800.51W89 U.S.S.R./232
The Ambassador in the Soviet Union (Davies) to the Secretary of State
[Received March 6.]
Sir: I have the honor to report the following with respect to an informal conversation which I recently had with certain prominent Soviet officials.
The People’s Commissar for Foreign Trade, Rosengolts, invited us to his country house (“dacha”) for lunch on February 5th. To our surprise we found there Marshal Voroshilov, the People’s Commissar for Defense; Mikoyan, the People’s Commissar for Food Industries; Vyshinsky, the Prosecutor who conducted the recent Radek trial; and Rostov [Rozov], who is the new head of Amtorg13 in New York.
After lunch and over the coffee and cigars, the conversation was obviously turned by Rosengolts from a discussion of trade into a discussion of the debt situation. Rosengolts stated that he thought the matters in difference could be settled if practically approached; that their Government recognized no moral obligation to pay the Kerensky debt14 but even so that he hoped that the matter could be settled; that the matter of the debts to other nations was embarrassing his Government; that with Great Britain and France they had arrived at a [Page 370] modus vivendi that left debt settlements independent of credit situations. He stated that the matters in difference between our countries could probably be furthered by a similar approach, and asked whether I had any ideas as to how we should approach the matter. My rejoinder was that I had no express instructions from my Government to initiate any debt discussions or to project any plan. He then suggested that he thought the matter might be worked out through negotiations with private parties by Rostov [Rozov] as head of the 3Amtorg, rather than to take up the matter through the Foreign Offices. To this I replied that I could not speak for my Government but that I would take it up with the Secretary of State and of course would naturally desire to know more of the specific plan which they had in mind in connection with the settlement of the whole matter through such process of private negotiation. He stated that he thought it was advisable that Rostov [Rozov] should explore the situation and return sometime in July and report what he might have been able to develop. My rejoinder was that, speaking personally, I could see no harm in Rostov [Rozov] making such explorations as his superiors desired. Rosengolts pressed the position which France and England had taken in recognizing their domestic difficulties and separating the debt question from the credit situation. To this I replied that I was not a diplomat by training and that I was not certain but what my first obligation was to discuss the debt problem through Mr. Litvinov and the Foreign Office when he saw fit to take the matter up with me, but that inasmuch as they were responsible members of the Soviet of People’s Commissars and interested in the problem, that I would speak quite frankly to them, particularly inasmuch as the discussions had originated with them. I then stated that I appreciated that there were difficulties which confronted statesmen of both countries by reason of the peculiar conditions which were imposed by forces independent of what simple common sense might require, to wit: perhaps provisions of the Johnson Act15 in the United States which I explained in detail on the one hand, and the embarrassment which Russia might find by reason of treaty obligations to treat all their debtors the same as they treated the United States; but that, speaking personally, it was my opinion that the debt obligation to us was peculiarly important to them by reason of special circumstances; that there was a very vital distinction between their relation to England and France and their relations with the United States in this situation; that their obligations to treat all creditor nations the same had confronted them, and their difficulty with reference thereto was as well known to them prior to the Litvinov agreement as it is now; that the irrevocable fact is that the President of the United States, in a very large-minded and big [Page 371] way, had projected a plan which was of great value to the Soviet Government at that time, and that an agreement between gentlemen16 had been entered into with full knowledge of the facts on their part and under conditions where there could be no misunderstanding as to what that gentlemen’s agreement was in principle; that I had examined a memorandum of the gentlemen’s agreement with care and that it had provided that a loan should be made by either the national Government or its nationals; that the matter of the debt which might run up to $200,000,000 or more was, in our national economy, relatively but a flyspeck upon a great wall and something that meant little to us except as a matter of principle was involved; but that it was a serious matter to them to retain the confidence of our Government in the performance of their agreement; that we had no aggressive militaristic neighbors threatening our peace; that we did have a great body of humanitarian democratic thought which did have great influence upon world opinion among liberal minded men everywhere which might be of inestimable value to Russia at some time in the future; and that, speaking as a friend of the humanitarian impulses and purposes of the Russian people, personally I felt compelled to say that in my opinion it would be a great pity if a cloud were to be permitted by the Soviet Government to dim the confidence which my Government might have in the integrity and character of the men who were running affairs here; that this was particularly true in my opinion because there was no leadership of any of the great nations of the earth that viewed with as much sympathy the fundamental humanitarian purposes of the Russian people to the degree that President Roosevelt and Secretary of State Hull did; that it would be too bad if a condition were to be permitted by the Soviet Government to exist which would dampen or destroy their confidence in the integrity of Russian leadership; that financial credits and business considerations in importance faded into nothing in contrast with this matter of the principle involved. To this Voroshilov replied that the financial amount involved was relatively small and that the matter should be settled on big, broad, general principles and that a way should be found, that he appreciated the greatness of the President of the United States, and that there was much force in what I had said. He then stated that, although he was a friend of Ambassador Bullitt, it was his belief that a great many difficulties had been created by him. To this I immediately replied, and in no uncertain terms, that I had the greatest admiration for Ambassador Bullitt, knew him to be a strong, forthright man who dealt directly and with the belief that honorable obligations would be fulfilled in the spirit in which they were entered [Page 372] into, and that the important fact was the continued existence of the condition and not the causes therefor. Rosengolts also suggested that they had been informed that there was serious opposition to working out any agreement with Russia in certain quarters of the State Department and asked whether that were true. My reply was that I did not believe it to be true, that I had not found it to be the fact; that it might possibly be true “down below” just as it might possibly be true that “down below” in the Foreign Office of Russia there might be men who were bitterly hostile to the American Government as a representative of the hated capitalist order of society, but that I knew of no such attitude; and that I did know that such was not the fact so far as my President, the Secretary of State, Judge Moore or other responsible men in the Department, or I myself were concerned. In conclusion I made it very clear that I had no instructions to project the debt question. The attitude of my Government was that it was up to the Soviet Government in view of the commitments made; that the problem was in their lap; that my disposition was friendly; that I was here and available for use by them if they saw fit to take the matter up; that I would advise the Department of Mr. Rostov’s [ Rozov’s] plans and would await their further wishes in the situation.
Voroshilov, Rosengolts and Vyshinsky stated that they all appreciated my frankness, were very happy that my past experience and what they were convinced was my objective outlook, characterized the American diplomatic representation here; that in any event they hoped that I would enjoy my stay in Russia which I assured them I was doing.
The general net result was that these leaders of the Government are acquainted with the facts first hand; that it was our position that an honorable agreement had been made with full knowledge of all facts prior to entering into it; that it had not been performed by them; that it was a matter of relatively little importance to us and might be of vital consequence to them in the future; that it was their problem and their next move. Of course it all went back to Litvinov as I intended it should.
Respectfully yours,
- Official purchasing and sales agency in the United States of the Soviet Union, 261 Fifth Avenue, New York, N. Y.↩
- The loans made by the United States to the Russian Provisional Government under the leadership of Alexander Fedorovich Kerensky, July–November 7, 1917, amounting in principal sum to $187,000,000.↩
- Approved April 13, 1934; 48 Stat. 574.↩
- For memorandum of the “gentlemen’s agreement” between President Roosevelt and People’s Commissar for Foreign Affairs Litvinov, November 15, 1933, see p. 26.↩