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

No. 102

Sir: I have the honor to inform you that I have learned from a most reliable source that within the past ten days the Minister of Commerce, Mr. Hauge, called into private consultation the leading industrialists of Denmark for the purpose of formulating methods by which the industries of this country could be induced to a more extended production of commodities at present imported into Denmark from abroad.

Previous despatches from this Legation have described the operation of the Valuta Control by which Denmark has tried to protect the value of the Danish crown by maintaining a favorable balance of trade. The Valuta Control has drastically limited imports, especially of those articles which could be produced locally or for which local products could be substituted.

At this Conference the industrial leaders expressed themselves as being unable to expand their production without some more permanent assurances of protection from foreign competition than is provided by the Valuta Control whose importation permits are issued for periods of four months.

It was decided definitely that Denmark should place a high tariff on certain commodities. In view of the fact that Denmark is almost entirely dependent on Great Britain for the absorption of her dairy products, the proposed tariff would have to be so arranged that the products of Great Britain should not be affected. Commodities principally imported from other countries, i. e. the United States and Germany, would be, however, so heavily taxed as to practically exclude them.

It was understood that these measures would be drafted within the next few months and as their object is to provide the Danish manufacturer with a guarantee upon which he can expand his business, it is probable that, once drafted, these measures would be difficult to rescind or alter for several years.

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The immediate initiation of trade negotiations between the United States and Denmark would in all probability have one of two advantageous effects. It might set off indefinitely the crystallization of this tariff plan or it might result in a form of tariff which would to a certain point at least extend to the products of the United States the same advantage which it is proposed that the products of Great Britain should enjoy, while leaving the brunt of the burden on the commodities of Germany. If, however, there should be no move on the part of the United States in the immediate future there is a serious danger of the action outlined above, which will make it impossible for the next several years to regain and hold our Danish market for American goods.

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Respectfully yours,

Ruth Bryan Owen