862.5151/1228a: Telegram

The Secretary of State to the Ambassador in Germany (Dodd)

75. Please send the Department by cable whatever material you may now possess that will throw light on matters described below and then prepare a comprehensive written report on the same matters. We are interested in the subject of the German decrees limiting the amount of exchange made available for the purchase of goods, presenting particularly the bearing of these decrees on American goods and outlining any discrimination reacting to the detriment of the United States, whether through the terms of the decrees or through their differential application. For example, Department has just received reports from Argentine that an agreement has been concluded whereby exchange quota for Argentine imports is increased by 10,000,000 Reichsmarks in return for similar increase in exchange permits extended by Argentine.

It also would appreciate an explanation of the factors that have permitted the continued maintenance of a high level of imports by Germany in recent months despite the progressive tightening of the exchange restrictions. For example, the American press states in their commodity report that German stocks of textile raw materials are now at the highest peak since 1927. Again, the reports of the Commercial Attachés have indicated large purchases of airplanes and airplane parts which presumably are paid for in cash.

To what extent is the continued maintenance of imports accounted for by the nonapplication of the new restrictions to old contracts, to unpublished supplemental allocations of exchange, to exceptions of certain classes of goods considered essential, etc.?

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Please submit as concrete an analysis as possible particularly in relation to the bearing of these exchange decrees and German exchange policy on American trade.

For Your Information Only. The Department is giving serious consideration to situation that will be presented if the German Government, either because of the general exchange situation that develops or in an attempt to force this country into immediate trade concessions, extends the restrictions against American goods and even introduces discrimination against American goods either by means of exchange control or by the further development of raw material purchasing organizations.

It is in fact wondering whether the accumulating of these very great stocks of textile raw materials may not be in preparation for some new pressure movement.

Hull