611.6231/348
Memorandum of Conversation, by the Assistant Economic Adviser (Livesey)
- [Present:]
- Mr. George N. Peek15 and Assistant Secretary Sayre.
- Mr. Moffat and Mr. Livesey were also present.
With reference to reports in the morning’s newspapers regarding proposals that the United States Government finance raw material exports to Germany and with reference to a file of correspondence between Mr. Peek and Mr. Mooney,16 Mr. Sayre said he wished to acquaint Mr. Peek with information before the Department. In the existing circumstances an American governmental credit to Germany might have sharp repercussions at home and abroad. He first showed [Page 422] Mr. Peek a report of the Commercial Attaché at Berlin regarding the large purchases Germany is making of airplanes and airplane material, this being an indication that credits extended to Germany for its necessary imports might be regarded by France and others as facilitating German cash payments for munitions.
Mr. Peek said that his interest was in expanding trade wherever it could be expanded. He would be glad to expand our exports of raw materials to Germany. However, there was no question of making a loan to Germany. It was fundamental that the export-import banks make loans only to Americans and there is, in fact, no important financing required in connection with the German project under consideration which is that American packers undertake distribution of German wines in the United States in return for increased importation of American lard into Germany. At most there might be an extension of intermediate credits to the packers in connection with their handling of German wines.
Mr. Sayre said that this was reassuring and asked whether the proposal would require any action other than financial such as reducing our tariff on German wines. Mr. Peek said that no governmental action would be necessary unless it be action by the German Government to remove the obstacles to the importation of American lard.
Mr. Sayre pointed to the apparent unwillingness of Germany to take American lard, to its anxiety to obtain other raw materials such as cotton, copper and petroleum from the United States and asked whether Mr. Peek would contemplate making an arrangement regarding, say, American cotton instead of American lard. Mr. Peek said he would not. It is important to find an outlet for our lard but sales of cotton to Germany do not require the same assistance. Besides, our packers, whose nation-wide distribution facilities could be used to promote the marketing of German wines, have no interest in doing this to facilitate our exports of cotton, copper or petroleum. Our packers’ interest is in selling lard.
Mr. Sayre agreed that proposals to sustain lard exports to Germany are on a different basis from proposals to finance exports of cotton, copper or petroleum. He wished, however, to inform Mr. Peek of the great eagerness with which Germany is pressing to obtain an arrangement with the United States whereby Germany would be assured of its supplies of cotton, copper and other necessary raw materials. Germany is anxious to send a mission to the United States at the earliest possible date, hoping to negotiate an arrangement assuring it of supplies of raw materials. Of course, in the present circumstances, proposals of this kind would stir up great opposition at home as well as abroad in view of the current state of opinion regarding Germany. Mr. Sayre showed Mr. Peek a recent memorandum of a conversation [Page 423] between the Secretary of State and the German Ambassador in which Mr. Hull declined to give any indication of when it might be possible to receive a German mission to discuss commercial relations between the two countries. He also offered to make available for later reading certain confidential despatches discussing the German eagerness for a trade agreement and the difficulties in reaching an agreement advantageous to the United States, in view of the general commercial policy of Germany.
Mr. Peek repeated that he is anxious to expand trade wherever possible but that his particular interest in connection with Germany is in the possible deal concerning lard which also has the advantage that some of the difficulties surrounding the marketing of German goods in the United States might be surmounted in respect of the sale of German wines if distribution arrangements could be made with the American packers.
Mr. Peek said that he had mentioned the pork-wines project to the President who seemed to think well of it. Mr. Peek intends to follow the matter further by cabling an able European agent of one of the packers, an American now in Europe, and getting him to push the matter.
Mr. Sayre said that the conversation had cleared up questions raised by some phrases in Mr. Mooney’s letter to Mr. Peek as well as by newspaper articles and he was glad to find that Mr. Peek was so thoroughly in agreement, particularly with respect to avoiding anything like a loan to Germany. He had thought that in view of the present sensitiveness regarding German policies and practices, Mr. Peek should have the advantage of knowing the confidential information which the Department has regarding these matters. Mr. Peek said he would be glad to take the available confidential reports and despatches for careful reading.