File No. 165.102/517

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


2253. Department’s 1654. Foreign Office replies:

Agreement regarding exchange colors for cotton was based on assumption that consecutive shipments cotton for German spinners via Bremen or neutral ports such as Rotterdam or Copenhagen would be made. Since textile association, without fault on part German spinners, does not seem any longer in position to do so, it cannot base claim for release shipments colors on terms agreement. Furthermore, inasmuch as Neches, according to Embassy’s communication, has not brought cotton or other cargo for Germany, an obligation to provide return cargo cannot be deduced from agreement. As regards point that value of cotton imported into Germany exceeded several fold value colors allowed exported to America, Embassy will not fail to recognie that the measure of comparison of value of deliveries of either side in exchange agreed upon should not be price but importance of products for political economy of the two countries. Measured by this standard, dyestuffs exported during war to now have unquestionably benefited American industry at least as much as cotton shipments have benefited German spinners, aside from fact that cotton shipments have furnished hard-pressed American cotton growers welcome relief. [Page 255] Nevertheless, question whether exception can be made to requirement that colors shipments go via Bremen will be thoroughly investigated and results communicated later.