611.6231/499
Memorandum by the Secretary of State
The German Ambassador called, presumably to pay his respects and to introduce a new Secretary of the German Embassy, Dr. Scholz.
The conversation drifted until the German Ambassador brought up the general question of improving trade between nations and between nationals of different countries. Nothing new was stated in the conversation, except that I specially inquired as to the purchasing power of the blocked German Reichsmarks. The Ambassador replied that there were several, possibly five or six, classes of Reichsmarks at varying discounts, which had been so issued for the purpose of meeting the demands of those outside interests for whom they were primarily intended. He said that under the law all German money was accepted at par inside of Germany; that he did not know what the value of the franc was in terms of these blocked Reichsmarks, or vice versa; nor did he undertake to say what the inherent value of the Reichsmark was in terms of German goods. In other words, I could get but very little light on the question of a transaction in which outside tradesmen would accept blocked German Reichsmarks with the purpose of exchanging them for German goods and then effecting a transfer of such goods to another country.
I repeated to the Ambassador the nature of the economic program which this Government was seeking to pursue, and repeated also many previous statements to him to the effect that if the various nations continued to pursue their present narrow and shortsighted methods of trading, they would go from bad to worse economically, as they were now doing in most instances; that it was incumbent upon some country to present and keep alive a broad commercial policy which pointed the only way back to satisfactory, stable business recovery.
The Ambassador suggested that some countries needed credit, or at least should find ways to make individual or limited trading arrangements in the meantime. I replied that any such arrangements that might be in harmony with the broader program which this Government was sponsoring would be a step in the direction that we were seeking to go, but that individual or limited trading transactions entirely repugnant to this broad policy would only operate as a drawback and more or less to discredit the latter.
I then remarked that in former years when the United States needed capital from abroad to develop its internal affairs, there was no hesitation about giving collateral or executing mortgages on physical properties in this country to safeguard loans; that I wondered whether there would be any disposition in other countries to offer this plan to external [Page 469] creditors who might prefer it, and to the giving of time on the loans, to other proposals, such as accepting blocked marks or domestic currencies to be converted into goods in the same country and the latter to be transferred in some sort of fashion to the country where the purchaser or creditor resided. I got but little satisfaction on this point.