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

611.6231/782

Memorandum by Mr. Charles F. Darlington, Jr., of the Division of Trade Agreements³³

[Washington,] April 22, 1936.

1. With regard to the imports to be admitted into Germany from the United States, the German memorandum suggests as the “temporary goal to be attained”, first, “no restriction of importation of any commodity below the level of 1935” and, second, “an average increase of at present 10 per centum over 1935.” How, specifically, does the German Government propose to allow and make possible payment by Germany for this increased volume of imports from the United States?

2. a) How does the German Government interpret the term “foreign exchange” as it is used in the first line of paragraph 2 of the German memorandum?

b) In particular, how is the calculation to be made: i) of the total sum of foreign exchange at Germany’s disposal in the representative period and of the proportion thereof that was employed for payments to the United States; and ii) of the total sum of foreign exchange at Germany’s disposal in the period to be covered by the suggested arrangement?

c) Further in particular, how does the German Government propose to interpret the term foreign exchange as applied to the allotment to be made for payments to the United States in the period to be covered by the suggested arrangement? The German suggestions include the sentence, “It is taken for granted that Aski and private compensation transactions will be allowed to continue to the same extent as heretofore.” Is this sentence to be interpreted as meaning that settlements of payment for imports into Germany from the United States effected by these two methods are to be considered as allotments of foreign exchange for the purpose of the assurance suggested in the first part of paragraph 2 of the German memorandum?

3. a) How, in the view of the German Government, is the “assurance of allotment of foreign exchange on the principle of a representative period … 1933 or average of years 1931 to 1933” to be reconciled with the statement that “an average increase (of American imports) of at present 10 per centum over 1935 ought to result”?

b) It is noted that the “allotment of foreign exchange on the principle of a representative period” is to be “subject to deductions if warranted by the foreign exchange situation.” i) Is it the thought of the German Government that by means of these deductions the two ideas mentioned in the preceding paragraph may be harmonized? ii) Is it the intention of the German Government in the phrase “if warranted by the foreign exchange situation” to convey to the United States the understanding that the foreign exchange situation may be such that no deductions will be necessary?

4. Has the German Government in mind any specific commodities imported from the United States which it would wish to except from the operation of the principle of the representative period “if warranted by the foreign exchange situation”?

5. What treatment does the German Government propose to give to goods the import of which into Germany from the United States had disappeared entirely in 1935?

6. A general amplification of the thought contained in paragraph 3 of the German memorandum would be desirable. In particular:

a) Does the statement “the ratio 1:3 for private compensation transactions is discontinued” mean that private compensation transactions which would, in the absence of the suggested arrangement take place at 1:3, under the arrangement be made at the ratio of 1:1?

b) In what respect is this statement to be considered as being modified by the phrase “as far as foreign exchange is allotted as outlined above”?

c) How does the German Government propose to treat private compensation transactions which would, under existing regulations, take place at ratios other than 1:3?

33. This memorandum is a draft of questions to be submitted to Ernst Wil-helm Meyer, First Secretary of the German Embassy, regarding the interpretation of the German memorandum of March 30, p. 222.

    On April 8, Dr. Meyer, in a conversation at the Department of State, had given his personal understanding of the memorandum but had requested a written list of questions for reference to the German Government (611.6231/751). The list of questions as presented to Dr. Meyer was apparently dated May 5, 1936. but the only copy found in the files is the draft here printed. For the German reply, see memorandum from the German Embassy, June 24, p. 236.