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    "label": "Foreign Affairs File, 1940-1953: \"Conferences at Malta and Yalta, 1945\" (galley proofs, Part I)",
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    "seq": 310,
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    "ocrText": "J. 333305-MONO-State\nGalley 309\nUNCORRECTED GALLEY PROOF\nwar significance (that involved in the proposed 3-C agreement) must\nbe separated from true postwar reconstruction credits (your telegrams\n29 and 61). Separate telegrams will be sent to you regarding our\n1 Ante, pp. -\nreply to Ambassador Gromyko's note of January 4,2 indicating that\n2 Not printed.\nwe will proceed with the Fourth Protocol; and instructing you to reply\nto Molotov's aide-mémoire with special reference to the 3-C agreement.\nThe present message is to provide you with background information\nregarding Washington views on post-war credit possibilities.\nA study prepared in the Department which will be sent to you for\ncomment highlights the following points in Russia's interest in foreign\ncredits:\n(a) Russia's war loss is estimated at $16 billion of fixed capital or\nabout one-quarter of the pre-war total. Inventory losses may total an\nadditional $4 billion.\n(b) It is estimated that Russia with no foreign loans and only\nlimited use of its gold reserves (estimated at billion) and pro-\nduction ($200 million a year), plus reparations deliveries, could\nreattain by 1948 the pre-war level of capital investment.\n(c) Thus the U. S. S. R. will be in a position to take a highly\nindependent position in negotiations regarding foreign credits, espe-\ncially since $2 billion in credits would only speed up reconstruction\nby some 3 or 4 months.\n(d) Pre-war exports from the U. S. S. R. to the U.S. averaged only\n$26 million annually, enough to pay for only limited amounts of\ncapital goods, special machines, and know how.\n(e) The annual gold production could service about $3 billion of\ncredits at 4 percent and 20 years; or $6 billion at 2 percent and 40\nyears.\n(f) Russia may be expected to borrow only up to the amount which\nshe is sure she can service; only if the terms appear satisfactory to her\n(she has demanded exceptional terms in the 3-C negotiations) ; and\nshe will repay unless she feels it politically desirable not to do so.\nThe Treasury has suggested a $10 billion credit at 2 percent, 35\nyears, coupled with an option for United States purchases at reasonable\nworld prices of petroleum and minerals from the Soviets over a\nlike period.\nPreliminary views of the Department are that such a proposal can\nof course be made only after Congressional action of some sort; that\nit\nwould be preferable to obtain blanket loan authority rather than\nseek specific loan authorization for the U. S. S. R. or any particular\nnation; that the rate of interest entails many complications in our\nrelations with other countries, with general Export-Import Bank\noperations, with proposed transactions of the Bretton Woods bank,\nand with private investment; that from a tactical point of view it\nwould seem harmful at this time to offer such a large credit and lose\nwhat little bargaining exists in future credit extensions; and that the\nsuggested commodity arrangement would probably not be as strong\nan argument with the Congress as the Treasury believes, would\narouse the opposition of petroleum and mineral interests, would not\nprovide a fully distinctive basis for offering special credit terms to\nthe U. S. S. R., and might raise questions of general commercial and\ncommodity policy.\n333305-55-pt.1 20"
}