611.6231/395
Memorandum by the Secretary of State
The German Ambassador, having returned from Berlin, called and immediately took up the question anew of an additional trade agreement with this government. He was just as insistent and urgent as he could well be—as much so as on the occasion of two or three visits before he left this country for Germany.
I inquired as to any future plans of his government relative to financial or monetary or currency changes, or changes of policy with respect to either phase. He promptly replied that there would be no change in any respect under present plans. I then inquired as to the prospective policy of his government in making government monopolies of various commodities, and he replied that this policy would be kept down to the minimum. I do not know what he meant by the minimum.
I then remarked that financial, commercial, and general business methods and practices, especially in Central and Western Europe, were so unusual, so discriminating and so uncertain and chaotic, that there was no inducement to a government like the United States to undertake to project itself into a situation of that kind, even for the sake of getting a dollar on a debt here and there and selling a few dollars worth of goods now and then; that the sum total of such practices was to reduce the volume of international trade and finance, and, in the end, to suffer more financial policies and economic drawbacks and losses than was to be gained by such shortsighted and narrow economic and financial policies as were now being practiced. I added that if, when other governments over there were demanding, almost by duress, that exchange be specially set aside or manipulated in order [Page 436] to make payment on the Dawes debt service to the nations of one country while those of another country were ignored and left without any recognition, the German Government had risen up and proclaimed to the world that the sanctity of international contracts on which the Dawes–Young Agreement rested should not be thus violated with impunity but that relatively fair and equal treatment should be accorded all of the creditors alike, such action by Germany would have constituted a fine contribution to the exposure and clarification of present chaotic practices, methods and conditions. I said that so long as these arbitrary, discriminating, and uncertain methods and factors were made a part of the international financial and trade situation, I could see but little for my country to gain by participating therein. I stated that we are preaching to the various important nations the broad doctrine and policy of liberalizing trade barriers and promoting fair and equal and friendly trade methods and practices; and that when we can induce a few countries like the British, the Germans, and the French to join us in thus promoting economic sanity and restoring to a decent volume international finance and trade, we shall be more than delighted.
The Ambassador again and again came back to the question of some special trade arrangements between Germany and the United States. I replied that we expected to go forward, as we are now going forward, with the development of treaty arrangements with certain Latin American countries, and possibly some small countries elsewhere; that several committees here in the Department are at the same time developing every financial, industrial and trade fact as to several other important countries, with a view to a decision by this government as to which countries it might be able to negotiate an early trade agreement with, and which ones might not offer suitable inducement at this time; that Dr. Sayre, the head of the division where this work is being done, would be away for some two or three weeks yet and it would only be after his return that the work of these committees would be carefully checked so that it would be possible to determine more definitely as to which countries we might then take up conversations with.
The Ambassador inquired again if some special arrangements in the meantime for additional trading could not be entered into between Germany and the United States, to which I replied that there was no feasible way open so far as I could judge. I reminded the Ambassador that we are obliged in any event to move slowly for lack of sufficient public sentiment to sustain us as we go forward with these reciprocity undertakings; that powerful lobbies infest the capital and other parts of the country, whose chief purpose is by misleading propaganda to discredit and undermine and break down this move; and that therefore [Page 437] we could only move carefully and gradually. I declined to make any commitments with reference to any part of any request of the Ambassador.
I inquired whether Dr. Schacht would retain his present official position30 permanently. The Ambassador gave an evasive answer, intimating that he did not know. He left in apparent good humor but with the statement that he would seek to keep in close touch with the Department relative to the question of trade negotiations.
- Hjalmar Schacht, Minister for Economic Affairs since August 2, 1934.↩