The Ambassador in Germany (Dodd) to the Secretary of State

No. 146

Sir: With reference to despatch No. 1562 of September 1, 1933, from the Consulate General in Berlin, reporting an interview which Dr. Schacht, President of the Reichsbank had given to a Dutch correspondent, I have the honor to enclose a translation of a second interview,88 the account of which was published in the Deutsche Allgemeine Zeitung of September 6, 1933, under an Amsterdam date line.

The interview deals with the use of Konversionskasse funds for the promotion of German exports, and with the German view of the foreign attitude toward such employment of funds due German creditors. The “take it or leave it” attitude of Dr. Schacht, who is the dictator of German financial policy, is perhaps more clearly brought out in his answers to the Dutch correspondent than in any particular one of the numerous despatches which the Embassy has written on this subject since the Partial Moratorium became effective on July 1, 1933.

In the interview Dr. Schacht says that money which is paid into the Konversionskasse does not belong to the German Reich, but that it [Page 451] belongs to those creditors who are not granted full transfers; he also remarks that no one is forced to sell his scrip, the market price of which will probably be 50 per cent of its face value. It would seem to the Embassy, however, that even if Schacht says the money does not belong to the Reich, it in effect does so belong, since it is the Reich which is really disposing of this money; because, according to Dr. Schacht, the creditor will be unable to get even this probable 50 per cent of the face value of his scrip unless he sells it. Dr. Schacht, however, sees no injury to Germany’s credit arising from this ultimatum of “take a part only or eventually get nothing.” He considers that the Partial Moratorium shows everyone that Germany does not idly accept the economic problems forced on her by a “senseless international economic policy”, and will not admit the possible credit repercussions against Germany as a party to such a “senseless” policy. He lightly waives aside the threat of a Jewish boycott against Germany, as having no relation to economic policy and by inference no consequences in connection with Germany’s economic policy. He stresses once more the connection between German foreign trade and German foreign debts, and in answer to a question as to whether the use of scrip would mean dumping, said that England, Japan and America had been competing in this field and to say that it was now feared that Germany would use scrip to promote her exports, “calls forth a bitter smile in Germany”, and concluded that only if the foreign creditor will forego the payment of his interest, will Germany forego the use of scrip to promote her exports. Scrip, he said, would be used only for excess, or so called “additional” exports, with a portion of the transaction bringing in foreign exchange. This seems to indicate that scrip will not be employed up to 100 per cent of the amount of an export transaction.

In connection with the use of scrip, it may be mentioned that last week, the German Ministry of Economics issued a statement for the information of German exporters that dividend coupons of German securities could not be accepted in liquidation of export transactions. This statement would seem to have put an end to any idea which may have been entertained in the United States that the dividend coupons might be stamped with a statement of indebtedness for the non-transferred half of the interest payment in lieu of using Konversionskasse scrip for that purpose.

Respectfully yours,

William E. Dodd
  1. Not printed.