The Ambassador in Turkey (Skinner) to the Secretary of State

No. 177

Sir: I have the honor to report that I am having informal discussions with the authorities here in regard to the unsatisfactory state of Turco-American commercial relations. The general facts are that while we continue to purchase Turkish goods, especially tobacco, more or less as we have in the past, Turkish importations from the United States show a constant and alarming decrease.

Accepting as accurate, as no doubt they are, the figures issued by the Central Bank of Turkey, the account as between the United States and Germany in respect of their trade in this country runs as follows:

Importations from the United States Importations from Germany
1929 17,150,000 Ltq. 39,172,000 Ltq
1930 6,094,000 27,380,000
1931 4,118,000 27,049,000
1932 2,267 000 19,983,000
1933 (10 months) 1,983,000 15,563,000
Exportations to the United States Exportations to Germany
1929 15,388,000 Ltq. 20,582,000 Ltq.
1930 17,806,000 19,838,000
1931 12,678,000 13,649,000
1932 12,093,000 13,722,000
1933 (10 months) 6,533,000 12,476,000

Putting matters another way and bringing all the principal commercial countries into the tale, the story reads:

A Table

Showing Turkish Importations (000 omitted) from and Exportations to Principal Countries of the World

Importations from Exportations to
1932 10 months 1933 1932 10 months 1933 10 months
Germany 19,963 15,563 13,722 12,476 -3,087
Italy 11,074 7,235 16,359 9,949 +2,714
England 10,640 8,005 9,975 6,102 -1,903
France 7,190 3,792 7,820 3,930 +138
Belgium 6,175 4,220 3,459 1,913 -2,307
Russia 5,942 3,045 5,437 3,238 +195
Japan 3,969 2,561 275 936 -1,625
U. S. A. 2,267 1,983 12,093 6,533 +4,550
In 10 months, 1933, Turkey imported from and from above countries which are in deficit T. L. 30,149,000
and from above countries which are not T. L. 16,055,000
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It will be immediately apparent from the foregoing that although Turkey enjoys a substantial trade balance in the United States, consciously or unconsciously, she has reserved her trading favors for several European countries, notably Germany, where exactly the contrary state of affairs prevails, and I fear that on our side we have allowed matters to drift, although in possession of the soundest of all arguments for demanding better treatment. Our Turkish friends allege, but rather weakly, that it is not their fault if not more American goods are sold in this market, that our contracting firms show no great interest in their important undertakings here, and that their sincere disposition is to encourage a better commercial balance than we have had for a number of years.

In reply to this general statement, I have suggested that under normal trading conditions undoubtedly it is the business of American exporters to sell their own goods in Turkey, and if they cannot compete with exporters in other countries they must then take the consequences; but, since about 1930, Turkey has multiplied her confusing system of quotas, contingents and what-nots, and having applied these arbitrary practices to trade it was absolutely within her power to create such conditions as would enable our goods to come into the market as was formerly the case, whereas the statistics showed very clearly that we were furnishing a commercial balance out of which to pay for goods imported from other countries where Turkish trade was in deficit.

Furthermore, I discussed at length the Government’s industrial plan, which ties up with an industrial program being worked out by two of the Turkish banks under Government influence. It seems to be the intention, or has been up to today, to spend all the money for the construction of industrial plants of one sort or another in European countries, more particularly Germany and Russia. I took upon myself to state that as our manufacturers were highly qualified to furnish practically everything required in Turkey for the carrying out of these large undertakings, we definitely expected the Government, through the agencies which it controls, to turn in our direction and make a genuine effort to restore something like equilibrium to our trade relations. I mentioned, casually, that the Government itself was planning the construction of various war vessels and that we had not been invited even to bid. I pointed out that on March 19 I received a note from the Foreign Office, enclosing a considerable amount of information in the Turkish language, in regard to the construction of a naval base at Gölcük, Izmit, for which bids would have to be deposited by April 15, 1934, a date so near at hand as to make it physically impossible for any American concern to participate. Nevertheless, this contract contemplates the construction of an arsenal large enough to accommodate battleships of 15,000 tons, with all that that implies.

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I am inclined to think that my several conversations on these matters have seriously shaken our friends here, and I am even hopeful that they may revise their plans to such a point as to give our manufacturers an opportunity to make tenders, but I may be unduly optimistic because at the same time I hear whispers of secret contracts already passed. Certainly, it is true that there are numbers of German commercial representatives at Ankara at this moment as active as flies about a honey pot and very properly engaged in making any commercial arrangements which may be feasible.

In connection with these matters, my Turkish informants have several times spoken of the credits which they can obtain, or have obtained, in Germany, Italy and Russia, and the hint is thrown out that we are incapable of providing the same terms. I inquire whether it is not possible, through the instrumentality of our new Government export trade bank to be of assistance in extending trade in Turkey. As Turkey has extensive credits in dollars, it would seem to me not impossible to formulate an arrangement that would provide the necessary long term credits which could be liquidated out of balances in the United States. I am quite certain of this, that Turkey would dislike it extremely if we should take advantage of our strong position by insisting upon clearing house settlements along the lines of those already set up in many continental countries.

In conclusion, I think it would do no harm, and probably much good, if the Department instructed me formally with regard to the status of trade in Turkey and directed me to bring the facts to the attention of the Government, asking at the same time that prompt and effective measures be taken to place us on a parity, as respects our actual sales in Turkey, with the other countries which I have mentioned in this despatch.

Respectfully yours,

Robert P. Skinner