Memorandum by Mr. Ellis O. Briggs of the Division of Western European Affairs3

Discrimination Against the United States in the Operation of the Danish Exchange Control Board

The Minister came in with reference to an earlier conversation on the above subject in order to read a translation of a telegram from his Government explaining the purpose of the Control Board, which is to limit the gross amount of Danish imports to an amount which can be met by the proceeds of Danish exports; in other words to establish a “mutual trade balance”. The Minister made it plain that in the view of his Government there is no question of their desire to treat each country fairly but that the control of exchange (and thereby imports) was an absolute necessity at the present time.

Mr. Boal said that he understood this but that what we objected to was reports that established American business was being turned over to other countries, particularly the British, through the refusal of the Control Board to issue exchange certificates covering American goods at the same time that they made no difficulty in connection with applications covering British goods.

[Page 159]

The Minister repeated his statement that it was a matter of “mutual trade balance”, and pointed out the enormous adverse balance of Danish-American trade in which Denmark has imported twenty-five times as much from the United States as she has exported to this country. He said that since January 1, 1932, Denmark has been able to export to the United States only approximately 1 million crowns worth of goods, whereas the United States exports to Denmark had totalled 35 million crowns worth, of which the Control Board had issued exchange certificates covering 26 million crowns. (The Minister was not clear as to the remaining 9 million crowns worth and did not know whether this had been imported prior to the establishment of the Control Board last February, or whether this was held up pending action by the Control Board.)

No real progress was made in reconciling the two divergent points of view resulting from the Danish conviction of necessity as to the general problem and the apparent discrimination resulting from the fact that whereas the United States has had a phenomenal favorable balance of trade in the ratio of 25 to 1, the situation is reversed as between Great Britain and Denmark, the former country purchasing four times as much as it exports to Denmark.

With respect to the figures of 35 million crowns and 1 million crowns referred to above the Minister said that the former represented ¾ of the three-year average 1929–1931, while the 1 million crowns (Danish exports to the United States) represented only ⅓ of the three-year average. The Minister made the usual reference to the American tariff as being responsible in part for the small Danish exports to the United States.

It appears from the foregoing:

That the Danish are just as sincere in their contention as we are in ours and are likely to be just as tenacious.
There is no means of reconciling our desire to keep our established Danish market with the Danish insistence upon cutting down imports in general and in particular from countries with which they have a large adverse trade balance.
I do not believe any further discussion would materially modify the situation as outlined, and which does in fact in our view represent discrimination against the United States. Hence it is recommended that if Section 3384 is to be applied, the decision be made promptly. Otherwise this case will be allowed to represent a further successful invasion of our basic theory of most favored nation treatment. It is fundamentally a question of whether the preservation of the integrity of this theory is more or less important to us than the amount of Danish-American trade involved.

  1. Memorandum of a conversation between Mr. Otto Wadsted, Danish Minister, Mr. Pierre de L. Boal, Chief of the Division of Western European Affairs, and Mr. Briggs.
  2. Tariff Act of June 17, 1930; 46 Stat. 704.