goods. In return Germany will take Soviet raw materials such as manganese and other mineral ores and timber. It is expected that the principle of parity between exports and imports between the two countries will be embodied in the agreement and that the credit facilities referred to above will be used for the purpose of permitting the placing of large orders immediately with German firms. According to the German Embassy here the progress of German rearmament has made it possible to remove the chief previous obstacle (see my despatch No. 1463, July 9, 1938 and telegram No. 410, December 3 [5]56) to the [Page 313] expansion of German-Soviet trade; namely, the inability of German firms to fill orders for delivery within a reasonable time. According to my informant the proposed agreement has no political significance.

In view of the impossibility of communicating with other missions in this code this message has not been transmitted to Berlin Embassy.

Kirk
  1. Neither printed.