611.6231/848
Memorandum by the Assistant Secretary of State (Sayre)
The German Ambassador called with Dr. Meyer by appointment to discuss the present status of trade possibilities between Germany and the United States. The Ambassador said that he is sailing for Germany tomorrow and he desired to know the present status of trade possibilities so that he might lay the matter before the German Foreign Office upon his return to Berlin. He asked particularly concerning the offer which Dr. Meyer submitted to the Department on behalf of his Government on March 30, 1936, looking to the reestablishment of reciprocal unconditional most-favored-nation treatment in the trade between the two countries.
I outlined to the Ambassador the present situation, following closely the accompanying memorandum55 which had been prepared by Mr. Hawkins56 at my request for this interview.
At the conclusion of my remarks, Dr. Meyer went into the matter of the March 30 offer in some detail, describing that it was put forward in order to make it possible for the United States to maintain its principles and yet to trade with Germany. He said that his idea was to establish most-favored-nation treatment even with respect to the allotment of foreign exchange with the great bulk of commodities concerned in the trade, excepting only three or four, albeit very important commodities, such as cotton, lard, and the like, and that with respect to these, the German Government would agree to give most-favored-nation treatment just as soon as it proved possible to do so.
Dr. Meyer, prompted by my references to Latin America, asked whether the conditions imposed by the United States would require Germany to shift its economic relations to a most-favored-nation basis with respect to its trade with all countries or only with that of the United States. I replied that naturally the United States did not desire to dictate to any country what its commercial policy should be, but that we were and are concerned with the effects of German policy upon American trade. In seeking a basis for a possible trade [Page 253] agreement we must insist that Germany should afford to American commerce most-favored-nation treatment such as we have agreed to in our trade agreements with other countries.
Dr. Meyer also added that the German Ambassador had not sought the present interview under instructions from his Government.
The Ambassador then launched into a heated harangue. He said that he had been led to believe that the offer of March 30 would furnish a practicable starting point for discussions for the increase of German-American trade. He next commented on my statement that the German offer of a 10 percent average increase over 1935 in the allotment of foreign exchange fell short by a considerable margin from what would be required by strict most-favored-nation treatment, i. e., roughly about a 100 percent increase. He said that we all knew that Germany simply does not possess sufficient foreign exchange to make it possible for her to pay anything like 100 percent; that by offering 10 percent she was going very far and taking a real risk; that it would serve no purpose for Germany to promise more than she was actually able to pay. He said that a requirement of anything like 100 percent was such an impossibility that it left no room for an agreement. In heated terms he expressed his severe disappointment that now he must go home and carry a message to the Foreign Office different from that which he had given them to expect.
In reply, I said to him that he must not misunderstand my meaning. We have had men devoting constant and hard study on the subject of German-American trade, seeking to find some solution if possible. I said that I was sincerely anxious that some way be found to increase trade between the two countries and that we would not cease to study the problem; in fact, we would continue to have men work on the problem intensively. On the other hand, I said that we could not afford to abandon our policy of requiring strict equality of treatment in our trade agreements, and that an offer to increase the allotment of foreign exchange by only 10 percent in effect amounted to a discrimination against the United States in the allotment of foreign exchange. The mention of the word “discrimination” again aroused the Ambassador, who said that he had not heard that word mentioned since Germany had made debt settlements with respect to the Young and Dawes loans, and that it seemed most unfortunate to have the word arise again. I replied that the word was unimportant and that we might call it instead lack of equality of treatment but that the fact nevertheless remained.
In conclusion, I said that the door was not closed. I still hoped that it might be possible to find some way to increase German-American trade. I said that we would give the most sympathetic consideration to any proposal directed to that end and consistent with the American program which Germany might bring before us.
[Page 254]The interview lasted an hour and a half during which the Ambassador and Dr. Meyer made long dissertations and spoke at times with vehemence. Finally, however, they took their leave at least outwardly in a pleasanter frame of mind.