The Secretary of State to the Ambassador in Germany (Dodd)
12. Your No. 13, January 23. Referring to Schacht’s statement “that American creditors and bankers did not seem to understand [Page 345] the delicacies of Germany’s financial situation and that they had no authoritative committee to negotiate any of the matters involved”, unless you already did so, in your talk with Sehacht, it is highly advisable that the German authorities be made to understand that the Bondholders Protective Council is a disinterested body of most carefully selected individuals which was brought into existence upon the initiative of this Government and that the general anticipation exists that this body will play the same role as the Council of Foreign Bondholders in Great Britain, and that this Government has trust in it and regards it for practical purposes as representing the American holders of German bonds. Mr. Laird Bell is its representative and we assume that you are cooperating with him (Department’s instruction No. 543).
In regard to Schacht’s statement that only exchange surpluses in small amounts could be used for repurchasing bonds on the market at low rates the Department still awaits report as to quantities actually made available in past 2 years which it requested you to ask the German Government to provide.