641.6731/52: Telegram

The Chargé in the United Kingdom (Johnson) to the Secretary of State

1190. Following informal communication received today from the British Treasury.

[Page 877]

“Our Turkish clearing has been working extremely badly for some time, and we came to the conclusion not long ago that we would be better advised to put all our trade with them onto a compensation basis. Much the same ideas have been moving in the Turk’s minds, and they have just now invited us to start negotiations to revise our clearing agreement in this sense; we agreed to do so, and are now waiting for them to start.

In the meantime we have just heard from Angora that the Turks propose to put all their trade with the United Kingdom, the United States and France on a compensation basis as from the 20th August, by unilateral action. This is impossible, so far as we are concerned, as they are bound by the existing clearing agreements, and we, from the point of view of our own law, are bound by Treasury orders which enforce these agreements. Obviously we cannot accept their regime—of the details of which we know nothing—unless we are satisfied that our interests are adequately protected, and a new agreement will be necessary. We have asked them to hold their hands for a few weeks and to start negotiations at once; we both have the same general intentions, and it should not take us long to fix things up.

Among other arguments for accepting the immediate application of the new regime, the Turks say that the United States Embassy in Turkey have expressed their agreement to the scheme subject to confirmation from Washington. Could you give me any details about this? The Turks seem to be trying to run all their free exchange trade on similar lines, and we would like to keep in touch, so far as may be, with what you have done in this respect.

As our negotiations may start at any moment, I would be grateful if you could let me have an answer as soon as you conveniently can.”