Foreign Relations of the United States Diplomatic Papers, 1936, Europe, Volume II

600.628/26

The Ambassador in Germany (Dodd) to the German Minister for Foreign Affairs (Von Neurath)⁸

No. 712

Berlin, January 28, 1936.

Excellency: Pursuant to instructions from the Secretary of State,⁹ I have the honor to invite Your Excellency’s attention to the following matter:

Note Verbale No. III A 3174, of November 26, 1935, from the Ministry for Foreign Affairs,¹⁰ in reply to a request made on behalf of the United States Treasury Department that facilities be afforded for obtaining information deemed essential to the proper appraisement and assessment of duties on merchandise entering the United States from Germany, was duly transmitted by the Embassy to the Department of State and through the latter to the Treasury Department of the United States.

The Department of State has now informed the Embassy that the Treasury Department has acknowledged the receipt of the Note Verb-ale of the German Foreign Office and has noted the apparent position of the German authorities in refusing information concerning the operation of the scrip procedure on the ground that such procedure in no case results in the receipt by the German exporter of a total payment for an export transaction in excess of the foreign or export value of the goods involved. In this connection the Treasury Department has stated that a principal reason for its interest in the operation of the scrip procedure with reference to German exports to the United States is the responsibility of the Treasury under Section 303 of the United States Tariff Act of 1930.¹¹

The State Department has further informed the Embassy that in a communication dated December 6, 1935,¹² the German Ambassador at Washington, on instructions of his Government, gave formal confirmation that the funds built up under the German law, approved June 28, 1935, imposing a levy on German industry, have not been used to promote exports to the United States and will not be used in future for that purpose.

In taking cognizance of this statement of the German Ambassador, the Treasury Department points out that it is under the duty of considering whether any of the other methods by which the German Government encourages exports are in use with respect to exports to the United States and whether the use of such methods constitutes the bestowal of a bounty or grant within the meaning of Section 303 of the Tariff Act of 1930, and places upon the Treasury Department a mandatory duty to impose countervailing duties under that section. The Treasury Department’s representatives in Germany having so far been unable to obtain satisfactory information from the German Government or otherwise, that Department has requested the Secretary of State to obtain from the German Government definite information on the subject.

The Treasury Department has summarized as follows its present understanding of the procedures used to promote exports, and the points which should be clarified:

• “1. Blocked marks. It is understood that under special permission of the German exchange control authorities, so-called blocked funds (foreign-owned accounts frozen in Germany) may be used in payment of the whole or a specified part of the price of merchandise exported from Germany. Since these blocked marks may be purchased at a discount from their foreign owners, the authorization of their use to the specified extent results in a saving in cost to the purchaser of the German merchandise. It is important to know the extent to which the use of the various classes of blocked marks is permitted in connection with exports to the United States, the classes of exports for which such use may be authorized, and the portion of the purchase prices which may be paid in blocked marks.
• “2. Aski marks. Aski marks are understood to consist of deposits by German importers to the credits of foreign shippers or correspondent banks in payment for imports into Germany, which may be made only under governmental permit at prices approved by governmental authority. The purposes for which disbursements from Aski accounts may be made are strictly limited, but include payments for certain classes of merchandise exported from Germany. Because of the restrictions upon their use, Aski marks are available at a discount, loss to the American owner being usually offset by a premium included in the price fixed in the permits for the importations into Germany. The Treasury Department would like to be informed as to the extent to which Aski accounts are available for use in connection with exports to the United States, the classes of merchandise exported to the United States which may receive the benefit of the procedure, and the portion of the purchase price of each class which may be paid in Aski marks.
• “3. Bond and Scrip Procedures. It is understood that by special permission of the German exchange control authorities, exporters of goods from Germany may be permitted to use the proceeds of export sales for the purchase on foreign exchanges of German bonds which may be resold at a profit on German exchanges. It is also understood that payments of interest and principal on certain foreign-owned German securities, public and private, are required to be made to a conversion bank known as the Konversionskasse. The Konversionskasse pays the foreign owner of the security one-half of the amount due in currency and one-half in scrip redeemable at an uncertain date. The scrip is repurchased by the German Golddiskont Bank from owners who are willing to sell it at a fifty percent discount, and resold to German exporters at a slightly less discount. The exporters may redeem it at the Konversionskasse for its face value. An exporter is allowed to purchase only such an amount of bonds or scrip as will net him a profit sufficient to offset losses on the export transactions. It is desired that specific information be obtained as to the extent to which, and the conditions on which, these procedures may be followed in connection with exports to this country.”

Both in his note of December 6, 1935, and on other appropriate occasions, the German Ambassador at Washington has not failed to place the staff of the Embassy at the disposal of the competent American authorities for information regarding the use of registered marks and similar procedures, in connection with the imports of goods from Germany into the United States. However, in view of the Treasury’s request that definite information be obtained from the German Government clarifying the points summarized above, and in view of the citation by the Treasury Department of its responsibilities under Section 303 of the Tariff Act of 1930, I have been instructed by the Secretary of State formally to present the foregoing statement of the Treasury’s position and its request for definite information.

In bringing the foregoing to Your Excellency’s attention, I have been instructed to request that the German Government be so good as to furnish as definite reply as possible to the several points submitted.

I avail myself [etc.]

William E. Dodd

8. Transmitted to the Department by the Ambassador in Germany in his despatch No. 2658, February 10; received February 19.
9. Instruction No. 539, January 14, missing from Department files.
10. Not printed.
11. 46 Stat. 590, 687.
12. Foreign Relations, 1935, vol. ii, p. 476.