It is submitted to the Department whether this policy as outlined
violates our treaty with Denmark? While broadly speaking this policy
might seem to be uniform and without special favor, the Department
will note from previous correspondence that its application has been
prejudicial to American commerce.
It may be pointed out that this note makes no reference to that part
of the Tariff Law recently passed which required certain American
goods to pay a higher duty than similar British products between
October 10, 1932 and January 31, 1933.
[Enclosure]
The Danish Ministry for
Foreign Affairs to the American
Legation
Ø/P.I. Journal No. 73.K.38/U.S.A.
Note Verbale
In reply to the aide-mémoires of August 17
and September 12, 1932, of the American Legation, the Ministry
for Foreign Affairs has the honor to refer to the explanation of
the principles governing the distribution of exchange
certificates given orally on April 8, 1932, and on earlier
occasions, and in a note verbale of June
28, 1932.
On the above mentioned occasions it was pointed out that the
export trade of Denmark had been greatly reduced in consequence
of the tariff measures and import restrictions, etc., introduced
by various countries during recent years. Denmark has for this
reason fewer bills of exchange at her disposal for purchases
abroad. Consequently Denmark is unable to maintain her usual
import trade; when obstacles are placed in the way of the export
trade, causing the latter to decrease, imports must necessarily
be reduced in the same ratio if the economy of the country is to
remain on a sound basis. The Danish Government has therefore
reluctantly found themselves obliged to limit the facilities for
acquiring foreign bills of exchange. This limitation is provided
for in the Danish Act in question, in which
[Page 171]
it is stipulated that the
importation of goods from abroad can only take place after the
Exchange Bureau of the National Bank of Denmark has issued a
certificate to the effect that exchange considerations present
no obstacles to the importation of the goods in question. In
other words: no goods can be imported and no foreign currency
can be obtained for the purchase of foreign goods, unless the
importer has received an exchange certificate from the Exchange
Bureau.
It goes without saying that the limited amount of foreign
currency must in the first instance be reserved to pay for the
importation of such raw materials and other goods as form the
basis of Danish export activities (from which the foreign
currency is derived), and, in the second instance, for the
importation of raw materials for other productive activities.
This has redounded greatly to the advantage of the United
States, seeing that Denmark purchases a considerable portion of
the raw materials for her agriculture and her manufacturing
industries from that country.
In order to avoid arbitrary or unfair treatment of individual
countries, the Exchange Bureau has, furthermore, largely taken
into account the normal ratio between exports to and imports
from each separate country, so that the ratio between the import
and export figures for the whole year should be the same as that
of the preceding normal years, in so far as is compatible with
the consideration explained above. The norm chosen is not the
figures of the single year of 1931, but the average figures for
the period 1929–31, according to which Danish imports from the
United States are normally about 15 times as great as the
imports of the United States from Denmark.
During the first nine months of the present year the United
States imported from Denmark goods to an aggregate value of 31/3
million Kroner. According to the normal ratio between exports
and imports there should therefore have been issued exchange
certificates for purchases in the United States to a total
amount of 3 1/3 X 15 = 50 million Kroner. Actually, however,
Danish imports from the United States during the nine months in
question amounted to 69 million Kroner. It will thus be seen
that the total amount of exchange certificates which have been
issued for purchases in the United States have exceeded the
standard figure of 50 million Kroner by 19 million Kroner, or
nearly 40%.
The individual cases referred to in the aides-mémoires of August 17 and September 12, 1932, of
the American Legation, in which exchange certificates have been
refused for purchases in the United States, while they have been
granted for purchases in other countries, are therefore
naturally explained by the fact that imports from the
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United States had
already been exceptionally favored during the first nine months
of the present year, and that the other countries in question,
in accordance with the principles explained above, had a fair
claim to be considered.
Copenhagen,
October 21,
1932.
