659.116/178
The Minister in Denmark (Owsley) to the Secretary of State
[Received August 22.]
Sir: I have the honor to inform the Department that, since the beginning of the current year, there has appeared a noticeable tendency on the part of the Danish authorities to relax the restrictions that have been impeding the import of American products into Denmark. The primary cause is doubtless to be found in changes in existing conditions, both of a general and specific character: such as the large accumulation of foreign exchange in 1937; the rising costs of consumable goods, often of an inferior quality, occasioned through forced purchases under non-free market conditions; lower prices of [Page 243] certain American products; and failures of crops in certain countries with which Denmark has had quota agreements. However, it is believed that the tendency noted has been accentuated and reinforced by the representations made to the Danish authorities by the Legation: in particular by such representations as have been made under the instructions contained in the Department’s telegram of February 21, 2 p.m. and through the frequent contacts of the Commercial Attaché, Mr. Julian B. Foster, with the Chief of the Danish Import Control Office.
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At the present moment, 32 percent of Denmark’s total imports, as regards value, have been released from all import restrictions. The value of items on the free list has now been extended from 80 million Kroner in 1937 to some 540 million Kroner in 1938. The manifestation of such a tendency arouses the keen hope that further releases will be made in the future and that this country will make every effort consistent with the realities of its peculiar situation to rid itself of restrictions of this nature. Partially, at least, as a result of these releases, American imports, during the first six months of the present year, almost doubled in value over those of 1937—from 42.3 million Kroner to 71 million in the January–June period. It should, of course, be borne in mind that the principal American exports to Denmark have consisted of grain and feed stuffs (such as cotton seed oil cakes). Prior to January 1, 1938, these articles were on the bound list, although Danish importers had no difficulty in obtaining import permits for these two groups of commodities. However, recent transfers to the free list have been estimated as likely to be of more benefit to American exporters than to those of any other country—to an amount of perhaps $750,000 during the remainder of the current year.
Other evidence of the desire of the Danish authorities to assist American trade whenever possible is found in the fact that on several recent occasions the Valuta Office has granted special import permits for limited specified amounts of certain types of American goods following informal suggestions made to it.…
The officials in the Ministry of Foreign Affairs, with whom informal conversations have been had with regard to the prospect for additional releases, have signified their belief that the United States will gain by some 15 to 20 percent in its trade with Denmark when the overhaul of the present Valuta Control Regulations takes place in October or November of this year. They have also definitely stated in confidence that there appears to be no possibility of the Valuta Control being abolished as long as the present government continues in power. However, they all definitely look for a marked modification of the [Page 244] goods which will remain on the bound list and it is through this modification that the United States will gain.
The general position of the Danish Government with regard to ameliorating conditions affecting the import of American products into Denmark is set forth in Dr. Munch’s Note to the Legation of May 23, 1938; transmitted to the Department in the Legation’s No. 189 of May 28, 1938, entitled “Discrimination Against American Trade with Denmark”. It is believed that the policy pursued by the Legation in the face of these conditions has been a correct one; namely, that of a gradual, constant, and friendly pressure to induce the authorities concerned to take as liberal an attitude as possible toward removing all artificial restrictions upon American trade. In view of the hard realities confronting this country in its commercial relations with Great Britain and Germany, it is believed that an arbitrary, technical, and over-aggressive policy would defeat its own purpose. The Legation believes that the foregoing summary of restriction releases is sufficient to warrant a presumptive conclusion that the course followed has substantially, if only partially, contributed to a betterment within the last twelve-month period of the status of American trade with this country.
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Respectfully yours,