611.626/36: Telegram

The Acting Secretary of State to the Commission to Negotiate Peace

3262. Your 4270, September 19, 1 a.m.

1.
The Department concurs in your opinion that the resolution adopted on September 18 [15?] by the London Committee is in substance an attempt to avail of the provisions of Annex VI of the Treaty. The Department is, however, willing to approve the plan in [Page 455]view of the wishes of the other delegates and of the advantages of the lower prices, although we are advised that, so far as the prospective shipment of vat dyes is concerned, the question of price is not as vital to our consumers as it appears to be to the French.
2.
The outstanding feature of our situation is the pressing need for immediate supplies of vat dyes. Although it is desirable to secure these dyes otherwise than through the old German agencies, this consideration, as well as the question of price, is subordinate to the need of prompt delivery.
3.
As stated in Department’s 3062, September 8, 8 p.m., we are now withholding import licenses awaiting the outcome of the current negotiations in Paris, and your recent cablegrams create the impression that these negotiations may not result in a satisfactory and practicable plan for some time to come. One month has already elapsed since we announced to the consumers our decision to permit the early importation of a six months’ supply of vat dyes; and you state in your 4270 that it is the universal opinion that the Germans will not consent to the plan of the London Committee and that then the only remaining solution will be to anticipate the Treaty option. On this point, the Department is now entirely willing to agree in principle to such anticipation. On the other hand, however, as stated above, time is of the very essence and we are beginning to doubt whether arrangements to secure our six months’ supply of vat dyes through such anticipation could become operative soon enough to fulfil our pledges to the consumers. We are much embarrassed at present and cannot defer much longer the issuance of import licenses.
4.
In view of the foregoing, it is of the utmost importance that we be advised immediately when it will be possible to actually secure the delivery of dyes under a plan to anticipate the Treaty provisions. We should have advices which will warrant our informing the consumers. If this will not be possible in the very near future, we will be compelled to adopt the second alternative mentioned in your 4270. In this connection, the following are certain practical considerations which should be taken into account:
(a)
The consumers in this country have applied for, and we have allowed, allocations aggregating 977,019 pounds of vat dyes for consumption during the six months’ period beginning October 1.
(b)
Under the plan to anticipate the Treaty, it will be necessary to designate some single agency to act as an intermediary between the consumers and the sellers. The Department is prepared to designate the Textile Alliance as such agency to accept orders from the consumers in this country and to place these orders with or through the Reparation Commission under such plan as may be devised. It will be necessary for the Textile Alliance to send a representative to Paris to handle the details connected with the purchase of and payment for the dyes, and their shipment to this country.
(c)
As stated in Department’s 3062, September 8, 8 p.m., we do not see upon what ground we can deny consumers the right to import through the old German agencies. At best, we can only make it optional’ with the consumers whether they will avail themselves of an anticipation of the Treaty provisions. The only possible ground for denying the right to import through the old German agencies would be that, purely from the point of view of reparations, it is desirable for all American dye requirements to come through the Reparation Commission so that the value thereof may be credited to the reparation account. It is therefore urged that you send your views on this point.
(d)
We have not yet decided to permit the importation of any dyes other than a six months’ supply of vat dyes. If the provisions of the Treaty are anticipated to the extent of securing for us these particular dyes, will that be regarded as only a partial exercise of the option, leaving it open to us to secure such additional amounts of other dyes as we may decide are needed by our consumers? Or will the Germans insist that the option be regarded as completely exercised?

To meet the pressing demand of the American consumers we are considering the immediate issuance of allocation certificates which will entitle importers or their nominees to secure import licenses from us. At the same time we would announce the possibility or probability of being able to secure these dyes at Treaty prices and that consumers could either proceed immediately to order dyes through old agencies or arrange to purchase under the contemplated plan to anticipate the Treaty. Please consult Herty and wire us immediately your views on this proposal.

Phillips