611.6231/709
Memorandum by the Secretary of State
Dr. Ritter, Head of the Economic Section of the German Foreign Office, came in for a somewhat extensive conference on the trade relations between Germany and the United States with the view to prevailing upon this Government to agree either to an early new trade agreement or at least a modus vivendi which would make possible the restoration of fuller trade relations, but with the distinct qualification that no favored nation treatment could be given the United States by Germany with respect to exchange. Dr. Ritter went over about the same subjects that were brought up and discussed in the German note to this Government of May 24, 1935, setting forth the reasons on which it based a proposal for the negotiation of a new trade agreement with the United States. I need not, therefore, repeat them here.
I first emphasized the facts and views contained in the note of this Government of June 28, 1935, replying to the German note of May 24. I need not repeat them here. I then proceeded to point out to Dr. Ritter that notwithstanding our very earnest desire to increase trade relations and trade with Germany as early and in as many ways as are deemed practicable, I must call his attention to a few considerations which severely handicapped and obstructed the plans and purposes of our Government in that direction and with respect to which the German Government could be very helpful in removing or minimizing; that, in the first place, our one supreme objective was the full restoration of the normal volume and processes of international finance and commerce by the adoption by at least the important countries of the broad and liberalized commercial policy which our reciprocity trade agreements program, along with exchange stabilization and permanent monetary arrangements, embodied; that bilateral agreements by themselves had proven and were proving more hurtful than helpful in most of the parts of the world where they had been tried; that we simply could not surrender or abandon one fundamental part of this program for the sake of a bilateral agreement [Page 465] with any one or even more countries; that the corner stone of our foreign policy in the Far East was equality of commercial and industrial rights; that if we surrendered a portion of our trade agreements program it would severely discredit that program and render virtually impossible further progress with it. I then added that, on the other hand, the American people had trusted the German people with enormous loans of cash since the war, with which they had rebuilt, restored and renovated all or most of their internal properties; that this country had been exceedingly desirous of maintaining equal and fair trade relations with Germany to the end that in due course the full and normal volume of commerce would be restored; that Germany, however, had for the time being, as well as during recent months, placed this Government in an almost impossible situation with respect to going forward with a new trade agreement based on the principle of equality of treatment by a refusal on the part of the German Government to apply this principle to exchange for the benefit of American exporters; that American creditors of the German Government and German nationals felt very much aggrieved at discriminatory treatment at the hands of Germany; that serious discriminations in trade and quotas as well as exchange had very drastically diverted trade between the two countries to the distinct disadvantage of the United States in that German imports from this country had been reduced since 1934 at the rate of more than nearly $100,000,000, while American purchases from Germany had been kept virtually on a stable level; that Germany had been able to pay much of her indebtedness to creditors of other countries and even to certain American bankers in this country who discounted Reichsmarks, as well as to import vast amounts of war materials mainly from other countries and pay for them; that it was impossible in these circumstances, and before Germany had even actually resumed payment to the extent of the Young and Dawes debt service, for this Government to explain to the American people just why and how this country could overlook all these considerations of an unfair or discriminatory nature and proceed to trust German exporters in the face of the disastrous experience in this respect heretofore.
I explained to Dr. Ritter, individually and unofficially, that one prime purpose of our trade agreements program was to induce nations to find ways for the satisfactory access of each and all under reasonable conditions to raw materials, and that such objective should be brought about by thoroughly peaceful methods; that the present economic program which this Government was supporting in its large and ultimate objective would mean vastly more trade to this country and to Germany than dozens of simple bilateral agreements which exclude triangular and multilateral trade to a chief extent; that this [Page 466] country and Germany were peculiarly beneficiaries of the triangular trade method for reasons that I need not enumerate. I then reminded Dr. Ritter that by standing firmly behind our broad economic program and preserving its integrity, it had received the unanimous endorsement of the great Chamber of Commerce meeting held at Paris some weeks ago and that four days ago it had received the unanimous endorsement of some fifty-three governments speaking officially through their respective representatives in the League Assembly at Geneva.25 I said that I considered these very significant manifestations of approval of this program and the necessity of the important nations getting behind it and carrying it forward as tremendously more important than literally scores and scores and scores of mere bilateral trade arrangements which, as stated, had thus far proven more hurtful than helpful.
Dr. Ritter took no particular issue with these statements but simply pleaded earnestly for an immediate resumption of trade under a comprehensive new trade agreement. I indicated that we felt obliged to let Germany make some little showing in the way of modified methods and practices with respect to discriminations towards this Government and its nationals as to debts and commerce, especially the latter, and that it was scarcely feasible for such an agreement to be entered into, notwithstanding our earnest desire to do so just as early as conditions would at all permit.
Dr. Ritter became rather blunt as he was leaving and said that Germany would probably quit buying as much as she had and perhaps would not buy cotton at all from this country but would go to Brazil. I then said to him that I trusted when he was in the act of indulging in a rash statement about the trade relations of our two countries he would recall that the American people during the post-war period when his people were undergoing distress and privation trusted them with loans of more than $2,000,000,000 of cash for their general economic rehabilitation at home and that they had received but a comparatively small portion of it back; that the American people had befriended his people more since the war than all the peoples of the balance of the earth; that in addition this country for a generation had allowed Germany to be its broker to buy vast quantities of raw materials which it redistributed in some form to central and western Europe at fine profits; and that the restoration of these possibilities was not advanced by an easy disposition to become impatient and to make impatient utterances. He then appeared more moderate and probably will act more moderately than his threats indicated.
- See League of Nations, Official Journal, Special Supplement No. 140, Annex 2, p. 76.↩