862.51/3312: Telegram
The Secretary of State to the Ambassador in Germany (Sackett)
211. Reference Decree of President, German Reich of December 8, 1931, reported in your despatch 1335 of December 9.1
Please ascertain if Decree and contemplated regulations will exempt from operation of Decree interest on bonds publicly sold outside [Page 377] Germany as well as interest on securities not publicly sold outside of Germany held by American citizens.
In the event that it is contemplated to have Decree operate retroactively to reduce interest rates on German obligations held by American nationals, point out to the Foreign Office that such action would impair the obligation of contracts without compensation.
While German owners of securities apparently would receive certain benefits in liquidating their own indebtedness as compensation for reduction in interest rates on German securities, American owners of German securities are obviously not in a position to secure the benefits of such reductions.
Please report application which Decree and regulations will have, if any, to reduce interest on German securities acquired by American citizens prior to December 8, 1931.
- Despatch No. 1335 not printed. By Section 1 of the Decree of December 8, all securities with fixed rates of interest, mortgages, and bonds bearing interest at the rate of 8 percent or more were to be reduced to 6 percent or lower if the prevailing rate of interest was lower.↩