861.24/7–2844
Memorandum by the Chief of the Division of Financial and Monetary Affairs (Collado)
Mr. John Howard of the FEA called me to state that in negotiations with the Russians the latter had requested the following changes in the terms and payment in the proposed 3C Supplemental Agreement:
- 1.
- That payment might be made alternatively in dollars or in gold.
- 2.
- That there be a uniform rate of interest of 2% rather than the sliding scale suggested.
- 3.
- That the period of grace be 10 years rather than 3 years.
- 4.
- That the period of amortization be lengthened.
It appeared that with respect to gold the Russians also had in mind some sort of gold clause that their payments in gold would be at an equivalent never lower than $35.00 per ounce, a sort of hedge against appreciation of the dollar!
I told Mr. Howard that when Ambassador Harriman had been here I had discussed with Messrs. White4 and Bernstein5 of the Treasury possible modifications in the suggested terms and that we had decided that it would be possible to substitute a flat rate of 2.5% for the sliding scale, to substitute period of grace of 5 years for the 3 years suggested, and a period of amortization of 25 years instead of the 20 years. With respect to payment in gold I saw no objection to a simple alternative.
I suggested that he call up Bernstein, as White is out of town, regarding the tricky gold clause which apparently the Russians had suggested. He stated that he would inform us of the results of his telephone talks with Mr. Bernstein.