CREDIT AGREEMENT OF AUGUST 19, 1939 BETWEEN THE GERMAN REICH AND THE UNION OF SOVIET SOCIALIST REPUBLICS
Representatives of the Government of the German Reich and representatives of the Government of the Union of Soviet Socialist Republics have conducted negotiations with each other on placing additional Soviet orders in Germany, and have come to the following agreement:
Article I
1. The Government of the Union of Soviet Socialist Republics will cause the Trade Delegation of the USSR in Germany, or the importing organization of the USSR, to take placed additional orders to the amount of 200 million Reichsmark with German firms.
2. The additional orders shall be placed exclusively for supplies for capital investment purposes, that is in particular for:
Equipment of factories, Installations, Fittings of various kinds, Machinery and machine tools of all kinds, Construction of apparatus, Equipment for the naphtha industry, Equipment for the chemical industry, Products of the electro-technical industry, Ships, vehicles, means of transport, Measuring instruments, Laboratory equipment.
3. The usual spare parts for such supplies are also included. There are further included contracts for technical assistance and bringing installations into operation, where these are stipulated in connection with orders placed under this Credit Agreement.
4. The value of individual orders shall not be less than 50,000 Reichsmarks.
5. Not included in the additional orders, are orders for so-called current business. Such are, in particular:
Raw materials, Semi-finished products, Spare parts (other than those mentioned in paragraph 3), Chemical products, Consumer goods, Articles of daily use.
6. The Trade Delegation and the importing organizations shall be free in the choice of firms when placing orders. German firms shall likewise be free to decide whether, and to what extent, they wish to except orders under this Agreement.
7. Orders from List A will be placed within a period of two years from the date of the conclusion of this Agreement. By the end of the first year from the conclusion of this Agreement, the value of the orders shall not exceed 120 million Reichsmark.
8. Orders will be placed by the Trade Delegation, or, with joint liability of the Trade Delegation, by the importing organizations of the USSR.
9. The German Government undertake to give the Trade Delegation and the importing organizations of the USSR the necessary assistance in placing orders, in each individual case where required, particularly in respect of delivery dates and the quality of goods.
10. The delivery terms for orders placed under this Agreement shall be the normal ones and the prices for such supplies shall be reasonable.
11. Article VII of the German-Soviet Agreement on Trade and Payments, on December 19, 1938, shall also supply to orders placed under this Agreement.
Article II
The German Government declare that the German Gold Discount Bank ("Dego") has given them an understanding to finance the additional orders to the amount of 200 million Reichsmark on the following terms:
1. The Trade Delegation of the USSR in Germany shall deposit bills of exchange with "Dego". These bills shall have an average term of seven years and shall be drawn for each individual transaction in such a way that
30 percent of the amount of the order shall run for 6 ½ years,
40 percent of the amount of the order shall run for 7 years,
30 percent of the amount of the order shall run for 7 ½ years.
The bills of exchange shall be drawn by the importing organizations of the USSR and endorsed for acceptance by the Trade Delegation of the USSR. The bills shall be drawn in Reichsmark and shall be payable in Berlin.
2. On the basis of the bills of exchange, "Dego" shall make a credit available to the Trade Delegation and the importing organizations of the USSR, which shall be used to pay the German firms cash in Reichsmark. "Dego" will not require endorsement of this credit by the German suppliers.
3. The bills of exchange shall bear 5 percent interest per annum. This shall be paid by the Trade Delegation to "Dego" at the end of each quarter through the Trade Delegation's current account with "Dego". The interest shall be covered by bills of exchange if "Dego" so requires.
4. The Trade Delegation of the USSR in Germany shall have the right to redeem before maturity the bills of exchange deposited with "Dego", in accordance with paragraphs 1 and 3 of this article, in which case interest will be paid only of the period that has elapsed.