462.00R296/5820: Telegram
The Secretary of State to the Ambassador in Germany (Dodd)
90. Reference my telegram No. 85, July 7, 4 p.m. Please create an early opportunity to see Baron von Neurath and convey to him orally the following considerations which should likewise be embodied in an aide-mémoire to be left with him.
“The United States Government considers it essential, in view of the commitments reported recently to have been entered into by the German Government with respect to British holders of German bonds, to insist that measures be taken without delay to assure equally favorable treatment to American holders of such securities.
The German Government is aware, as a result of the repeated representations, written and oral, that have been made to it, both through the American Embassy at Berlin and through its own Embassy at Washington, that this Government considers as an inescapable responsibility of the German Government the extension to American investors of treatment that is no less favorable than that which is or may be accorded to the investors of other countries.
The American Government does not feel that this expectation can be made contingent upon its entering into special agreements as new and additional inducements to the observance of that obligation. It should perhaps be pointed out that the American Government has consistently pursued a policy of refusing to undertake direct negotiations of settlements on behalf of holders of foreign securities. Since the original contracts were entered into with private citizens, insofar as the United States is concerned, this Government has felt that subsequent negotiations for settlements should be left to the direct representatives of the bondholders. This, however, has in no sense implied indifference to the treatment accorded them. The American Government has in fact at all times insisted on and defended their right to equality of treatment as compared with the treatment given nationals of other countries.
With respect to the specific situation now under consideration, the American Government desires to stress the fact that it cannot recognize the claim on the part of a Foreign Government to withhold such equal treatment or to render it contingent upon special agreements involving trade concessions, clearing arrangements, or similar measures. Furthermore, in the opinion of the American Government there can be no justification for differentiation between creditors having exactly the same unequivocal pledges from the German Government, and in whose favor exactly the same revenues were hypothecated, [Page 379] with a clear absence of reservations, written or implied, at the time the obligations were contracted.
It would be unwise to attempt to disguise or minimize the extent of the unfavorable reaction which has resulted throughout the United States from the threatened discrimination on the part of the German Government. If the necessary measures to dissipate this apprehension are not taken promptly, it is certain that the unfavorable reaction referred to will rapidly grow in intensity.66
In the circumstances the American Government must request an early indication on the part of the German Government of the remedial measures which it proposes to take.”
Please telegraph date of delivery of aide-mémoire so that we may publish text here.67