862.51/3833: Telegram

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

26. Requested by representatives of American creditors to inform Department that arrangement satisfactory to them has just been reached and is likely to be announced this afternoon on the following lines:

Recognizing need of spirit of cooperation with creditors but compelled by practical considerations to continue Dutch-Swiss arrangements till June 30 next Germany proposes (1) to convene meeting representatives long- and medium-term bondholders in April to prepare permanent settlement on the basis of cessation special agreements involving discrimination in favor of creditors of certain countries; (2) during current 6 months gold discount bank to give firm undertaking to purchase at 67 percent of par (stead of 50) conversions kasse scrip covering interest maturing during this period other than Dutch and Swiss.

Reichsbank emphasizes that this increase not attributable to revision of December estimates but has been conceded for the sake of constructive harmony.

American representatives state that Ministry of Economics and Reichsbank have given verbal assurance that no other separate scrip arrangements will be made with any other country within current 6-month period.

Arrangement with Dutch projected until June 30 is similar in principle to former agreement.