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Memorandum on Poland
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Poland Our economic policy in Poland seems to continue to be a negative approach to isolate ourselves from her trade. Other Western powers -- notably the United Kingdom, Australia, and New Zealand are leaving no stones unturned in expanding their trade with Poland and Czechoslovakia. They are using both clearing agreements and loans. Loans largely to purchase Australian and New Zealand wool. Politically, Poland is now held firmly by the Communists. Any chance of change in administration in the foreseeable future is extremely remote. Polish Nationals agree that the weaker Poland becomes the firmer she will be held in Russian grasp. Ambassador Gallman concurs and has good understanding of whole Polish situation. Furthermore he has a practical and commonsense viewpoint regarding steps the United States may well take. There now exists excellent opportunity to increase Polish coal deliveries to Western Europe and at substantially decreased prices (25% or more) in exchange for American cotton. Western Europe is still importing large quantities of U. S. coal at high prices. The cotton spinning industry in Poland is an important segment of Polish economy. Poland now needs American cotton badly. Supply situation is serious. For more than a century Poland has secured far more than half her cotton imports from the United States. Poland's present overture for coal-cotton trade is sincere, her terms are unusually liberal--and this may be a test case to see if trade with United States is possible. If negotiations become too difficult Poland will look elsewhere for source of supply and will have made a reasonably good record that trade with the U. S. is virtually impossible if not absolutely impossible. Because of Poland's serious cotton supply position, time in which to conclude favorable deal is short, not over 60 days. Pertinent facts regarding whole proposal has recently been transmitted to the Department of State by Ambassador Gallman. Prompt response to cable is expected and should be made. Czechoslovakia With some differences, general situation is quite similar to that of Poland. AND SERVICE"