It may be mentioned that there does not appear to be anything new in
the claim of the German Foreign Office that the separate agreements
contemplated with Holland and Switzerland are not of a
discriminatory character since they will be made only in
consideration for the taking of additional German goods by those
countries; it is a claim which ignores the principle of the equal
treatment of creditors irrespective of the commercial relationship
of creditor countries to Germany.
[Enclosure—Translation]
The German Secretary of State for Foreign
Affairs (Bülow) to the
American Ambassador (Dodd)
No. W 4921
Berlin, June 21, 1934.
My Dear Mr. Ambassador: Since our
conversation on June 18th, an official press Communiqué63 has been published in Washington relative to the
representations made by the Government of the United States to
the German Government regarding the German transfer
[Page 374]
moratorium. The text
of this Communiqué is much sharper than the statements you made
to me. For that reason I beg to set forth to you once more below
a brief explanation of the standpoint of the German Government,
which is as follows. I beg you to communicate the same to your
Government.
In our conversation on June 18th you protested, by instruction of
your Government, first, that Germany had independently made a
uni-lateral debt arrangement. Second, you informed the Foreign
Office that your Government would necessarily regret deeply any
separate transfer agreement with another country the advantages
of which are not simultaneously enjoyed by citizens of the
United States.
With regard to the accusation that the German Government had made
a uni-lateral debt arrangement, I can only assume that the
Government of the United States in Washington is not fully
informed of the true facts of the case. With the note of January
25, 1934—No. 16364—you informed the
German Government by instruction of your Government that the
Bondholders Protective Council was an organization founded on
the initiative of the Government of the United States, that the
Government of the United States had full confidence in the
Bondholders Protective Council and practically looked upon it as
the representative of the American holders of German securities.
In your note Mr. Laird Bell was cited as the representative of
the Bondholders Protective Council. At the Transfer Conference
in May Mr. Laird Bell was again a member of the American
delegation. The American delegation took a more active part in
the negotiations of the Transfer Conference in May than any
other delegation. More than that, the proposal which surmounted
the critical stage at the end of the Transfer Conference and
formed a basis for the final understanding, originated in the
initiative of the American delegation. An essential part of the
agreement is the six months’ Transfer Moratorium for the period
from July 1 until December 31, 1934. Mr. Laird Bell took part in
all these deliberations and resolutions.
You will admit, Mr. Ambassador, that in view of these
proceedings, the German Government has every reason to be
astonished if the accusation is now made that unilateral action
was taken. At any rate I must point out that the negotiations
took place with the creditors’ representatives officially
introduced to the German Government by the Government of the
United States and that an understanding was reached and that the
action of the German Government was within the bounds of this
understanding.
With regard to the second point, namely possible separate
transfer agreements with other countries, I beg to state, to
begin with, that in
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January 1934, at the preliminary negotiations for the general
Transfer Conference in May, this conference was assigned the
task of “creating a basis for the administration of the German
debt service, suitable to lay the foundation of a permanent
settlement.” The German Government at that time declared “that
the proposed negotiations will be on the basis of
no-discrimination in favor of the creditors of any country and
the cessation of separate agreements.” No permanent settlement
was reached in May. As far as its assent at that time is
concerned, the German Government could therefore take the stand,
formally, that it is released from its assent at that time; but
I do not attach any importance to this formal side of the
matter. What is more important is the practical side.
If I may take it for granted that the American press
announcements of June 12, 1934, are correct, the Government of
the United States, in its reply65 to the note of the Royal
British Government in the matter of war debts and their maturity
on June 15, pointed out that debts could also be paid in goods.
In that way the objections raised by the Royal British
Government regarding transfers would be eliminated; that the
Government of the United States would be glad to receive such
proposals. In its transfer note of June 15 the German Government
made the following statement: “The German Government would also
welcome discussions relative to expedients which might be
adopted in the way of agreeing on additional exports of German
goods—if it is clearly understood from the outset that the goods
concerned are really additional goods—in case the Government of
the United States believes that such discussions could be of
practical value at the time being.” Accordingly I can see that
the United States, as the creditor, referred one of their
debtors to the same mode of overcoming transfer difficulties as
Germany, as the debtor, offered her creditors.
Germany’s previous separate transfer agreements with the
Netherlands and with Switzerland are based on just this
principle of augmented purchases of goods. If, as I hope, the
German Government again succeeds in arriving at a similar
understanding with the Governments of the Netherlands and
Switzerland, and if perhaps other governments also join in this
only possible remedy for the present transfer difficulties, that
would be entirely in line with the proposal which the Government
of the United States made to England. If the Government of the
United States protests against its own proposal as made to
England, when it is carried into effect in other countries, I
can only explain this by the fact that the real state of the
matter, on which Germany’s former and possibly new separate
transfer agreements rest, is not known to your Government. I
would therefore
[Page 376]
request you to explain fully to your Government that these
separate agreements are in fact based on the presupposition that
more goods will be purchased. Otherwise it would have to be
assumed that the Government of the United States wishes to
withhold from Germany the chance of a settlement to which it has
referred England, and to discriminate against Germany, as the
debtor, as compared with England; an assumption which I do not
wish to accept.
In the press Communiqué mentioned at the beginning there is
another remark which I consider it necessary to correct. It is
stated there that (in case of separate transfer agreements with
other countries) “the American creditors would have to see the
creditors of other countries being satisfied at their expense.”
Anyone familiar with the trade balance between the United States
and Germany, on the one hand, and between the Netherlands,
Switzerland and Germany, on the other, must fully realize that
the opposite is the case. If Germany was in a position to keep
up full interest transfers to the United States until some time
ago and part transfers until only recently, this was only
possible for the reason that, besides other countries, primarily
the Netherlands and Switzerland allowed Germany a considerable
surplus in the trade balance. Thus it was chiefly at the expense
of the Netherlands and Switzerland that it has been possible to
keep up fully or in part the interest transfers to the United
States. As shown in the trade statistics, which I venture to
enclose, Germany has taken 9 billion marks worth of goods more
from the United States, alone in the years since 1923, than vice
versa. If the United States would be willing to undertake a
similar return service and take from Germany surplus goods in
the amount of 9 billion marks in the next few years, the
transfer problem would cease to exist for Germany and all
citizens of the United States who are holders of German bonds
could have their claims, paid in in Germany in Reichsmarks,
transferred without difficulty.
I take [etc.]
