Foreign Relations of the United States, 1947, Eastern Europe; The Soviet Union, Volume IV

861.24/12–1247

Memorandum by Mr. Michael H. Cardozo of the Office of the Legal Adviser¹

[Washington,] December 12, 1947.

U.S.S.R. Lend-Lease Pipeline Transfers, Deliveries and Exports

1. As used in this memorandum,

a. “Transfer” means conveyance of title, as provided in Paragraph B of Schedule II of the agreement of October 15, 1945;

b. “Delivery” means turning over of custody and possession; and

c. “Export” means placing on board vessel for shipment to the U.S.S.R.

2. Up to December 31, 1946, transfers, deliveries and exports of pipeline material under the U.S.–U.S.S.R. agreement of October 15, 1945, continued as contemplated in that agreement. In addition, during this period “notices of availability” were issued to the Soviet Government from time to time. The Soviet Government, also during this period, issued “letters of acceptance” or shipping instructions with respect to pipeline material, which acts accomplished transfer of title within the meaning of the expression “transfer” in Paragraph B of Schedule II of the agreement.

3. Between January 1 and January 10, 1947, we were awaiting a decision of the Comptroller General on the legality or propriety of using funds deposited by the Soviet Government and other governments to pay the administrative expenses incident to shipment of pipeline material. During this period, contracts were not canceled and transfers, deliveries and exports were not terminated. Although the records are not set up in a manner that would permit ascertaining the precise figures within a reasonable time, it is proper to assume that some transfers, as well as deliveries, took place during this period.

4. Between January 10, 1947, the date on which a decision of the General Accounting Office was received, and February 5, 1947, all transfers and deliveries of Treasury procured items were suspended.

5. During January 1947 the Army and Navy delivered to the Soviet Government about $60,000 and $19,000, respectively, worth of lend-lease items procured by them. There was no evidence that the December 31 deadline in Public Law 521, which appropriated funds for the expenses of the Treasury Department, applied to them.

6. After the imposition of the suspension of Treasury procured items on January 10, 1947, representatives of the Soviet Government pointed out that, under the agreement, title to a considerable quantity of the pipeline material had passed, and that our refusal to turn it over to them would be an illegal retention of their property. This position was discussed by representatives of State and Treasury Departments with the Comptroller General and his General Counsel, and on February 5, 1947, final clearance was received, orally, from the General Counsel of the General Accounting Office stating that material to which title had passed could be delivered to the Soviet Government, even if some appropriated funds had to be used for the administrative expenses incident to the delivery.

7. As of February 5, 1947, deliveries were resumed with respect to property on which title had passed prior to December 31, 1946. With respect to notices of availability issued after September 30, 1946, the running of the three-month period was “tolled” after December 31, 1946, so that if the three months had not elapsed before December 31, or transfer had not otherwise been effected before December 31, the goods were not thereafter delivered to the Soviet Union.

8. Toward the end of March 1947 the Army began to press for payment of its expenses incident to loading material, stored in its depots, onto railroad cars. Because of doubt as to what funds could be used for payment of these expenses at this time, such payment was not made, and consequently loading of such material was stopped. This resulted in a complete stoppage, after the end of March 1947, of all deliveries. The last delivery was made on March 26, and deliveries were never resumed.

9. Exports to the Soviet Union continued throughout the period involved, and are presumably still continuing with respect to material on which title had passed prior to December 31, 1946. Exports in recent months are on a very small scale. Some of the material exported in 1947 is, of course, material delivered between January 1 and January 10 and between February 5 and the end of March, including material transferred between January 1 and January 10, 1947.²

10. The foregoing information is based on my own examination of our files and information communicated by the Bureau of Federal Supply of the Treasury Department.

1. This memorandum was directed to Mr. C. Tyler Wood, Deputy to the Assistant Secretary of State for Economic Affairs.
2. Acting Secretary of State Robert A. Lovett in a letter of December 19 to Representative Frank B. Keefe of Wisconsin wrote: “The Treasury Department, Lend-Lease Fiscal Office reports the total amount billed to the Soviet Government to the present time under the Agreement of October 15, 1945 is $216,060,888.73, including $10,715,932.83 billed in December 1947.” (861.24/12–1147)