811.61321/36: Telegram

The Acting Secretary of State to the Ambassador in Germany (Sackett)

150. I am informed by the Farm Board that the German proposal as to cotton is impossible of acceptance as a Board transaction. This does not at all conflict with my telegram of this morning, which suggested that the German Government should appoint an agent to consult with the Farm Board and I hope that may be carried through. Owing to the fairly accurate reports from Germany as to the German proposition to buy 600,000 bales of cotton, I understand that the export of cotton has practically stopped. For this reason, the Board this afternoon was forced to give out the following statement:

“The Farm Board has given careful consideration to the German offer to purchase cotton. The Board is desirous of facilitating assistance to Germany and to the American cotton producer by expanding his immediate markets. Many conditions of the German offer are beyond the ability of the Board to comply with. It is, therefore, unable to accept the offer under the present proposed terms.

In addition to other difficulties, the original suggestion of Ambassador Sackett 5 weeks ago provided for a minimum price which would have contributed materially to stabilizing the price of cotton and would have made it possible for the Board to offer participation to holders of new crop cotton. The fall in price since that time, due in part to the situation in Central Europe, has necessarily led to the elimination by the German Government of that feature of its offer.

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However, a new possibility has arisen in this whole question, which offers an alternative course. The purpose of the discussion has been in effect to assist the Germans in securing the foreign exchange necessary to provide immediate supplies. The effort now being made by the Treasury Department to expedite payment to German nationals under awards of the arbiter of certain German claims, if successful, would place the German bank in possession of an even larger amount of dollar exchange than the volume of this proposed transaction in cotton and would enable German business to make its purchases directly from the producers and the trade in the normal way.”

Castle