862.51/3618: Telegram

The Secretary of State to the Acting Secretary of State 81

18. On basis of information conveyed in Gordon’s number 96 of June 9, 5 p.m., to the Department and material forwarded by Dulles82 designated by the American houses of issue the situation already created by Schacht in regard to American investors in Germany seems to me serious and the prospective developments may be even more adverse. The immediate intention seems to be [to continue?] the transfer on the standstill debts and inaugurate the transfer moratorium on the long-term warrants.

The American share of the standstill debt is decidedly less than the American share of the long-term. Furthermore, Schacht in his closing remarks at the Conference stated that he was giving consideration to discriminating in the treatment of debtors of different countries in accordance with the German balance of payments vis-à-vis each particular country illustrating the idea as follows:

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“For instance all the European countries differ favorably in this regard from the United States of America and amongst the European countries there are some which give us a greater chance to export and therefore there is greater balance in our favor from commerce than with others.” The general impression I have is that the German Government intends to use its debt situation as a means of getting trade advantages and if it fails to do so will discriminate adversely against the United States.

I therefore believe that urgent consideration should be given to an immediate presentation to Schacht and to other German authorities of the American point of view. This protest would rest first on the indispensable role played by the American capital in the upbuilding of present day Germany and it would emphasize the general importance of the rule of non-discrimination among creditors.

Will the Department check these observations against its own information and then submit question to the President and ascertain whether he believes such a protest as is above sketched should be presented either to the authorities in Berlin or Schacht upon his arrival here. If action is to be taken it probably should be immediate if it is to be effective as there is reason to believe that the British banking authorities are working closely with the German authorities to develop further plans satisfactory to themselves.

  1. The Secretary of State was in London as Chairman of the American Delegation to the World Economic Conference.
  2. John Foster Dulles, representative of American investors.