611.6731/642: Telegram

The Secretary of State to the Ambassador in Turkey (MacMurray)

58. Your No. 150, December 4, 8 p.m., and No. 152, December 5, 6 p.m.

With reference to Kelley’s advice to the tobacco companies regarding the application of countervailing duties, your attention is invited to the statement at the end of paragraph 1 in the Department’s telegram No. 41 of August 26, 1 p.m. “or other free foreign exchange”. Assurances regarding the application of countervailing duties should not be given until the Department has had an opportunity to consider the details of the new Turkish regulations and to discuss them with the Treasury Department.
Do the Turkish authorities intend to apply corresponding changes in its exchange rate to purchases of free currencies other than the dollar? What are the principal currencies which are considered by the Turkish authorities to be free currencies?
The Department takes note of the Turkish assurances that existing dollar arrears will be liquidated at their full value in dollars.
The Department is sympathetic with the Turkish Government’s endeavors to improve its trade relations with the United States and will be glad to receive any proposals which that Government may desire to make. Any suggestions, however, which fail to safeguard the rights of American holders of exchange arrears would be contrary to the spirit of the Trade Agreement and a derogation of the assurances which American exporters have received.
Since only 3 weeks remain in the calendar year and $6,300,000 of American funds remain blocked, it would be appropriate for you to inform the Turkish authorities at this time that we assume that Turkey [Page 886] will comply fully with the provisions of Article 9 of the Trade Agreement with respect to the allocation of exchange during 1939.