867.5151/161: Telegram

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

160. Your No. 56, December 1, 5 p.m. Information desired by the Department was forwarded in the Embassy’s despatch No. 1287, December 6,45 but in view of the situation which has now arisen following brief telegraphic report is submitted.

Department’s assumption in the first paragraph is correct.
American creditors will probably experience difficulty in collecting the full amount of their claims in view of the fact that, (1) Turkish firms operate on small capital; (2) dollar obligations cover merchandise which has in most cases already been sold so that the firms have no chance of immediately recovering additional outlay and; (3) local banks are pursuing an extremely conservative credit policy at the present time.
The answer to Department’s first question in section 2 is in the negative. With regard to the second question there are no Turkish regulations which require the deposit of the counter value of dollar commitments. Although this is usually done it is a matter of trade and banking practice or a requirement of the American exporter, consequently the Turkish authorities have assumed no responsibility for transferring to the American creditors the amount of dollars represented by Turkish pounds at time of deposit.
  1. Not printed.