611.6231/1153: Telegram (part air).

The Chargé in Germany (Kirk) to the Secretary of State

786. In a conversation with a member of the Embassy staff Puhl, who is the active head of the Reichsbank under Funk the nominal head, said that he greatly regretted the publicity given here to Grady’s recent statements on German-American trade31 as well as the action of the Securities and Exchange Commission in refusing registration to German conversion bonds32 from the viewpoint that such incidents weakened the efforts which moderate elements in the Government were [Page 574] exerting to bring about a “moderation of policy” on the part of the Reich and strengthened the hands of the extremist influence in party and Government. He said that on both occasions he had been the subject of such reproaches as “well you see that your policy of conciliation doesn’t get anywhere.”

He said that Funk had called him in when Grady’s utterances were published in the local press and had wanted to issue a statement “correcting” the reported statement that Germany had made no proposals towards solving the trade and economic issues between the two countries.

Funk had wished to refer to the proposals suggested last summer presumably by Brinkmann in a speech, see Embassy’s telegram No. 387, August 16, 1938, 6 p.m.,33 and in a personal letter to the Ambassador34 which is understood to be in the Department’s files suggesting as a provisional scheme the carrying out of German-American trade on the basis of a special “Amerika mark”. Puhl said that he had dissuaded his Minister from making a public reply and suggested that since he knew Grady personally and favorably he, Puhl, might write the latter a personal letter in an endeavor to clear up the “misunderstanding”. Puhl added that there were mistakes and misunderstandings on both sides as regards trade relations, that he thoroughly realized the disastrous effect on German economic relations of German policies of exchange control and over valuation of the mark but that while these policies were economically vexatious and disadvantageous to the Germans it was not possible at this moment to eliminate them.

Repeat to Treasury as No. 55, from Heath.

  1. Henry F. Grady took office as Assistant Secretary of State on August 8, 1939. For statements referred to, see New York Times, August 9, 1939, p. 11.
  2. In press release No. 2027, dated August 2, 1939, the Securities and Exchange Commission announced that it had ordered a public hearing to be held on August 15, 1939, “to determine whether grounds exist for the issuance of a stop order suspending the effectiveness of registration statements (File No. 2–3961) filed under the Securities Act of 1933 by the German Government and the Konversionskasse für Deutsche Auslandsschulden (Conversion Office for German Foreign Debts). …” (862.51/4755a)
  3. Foreign Relations, 1938, vol. ii, p. 422.
  4. See letter of October 31, 1938, and enclosed memorandum, ibid., p. 428.