The Minister in Denmark (Coleman) to the Secretary of State

No. 103

Sir: I have the honor to refer to despatch No. 43 dated April 9, 1932, enclosing an aide-mémoire left by me at the Foreign Office on April 8, in protest of the workings of the Exchange Control Board against American imports.

In the meantime no reply and no explanation of the workings of the Board was given. In one important instance, however, after an import permit had been refused an Oil Company for the importation of American oil for the present quarter’s needs, representations were made and the application was reconsidered and a sufficient import permit granted. Fewer complaints have been lodged and no new concrete cases of discrimination are now on record in the Legation.

On April 29 I was asked to call on Mr. Mohr at the Foreign Office and was handed a Note Verbale in reply to my protest mentioned above. A copy of this Note is enclosed herewith and will be found to be indefinite and in no way answering the protest of seeming discrimination.

It is more or less the same unsatisfactory argument maintained from the first, nevertheless my opinion on the question remains unchanged as fully expressed on the last page of my despatch No. 85 dated June 14, 1932,5 “Foreign Exchange Control”.

. . . . . . . . . . . . . .

Respectfully yours,

For the Minister:
North Winship

Counselor of Legation

The Danish Ministry for Foreign Affairs to the American Legation

O.P.I. Journal No. 73. K.38/USA

Note Verbale

In reply to the aide-mémoire of April 8th and to the verbal inquiry of the American Legation, the Ministry for Foreign Affairs have the honor to give the following information:

The tariff increases, import restrictions and other restrictive measures introduced by various countries during the last years have [Page 161] affected the principal Danish exports, viz. agricultural produce, to an exceptional degree. As a result of these measures Denmark is no longer able to maintain her export to the same extent as formerly, and there are, in consequence, fewer bills of exchange available 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. It has therefore been necessary to introduce an exchange regime limiting imports and arranging an allotment of the limited quantities of foreign bills of exchange available by issuing exchange certificates, i.e. permits to buy foreign currency.

The purpose of this arrangement is to secure, as far as possible, the maintenance of the normal ratio between the value of imports and that of exports. When distributing the certificates the character of the goods in question is first and foremost taken into consideration, preference being given to applications as regards raw materials and other articles which form the basis of the export trade (without which there would be no foreign bills of exchange available) or are used in other productive trades.

But in order to avoid arbitrariness and injustice as against individual countries endeavors are furthermore made, in distributing the exchange certificates, to maintain the same ratio between imports from and exports to each country as that which prevailed before the restrictive measures of other countries came into force. (It goes without saying that the endeavors to maintain the normal ratio between imports and exports apply to the year as a whole, not to the separate months).

It will thus be seen that due regard is being paid to the fact that Denmark normally has an adverse balance of trade as against certain countries, including the United States. No attempt is made to do away with the passive balance, the exchange control measures being directed toward the prevention of a further increase of the adverse ratio, an increase which would disturb the economic equilibrium of Denmark.

The average figures for the last three years show that during that period Denmark has imported about 15 times as much from the United States as she has exported to that country. During the part of the present year for which statistics are available (i.e. the first 5 months) the value of Danish exports to the United States was about 1.8 million Kroner. If the normal ratio between exports and imports had been maintained imports from the United States would [Page 162] thus have amounted to between 25 and 80 million Kroner. As a matter of fact, however, they have reached the sum of 49 million Kroner. It will thus be seen that exchange certificates for imports from the United States have been granted to about twice the extent envisaged by the exchange regime in force. In other words, the United States have, so far, received an exceptionally favorable treatment, probably more so than any other country.

The cases cited in the above mentioned aide-mémoire, concerning the refusal of exchange certificates, may therefore be explained by the fact, that exchange certificates for imports from the United States have already been granted to an extent far exceeding the above mentioned ratio.

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