862.5151/1441
The Consul General at Berlin (Jenkins) to the Secretary of State
[Received December 10.]
Sir: I have the honor to refer to this Consulate General’s despatch No. 2210 of October 6, 1934,45 in regard to certain currency control measures affecting American shipping. In this despatch it will be recalled that attention was drawn to the fact that in its efforts more effectively to control foreign exchange, the Reichsstelle fuer Devisenbewirtschaftung (Exchange Control Office) had recently promulgated certain regulations seriously affecting American shipping. Amongst other things it was provided that the newly created Import Control Offices should grant special currency permits to cover shipping charges, in addition to ordinary currency certificates for the importation of merchandise. In other words, an importer was required first to obtain a currency certificate to pay for the merchandise itself, and then the special currency permit to cover shipping charges and other incidental costs. In itself this would have constituted no discrimination against American shipping as such, but in seeking to obtain an interpretation of the new regulations it was developed that no special currency permits were to be required for shipments on vessels under the German flag. That is to say, an importer would only be required to obtain the additional exchange certificate when his goods were to be imported on an American or other foreign vessel, and not in connection with shipments by German vessels. It was evident that in practice this would result in a very unfair discrimination against American ships as compared with their German competitors because shippers would naturally seek the line of least resistance and prefer to utilize German vessels where only one currency certificate was required, instead of American ships necessitating two certificates to cover exchange transactions.
I am now happy to be able to report that this situation has been greatly improved as a result of an amendment just adopted by the Exchange Control Office, authorizing American shipping companies to establish special deposits with certain German banks to take the place of the exchange permits to cover shipping charges. Under [Page 457] this arrangement it is proposed that the American shipping lines shall simply endorse on the bill of lading a statement to the effect that exchange requirements in regard to shipping charges have already been covered. This will mean that the importer should not have any more trouble when shipping by an American vessel than he would when bringing in his goods under the German flag. The amended regulations were published in the Reichssteuerblatt No. 78 of November 3, 1934, a copy of which is enclosed with this despatch.46 In paragraph 10, on page 1348 of the publication in question, will be found the amendment referred to in this despatch, a translation of which reads as follows:
“An importer or his accredited forwarding agent has to obtain a special currency permit to enable him to pay freight charges to the foreign forwarding agent, even if the payment is to be made in Germany in reichsmarks. Unless the payment can be effected on the basis of a special clearing agreement, the permit has to be obtained at the competent Exchange Control Office, since mark payments made to foreigners in Germany are subject to the foreign exchange regulations. The payment of freight charges to a foreign shipper or forwarding agent in Germany without a special currency permit is only permissible if the latter has a general permit to have certain mark payments deposited to a special account, which payments he may then use to defray the expenses of his German office.”
When the amended regulations first appeared, some American shipping lines were inclined to meet the new conditions without further question, but others were doubtful of the final outcome and postponed any definite action in the matter. In the meantime an official of the Foreign Office informed this Consulate General by telephone that the changes in the regulations were designed especially to rectify any possibility of discrimination against American shipping, and that the German authorities considered that American vessels would now find themselves in as satisfactory a position, in relation to German shipping, as they had been previous to the regulations published in the Reichssteuerblatt No. 66 of September 28, 1934.
Several conferences took place in Hamburg between Consul General Erhardt and American shipping concerns, including the United States Lines, the Southern States, Yankee, Mobile-Oceanic and American West-African Lines, when the new provisions in the exchange regulations were carefully discussed. A copy of Consul General Erhardt’s letter of November 10, 1934, in regard to the questions raised at these conferences is enclosed herewith for the information of the Department.47 No decision had been reached when Mr. Erhardt wrote, but on November 16 Mr. Kemp, Assistant Treasurer of the United States [Page 458] Lines, called on me to explain that his company and the other shipping concerns interested had finally agreed to comply with the new provisions of the exchange regulations, and establish the required deposits to cover incidental charges or “Nebenkosten”. However, Mr. Kemp added that this acceptance was based on an understanding between the representatives of the United States Lines, the Devisenstelle in Hamburg and the Dresdner Bank, under the terms of which two deposits would be opened by the steamship company, instead of one; the first to be in accord with the exchange requirements, and the other to be an open account to which excesses could be transferred from the incidental charges, or “Nebenkosten” account, should it seem necessary at any time to do so. Mr. Kemp explained that this was considered very important because the company did not care to run the risk of tying up too much of its funds in marks.
Mr. Kemp did not make it clear whether or not the other American lines would also adopt the practice of opening two more or less special accounts instead of one, but it is assumed that the other concerns will probably follow the lead of the United States Lines. No doubt Consul General Erhardt will submit further and more detailed reports in regard to the outcome of these conferences.
The new arrangement will have to be tested in practice before it can be determined whether or not American shipping will now be relieved of the possibility of discrimination. But in the meantime it seems clear that the German authorities have sincerely endeavored to rectify the matter for the benefit of the American lines, and it is hoped that the arrangement can be carried out as planned. Should there be any further developments, the Department will be informed.
Respectfully yours,