662.116 Autos/18
The Ambassador in Germany (Dodd) to the Secretary of State
[Received December 13.]
Sir: With reference to cabled instruction No. 130, November 15, 2 p.m., and in amplification of my cable No. 219 of November 22, 5 p.m.,48 I have the honor to report as follows:
In the course of negotiations concerning the barter of American automobiles against German products, responsible officials of the Ministry of Economics have informed the interested American companies that they were unwilling to approve such transactions except at the very uneven ratios of one to ten or at best one to five. This information emanated from the individual negotiations of the representative [Page 459] of General Motors, Hudson-Essex, Chrysler, Packard and Nash, and the decision was taken on the basis of existing regulations, and was not founded on any new legislation. The “New Plan” for the control of imports into Germany implemented the Government to control all imports. A full report on the “New Plan” which became effective September 24, 1934, is to be found in the Consulate General’s Voluntary Reports Nos. 1370 of September 14,49 and 1378 of September 21, 1934,50 respectively. In connection with the efforts of American automotive companies to arrange barter transactions to enable the export of their products to Germany, particular attention is directed to the sections on pages 10 and 11 of the Consular Report first mentioned above, under the paragraph captions “Promotion of Barter” and “Changes With Regard to the Previous System for Import Control effected by the ‘New Plan’”. There does not appear to be any expressed discrimination against American automobiles in the regulations constituting the “New Plan” and since the barter offers made to the competent German officials were independent and individual, refusal of the German officials to approve the suggested barter transactions, each of which must stand on its own feet, would not appear to furnish ground for raising the complaint of discrimination on our part.
Until last June considerable amounts of American goods were entering Germany through third countries, such as Holland, which could be paid for under the existing clearing or payment agreements. Since then the German Government has sought by progressive revision of most of the agreements to curtail, if not entirely prevent, the inclusion of goods from a third country within the benefits of the agreements. In the German-British Agreement51 which became effective November 1, 1934, Germany sought to render impossible the entry of any but United Kingdom goods into Germany thereunder, and the Embassy has direct information from the British Commercial Attaché that the British Chamber of Commerce is in fact obliged to issue a certificate in each case, as provided in Article I, paragraph IV, of the Agreement, certifying that the goods in question are United Kingdom goods. In contrast to the complete exclusion of goods from other countries under the British Agreement, the Acting Commercial Attaché, Mr. Miller, reports that General Motors has been informed that two cars per year may be imported through Belgium.
Under the conditions existing American automotive companies are taking steps to abandon Germany. General Motors is progressively discharging its employees, but its investment of some 80 million marks in the German Opel Company may have the effect of enabling it to [Page 460] continue to deal in spare parts at least. Hudson-Essex has given notice to all employees, but is retaining a small nucleus to carry on its other European business controlled from the office here. Chrysler, Packard and Nash, like the others, will have practically no cars to sell, since they cannot be imported and will try to continue to sell parts.
With regard to the cars manufactured in other countries, the Acting Commercial Attaché states that he is informed that the Austrian Steyr is withdrawing its representation in Germany and is obviously adversely affected by the existing situation. He adds that there are unconfirmed rumors that 500 Fiat cars have been imported recently from Italy under the German-Italian Clearing Agreement of September 26, 1934. (See enclosure No. 2 with dispatch No. 1334 of October 2, 1934, for text of Agreement52). However, importations made under such clearing agreements do not appear to furnish ground for claiming discrimination against American automobiles. It is understood that the Citroen plant in Cologne is still carrying on, but the Ford plant which also produces in Germany is doing the same and both are essentially in the same position, being partly foreign owned and manufacturing in Germany.
American automotive representatives in Germany are faced with the following alternatives if they continue to import:
- 1.
- Practical abolition of imports if they await the allocation of foreign exchange or permission to share in a clearing arrangement with some third country.
- 2.
- Sales against untransferable marks in the remote hope that conditions may so improve that in future the amounts will become transferable. Although the number of American firms having a large stake in Germany is small, their business is relatively large and they constitute the bulk of those accepting marks in payment for imports. This condition is notably true in the case of American firms engaged in the petroleum business. Reports reaching the Embassy, however, indicate that practically all smaller American sellers are demanding cash foreign exchange for almost all of their sales in Germany. If more precise details can be obtained concerning individual cases, this will be furnished.
- 3.
- The conclusion of a barter agreement with the competent German officials under which a high ratio of German goods must be accepted in the United States against permission to import an article not vital to German economy at present.
During the first 9 months of 1934, American exports of automobiles and motorcycles to Germany amounted to 3.9 million marks as compared with 2.2 million marks for the same period in 1933.
Any developments of importance or interest will be reported promptly.
Respectfully yours,