862.51/3789: Telegram

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

5. Department’s No. 153, December 29, 3 p.m. The British Ambassador here on January 10 presented a note to this Government stating that the British Government notes with satisfaction the attitude of American Government in regard to the treatment of foreign loans by the German Government. It informs the Department that the British Ambassador in Berlin has been instructed to keep in touch with you and to keep you informed of the texts of the British notes sent to the German Government, and to ask in return to be informed of the terms of the note which you presented. The British Financial Adviser at Berlin has been authorized as well to discuss with the American Embassy, if necessary, the technical details.

The Department believes this collaboration should be helpful in maintaining the American position and authorizes you to keep your British colleague informed.

At the request of the issue houses the Foreign Bondholders Protective Council, which was created at the initiative and with the encouragement of this Government,30 has agreed to send a representative, Mr. Laird Bell of Chicago, one of its vice presidents, to the forthcoming meeting at Berlin to protect the interests of the American bondholders. The Department has discussed the situation with Mr. Bell and his associates and you may feel free to keep in touch with Mr. Bell, while directing your action along the line of the Department’s communications to you. The Department understands that this forthcoming meeting is to be devoted primarily if not exclusively to the matter of preferential terms sought by the Dutch and Swiss.

[Page 335]

The grant of preferential treatment to certain groups of national creditors is one which this Government has consistently opposed both in Europe and in Latin America and it is important to maintain a unity of judgment with Great Britain in regard to it. If every creditor country seeks to secure special advantages in situations where its trade relations give it the opportunity, the result will be a worldwide contest between creditor governments, which in the final outcome will be expensive to them all. It certainly would appear that while the Dutch and Swiss Governments may be in a position to present their claims for preference in Germany, in other debt situations in which Dutch and Swiss citizens are concerned these Governments would be at a disadvantage compared with other governments. The Department is considering transmitting this observation to the Dutch and Swiss Governments before the Berlin meeting.