867.50 Five Year Plan/20
The Ambassador in Turkey ( Skinner ) to the Secretary of State
[Received November 5.]
Dear Mr. Secretary: I very much appreciate the pains which you took on August 2nd last to write to me so fully in regard to contract opportunities in Turkey, about which I sent you a letter on June 28, 1934. It is, of course, certain that the American Government will not lend its credit for the execution of what I may call war contracts in Turkey, or in any other country, nor is it very likely to give a favorable ear to ordinary construction contracts, except as the latter possess real merit. I think, therefore, that we are entirely in agreement on the outstanding principles.
The next question is whether our Export Bank is definitely prepared to grant extended credits, and if so, what the proportion of these credits to the whole amount of American purchases involved will be. I can only report what I have heard from contractors themselves. According to information supplied to me by Mr. John W. Doty, President of the Foundation Company of New York, it has not yet been possible for him to get a clear line on the amount of support that contractors can expect to receive, and without this knowledge it is not easy for contracting firms to make binding proposals in foreign countries.
It is running in the minds of our Export Bank people that they should grant only short-term credits, and then for only seventy-five per cent of the amount of the imports, but Mr. Doty told me in Paris a few days ago that the British Government, since the latter part of July, is permitting credits to be extended for a period of seven years and to an amount of one and one-half times the value of the imports. The reason for granting up to one and one-half times the value of imports is, so Mr. Doty explains that after figures have been established for prime movers, and the like, and for construction work, there always arises the necessity of importing miscellaneous devices, the value, nature, and quantity of which cannot be foreseen, and for this reason the official credit is granted not only for the main shipments of machinery but also for what Mr. Doty calls “slack”.
It may interest you to know that the Foundation Company of New York is now endeavoring to obtain a contract in Latvia for hydraulic [Page 959] works, and expects to succeed. However, as there seems to be no present prospect that the United States Government will grant extended credits for the machinery, unless for say seventy-five per cent of the value, his concern is expecting to write this contract through their British branch and to obtain a British Government credit in return for which it will then be necessary to purchase all machinery and equipment in Great Britain.
Please do not think for a moment that I am encouraging loosely thought out contracts in foreign countries where, for the sake of a little immediate benefit, we might lose the whole principal amount. The greatest care must be exercised in granting these credits under any circumstances. This said, there is a fair amount of foreign business of legitimate character that can be obtained, and I am sure that it is your definite desire that we shall obtain as much of such business as we can for our responsible firms.