462.00R294/870: Telegram

The Ambassador in Germany ( Dodd ) to the Secretary of State

179. Referring to Department’s telegram No. 102 August 9, noon and to Embassy’s despatch 1166 of August 15, the local representative of Schroder Banking Corporation informed me this morning that the proposed transfer transaction to Treasury Department now impossible as Reichsbank informed him that Finance Ministry refused to approve inasmuch as such full payment in foreign exchange would create embarrassing precedent for other similar claims, particularly that of Belgium. Understand that Treasury Department will be directly informed by Schroder Banking Corporation, New York.

This believed to be further evidence of Germany’s determination not to make any foreign exchange payments unless definite immediate advantages can be secured. Schroder representative stated that inasmuch as the I. G. Farben Company were interested in the plan it is possible that it may later be put through without inclusion of money due under the debt agreement, as this and other such large companies are desperate for immediate foreign exchange credits.

Dodd

[The Department of State each succeeding year through 1941 presented to the German Embassy semiannual statements of amounts due from the German Government pursuant to the terms of the Debt Agreement of June 23, 1930, and the Moratorium Agreement of May 26, 1932. The German Embassy merely acknowledged the receipt of the statements by informing the Department they would be forwarded to the German Government.]