659.116/100: Telegram
The Minister in Denmark (Owen) to the Secretary of State
4. Department’s telegrams 2, February 11, 7 p.m.; and 8, March 26, 7 p.m. Danish Government’s reply dated today just received as follows:
“Madame: In a note dated February 14th last you have asked me to inform you of the plans which the Danish Government may have for bringing about the condition of equal opportunity for American commerce in Denmark.
It will hardly be necessary to give the Government of the United States of America a detailed account of the international economic development which forms the background of the commercial policy of the Danish Government during recent years. The world crisis with falling prices of agricultural products and the restrictive measures taken in consequence hereof in a number of countries (high duties, quotas, exchange restrictions, et cetera) impeded and in many cases nearly rendered impossible the sale of the most important Danish export commodities, namely, agricultural products. The Government of the United States will be aware that it is mainly by means of this export of animal agricultural products that Denmark hitherto has obtained the surplus of purchasing power which has enabled her to buy from certain countries, as for example, the United States of America, more than she sold to them. Circumstances have now involved the necessity of reducing the production of Danish agricultural goods or of selling them at very low prices. Owing to the smaller purchasing power resulting therefrom the purchases of Denmark in foreign countries has consequently to be diminished—whether of raw materials for agriculture or of finished articles.
Great part of the raw materials which conditioned the large Danish export of agricultural products was bought in the United States of America. Already before the adoption of the Danish Exchange Control System purcnases in the United States of grain, feeding stuffs and fertilizers show a heavy decrease—from 74 million kroner in 1929 to 29 million kroner in 1931. Similarly reduced purchases of finished goods manifest themselves in the imports from the United States of another main group, viz, cars, machines, et cetera, for which there was a decline from 70 million kroner in 1929 to 50 million in 1931. In other words, the heavily declining imports from the United States during the first years of the crisis are naturally explained, beside in the fall in prices, in the altered conditions of sale for Danish export commodities, brought about by the crisis, and it is most probable that under free conditions the development would have continued on the same lines.
As Danish exports fell more than imports it proved necessary to establish the Danish Exchange Control System in order to adapt imports to exports and necessarily to greater extent to proceed to the manufacture of different industrial goods which hitherto had [Page 176] been imported. The resulting decline of the import did not only affect the United States but other countries as well.
The Danish Government do not sympathize with the policy of reciprocity which seems to dominate the world, but faced with the choice of either seeing Denmark’s export melt away or to a certain extent giving away to the pressure of reciprocity the Danish Government believed that by trying the latter alternative they did in reality act not only in their own interest but also in the interest of those countries which supply Denmark with goods without at the same time in any essential degree buying in this country. For only thus it was possible to maintain at least part of the free purchasing power by which such countries hitherto had benefited. Only through the fact that Denmark to some extent but not without considerable sacrifices succeeded in consolidating, thanks to the Exchange Control System, her export to the chief markets was it possible to a certain extent to remedy the heavily falling tendency in purchases from the United States during the worst years of the crisis and to maintain considerable imports from that country—in 1934 kroner 100 [82] million.10 As far as certain groups of goods are concerned, both raw materials and finished goods, it has been even possible to increase imports from the United States. The value of cars, machines, et cetera, imported in 1934 was thus 30.6 million kroner against 16.5 million kroner in 1932. The increased degree of employment within industry has furthermore enabled an import of materials for spinning mills worth 11.2 million kroner in 1934 against 4.7 million kroner in 1932.
As mentioned above the Danish Government do not adhere to the prevailing commercial policy of reciprocity and the principle now applied in different countries to foreign trade, namely, to balance difference between exports and imports so that commerce with each single country takes place on the basis of 1 to 1 is by no means applied by the Danish Government. A striking instance hereof will be found in the commercial relations between Denmark and the United States of America as the said proportion during the last 3 years on an average was 1 to 10 in favor of the United States.
Only compelled by necessity the Danish Government have deviated from their liberal commercial policy and I beg to assure you that the Danish Government have always endeavored to carry out their regulation of the trade as moderately as possible; they are anxious to avoid injuring the commerce of a friendly nation and constantly do their utmost not to prejudice either the commerce of the United States, or that of any other country.
Also under the prevailing conditions the Danish Government are willing to strengthen commercial relations between the two countries within the scope of what is obtainable. The possibilities hereof will, of course, increase if such an extension of commerce could be contemplated on the basis of reciprocity. In case therefore the Government of the United States might see their way to find means of increasing their purchases in Denmark, the Danish Government are of the opinion that this will prove to be of great importance to the development of commerce and they will with pleasure examine every suggestion [Page 177] put forward by the Government of the United States in this respect. I beg in this connection to draw your attention to the fact that the commodity which formerly constituted Denmark’s staple export to the United States, namely, butter, now is virtually excluded from the United States on account of their protective tariffs.
I avail myself, et cetera, signed P. Munch.”