The Consul General at Berlin (Messersmith) to the Secretary of State
[Received May 8.]
Sir: I have the honor to refer to my strictly confidential despatch No. 1233 of April 11, 1933, with reference to the interference with the treaty rights of certain American firms in Germany and in which I out-lined [Page 422] my conversation with Dr. Bang, the Staatssekretaer at present at the head of the Ministry of Commerce, with regard to the cases of the Associated Press G.m.b.H., the New York Times G.m.b.H., the Keystone View Company, the Nationale Radiator Gesellschaft, G.m.b.H., the Roth-Buechner Company which is a subsidiary of the Gillette Company, the Remington Typewriter Company, and the Weston Electrical Instrument Corporation, all of which were briefly outlined in the despatch under reference. In this despatch I also pointed out that the general policy of the present Government, or at least of the National Socialist Party which is in complete control of the Government, is towards the dissolution of the big industries in favor of small factories.
Since the writing of this despatch, further information has developed in this connection. The Burroughs Adding Machine Company which has enjoyed a good business in Germany for a number of years, has brought to my attention that it has been asked by municipal authorities and city owned public utilities to sign the same form as that referred to in the first paragraph of my despatch No. 1233, on page 6.67
The National Cash Register Company which owns and operates a German company with a factory employing at present about 1,000 men in Berlin, has been asked to submit the same form by various municipalities and public utilities. This American owned German company was founded in 1896 and is the oldest firm in Germany in the cash register business. Its German competitors, Krupp and Anker, were established much later. The German plant manufactures in Germany not only for the German market but also supplies a part of the export demand of the parent company in the United States. The products it manufactures in Germany are 100% German and the only machines which the company imports from the United States are some of the larger and special machines for which there is only a small demand and which it would not pay to manufacture in Germany.
It will be noted that the declaration which certain American firms in Germany have been asked to sign and to send in within a period of eight days, requires affirmative answers to the following: (1) That the firm is a purely German firm; (a) [(2)] that the company is not entirely or mainly owned or under the responsible direction of foreigners, Jews, and that it does not have Jewish partners; and (3) that the company is not based on “Marxistic” principles. The firms mentioned in this despatch cannot give an affirmative answer to the first of these three declarations as they are not a purely German firm in the sense of the declaration which is that the firm is organized under German law and entirely owned by German citizens. These firms are organized under the German law as German companies which under the Treaty of [Page 423] Commerce between the United States and Germany68 gives them the same rights as an entirely German owned firm. They cannot answer the second query in the affirmative as the companies in question are wholly owned by parent companies in the United States. In some cases the managing director in Germany is an American or a person not a German citizen; but in most cases the managing directors are Germans. It is impossible for any of these firms which are stock companies, to declare that none of their stock is in the possession of Jews. It is of course possible for all of these firms to answer the third query affirmatively, as obviously none of them are based on “Marxistic” principles.
In order to clear up this matter further and to determine what action the Ministry of Commerce had taken after my interview with Staatssekretaer Bang, I called by appointment at the Ministry on April 13 and saw Ministerial Director Dr. Posse in the absence of Staatssekretaer Bang. Dr. Posse it may be said, is one of the ranking officials of the Ministry and has frequently represented it at economic conferences at Geneva, and he informed me during this interview that he had been named to go to Washington for the conversations which are to take place during the preliminary meeting to the World Economic Conference.
I first referred to my conversation with Dr. Bang on April 7 outlined in my despatch No. 1233, and he informed me that he was familiar with what had passed then. I asked him what the Ministry had done as a result of this conversation and Dr. Posse stated that Dr. Bang had taken up the question of these American firms and of interference with treaty rights with the office of the Chancellor, Mr. Hitler, and with the Ministry of the Interior, at the head of which is Mr. Goering. He stated that he had no information further than this and reiterated that his Ministry would do all in its power to bring about a correction of the situation.
I then outlined to him the further cases of the Deutsche Burroughs Adding Machine Company and of the National Cash Register Company, which had come to our attention, and emphasized particularly the case of the latter company which meets its German demand almost entirely out of its Berlin factory. I also emphasized the fact that the Nationale Radiator Gesellschaft since 1914 had sent to the parent company in the United States only 400,000 marks of its earnings, the rest having been invested in the three German plants in increasing their efficiency and production. I pointed out that in many respects the existence of these plants and their continued operation was of much more importance to Germany than to the United States as unfortunately for us a part of the export demand of the parent companies in the United States for Europe and South America was supplied from the German rather than from the parent factories in the United States. I stated that the American [Page 424] companies were being very patient and understanding because they realized that radical changes had taken place in Germany which involved disturbance of ordinary conditions and that under existing circumstances it was difficult to get rapid action. I said further that we realized that the pressure for certain interference in business was coming from the bottom and from political sources, rather than from the top and from official sources, and that he could depend upon our understanding the difficulties under which the Ministry was laboring but that unless some satisfactory assurances could be given to the American firms concerned as to the attitude of the German Government, they would be under the necessity of informing the parent companies of the discriminatory action being taken which would undoubtedly result in the parent companies making representations to the State Department in Washington and that this would involve taking up the matter with the Foreign Office through the Embassy. I stated that if the parent companies in America took such action, publicity would be inevitable and it would have a further unfavorable effect on public opinion abroad if it became known that foreign firms in Germany were being discriminated against.
Dr. Posse stated that he appreciated the situation fully and expressed his thanks that the Embassy and the Consulate General were handling the matter so considerately. He assured me again that Dr. Bang had taken up the whole matter with the offices of the Chancellor, Mr. Hitler, and of Minister Goering, and that the Ministry would do everything in its power to get the matter settled as quickly as possible. He added that he could assure me officially, and that I was to consider it as official, that no such action as that which had been brought to his attention by me came from official sources and that it did not represent either the will or the act of the German Government. He was particularly interested in the information I brought him as to the declaration which American firms had been asked to sign, and asked me to leave copies with him, which I did. It was obvious from his manner that he recognized the extraordinary character of these declarations and made it clear that they had not been authorized by official sources.
During the course of the conversation it was necessary to make a distinction between the products of the American-owned German factories and those products imported by the German company from the parent company. Dr. Posse brought out the fact that certain municipalities and he believed certain states as well as Congress, had made it a condition that only American products could be used in certain public works or that public administrations could only use goods manufactured in the United States; and that it was undoubtedly the right of state and municipal authorities both in the United States and in Germany to decide to use only goods manufactured in their respective countries. [Page 425] I stated that I could not give any definite information on this subject as to our practice at home, but that it was my impression that certain municipalities at least had specified in contracts for public works that only American materials could be used. I stated that the matter which I was bringing specifically to his attention was the situation of those German American-owned factories which by the action of states and municipalities were being excluded from selling their products manufactured in the German factories, to them. Dr. Posse stated that he appreciated that this was a clear violation of treaty rights and that as he had already stated, he would do everything in his power to get the proper information about, as the central Government had nothing whatever to do with the matter.
I informed Dr. Posse that I thought it was desirable to get action as rapidly as possible and to get this movement stopped before it gained further momentum. He assured me that he recognized all the implications involved and the importance of immediate action and that he would again see that the matter was taken up in the same quarters in which Dr. Bang had already discussed it.
The conversations with Staatssekretaer Bang and Ministerial Director Posse have indicated clearly that the Ministry of Commerce recognizes as a violation of a treaty right the effort of certain municipal and state administrations to exclude from purchase by their services, the products of American-owned German plants. They have given their specific assurances officially that the Ministry will do all that it can to stop this movement. They have expressed appreciation of the considerate manner in which this matter has been taken up with them by us. They have, however, indicated the powerlessness of the Ministry and recognized by implication the existence of the dual Government described in my despatch No. 1231 of April 10, 1933.69 This was frankly admitted to me by the statements of both Dr. Bang and Dr. Posse that they had taken up this matter with the offices of the Chancellor and of the Minister of the Interior.
The American firms which have taken up this matter with the Consulate General have been informed that they should not in the meantime sign any of the declarations which have been submitted to them or take any action with regard to them, as the Consulate General has taken up the matter officially with the Ministry of Commerce which has given the necessary assurances that the requirement of these declarations is not based on any official orders of the German Government.
It is obvious that the instructions to states, municipalities and certain public utilities not to buy any except German goods manufactured by purely German firms, have come from a central organization of the [Page 426] National Socialist Party. This policy is in line with the general policy of the Party which is distinctly unfavorable towards foreign capital and foreign investment in Germany and towards any firms which in the opinion of the Party are not “purely German” firms. It is interesting in this connection to note that at the same time that the Party Organization is instructing municipalities, etc., not to buy imported goods or goods not manufactured in Germany by purely German firms, the central offices of the Party organization in Berlin have recently purchased some expensive calculating machines from an American company in Berlin and imported from the parent factory in the United States.
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