Foreign Relations of the United States Diplomatic Papers, 1940, General and Europe, Volume II

166.091/52a

Memorandum Prepared in the Division of Near Eastern Affairs¹

[Washington,] January 25, 1940.

The following is offered as of interest to foreign Government agencies, and to foreign business individuals and concerns, who may desire to purchase goods produced or manufactured in the United States of America, and who may not be fully acquainted with the character of the work performed by American Government agencies in placing foreign purchasers in touch with American suppliers.

American diplomatic and consular officers are instructed to keep constantly on the alert to submit reports on trade opportunities. When such opportunities arise, the officers transmit them, with all the information obtainable (including, if possible, the exact specifications of the articles desired) to the Department of State at Washington, which sends them without delay to the Department of Commerce. The latter disseminates the information to American traders and manufacturers.

Any American trader or manufacturer is at liberty to interest himself in foreign trade opportunities or not. The responsibility of the Government agencies ceases after the information relating to opportunities has been collected abroad, transmitted to Washington, and made available to the American business world. It is then for American business concerns, if interested, to get in touch with the organizations or individuals abroad who desire to be supplied.

American Government agencies cannot undertake to urge American suppliers to interest themselves in trade opportunities. To do so would tend to make this Government responsible for their successful outcome. The preparation of the estimates and of correspondence which results from an active interest in a trade opportunity naturally involves expense. A prospective supplier must be free to judge whether from his point of view the incurring of such expense is justifiable.

This consideration applies of course with even more force to the necessity Government agencies are under to refrain from urging American business men to invest funds and to devote efforts to the production and supply of goods for foreign account. Here again, the manufacturer must be free to decide whether to supply or not to supply, since he it is who furnishes the necessary effort and capital, and he alone suffers loss if the transaction turns out badly.

In brief, American business operates by private initiative and private responsibility. As regards foreign commerce, the Government serves business by transmitting to it trade information. The Government’s agents, in other words, form a connecting link between foreign Government agencies, foreign business concerns or business men, and American suppliers, nothing less and nothing more. In consequence, Governmental or other organizations abroad who wish to encourage American suppliers to interest themselves in trade opportunities, to expedite action in regard thereto, or to arrange details, will find it to their advantage to communicate directly with the suppliers concerned, or else to utilize their own agencies in this country or any other agencies that may be open to them, for these purposes.

In order that American suppliers may participate in foreign adjudications, enough time must be allowed so that they may have an opportunity to receive the specifications, to formulate their respective offers, and to communicate them.

Except in the few instances where bids are invited on commodities subject to well-known standards, American suppliers naturally are not in a position to draw up estimates and to submit offers until the complete specifications are received.

The American producing system has been built up gradually by free enterprise and competition and at present supplies the needs of the 135,000,000 people who now live in continental United States.

Most of the products are designed for use in all parts of the country, which varies greatly from place to place in climate, altitude, land forms, vegetation, et cetera. Consequently these products, not being designed for a restricted set of conditions, are suitable for use in most localities abroad.

By and large, the American public has always formed a “quality market” rather than a “price market”, for the reason that true economy is considered to result from the purchase of products of sound design and construction which are durable to a high degree. It has been possible to manufacture goods of high quality, to pay relatively high wages to labor, and to place the goods on the market at reasonable prices owing to the economies that result from mass production for the large domestic market.

1. This memorandum was transmitted by the Chief of the Division (Murray) to the Chargé in Iran (Engert) in a letter of January 30. Mr. Murray stated that the memorandum had been shown to the Commercial Office of the Department and to officials of the Department of Commerce and had their informal approval.