Foreign Relations of the United States Diplomatic Papers, 1940, General, Volume I

860N.51/9: Telegram

The Ambassador in the Soviet Union (Steinhardt) to the Secretary of State

Moscow, December 14, 1940—6 p.m.
[Received 8:30 p.m.]

1731. My 1520, November 11, 6 p.m. In connection with the general question of foreign property located in the Baltic States the Counselor of the Swedish Legation⁴⁹ recently informed a member of the Embassy that the Soviet Government has offered to pay Sweden 10% of the total value of nationalized Swedish property in the Baltic States if payment is to be made within 1 year or 15% of the value if payments are extended over 3 years or 25% if payments are extended over a 10-year period. The Swedish Counselor stated that his Government was not disposed to accept this proposal and before pursuing the matter further would await the outcome of negotiations between the German and Soviet Governments on the question of German property in the Baltic States.⁵⁰

A member of the German Embassy states in the strictest confidence that the German and Soviet Governments have reached an agreement concerning the compensation to be paid for Reich German and German Bait industrial property with one or two exceptions among which the Estonian Shale Oil Company which is still the subject of special negotiation, is to be taken over by the Soviet authorities and the agreed valuation which it was stated was “somewhat less” than the real value is to be credited to Germany in the balance of payments under the existing economic accords and will be used to offset the value of Soviet deliveries to Germany. My informant said he could not give the exact agreed value since “the arrangement in regard to compensation would apply to German property only” which he said had been agreed upon partly because of the German-Soviet treaty of 1925 referred to in my telegram under reference and partly because of the existence of special economic agreements between Germany and the Soviet Union. My informant stated that originally the Soviet Government had made the same proposal to the German Government which it had made to Sweden but that this proposal had been rejected by Germany as entirely inadequate.

Steinhardt

49. N. Lindh.
50. An agreement between Sweden and the Soviet Union was eventually signed in Moscow on May 30, 1941, which regulated their mutual property claims in the former Baltic States. Swedish economic claims of all kinds amounted to about 118,000,000 Swedish crowns; and “in final settlement of all other Swedish claims the Soviet Government will pay the Swedish Government the sum of 20,000,000 Swedish crowns in eight quarterly installments, or over a period of two years.” In return, Sweden “released gold to a value of 18,000,000 Swedish crowns belonging to the Baltic States and deposited in Sweden, and also a number of Baltic ships lying in Swedish ports before the negotiations were concluded.” (758.61/75, 78)