611.6731/683
The Ambassador in Turkey (MacMurray) to the Secretary of State
No. 1488
Ankara, June 21,
1940.
[Received July 19.]
Sir: In continuation of my despatch No.
1443 of May 6, 1940,37 relative to the exchange situation, I have the
honor to report that I took up again with the Minister for Foreign
Affairs on May 8, 1940, the question of the allocation of exchange
for the payment of arrears due on imports from the United States,
with particular reference to the statement in the Ministry’s note of
April 24, 1940, that $1,755,071 were “in course of payment”. There
is enclosed, for the Department’s records, a copy of the memorandum
of my conversation with the Minister. I gained the impression that
the Minister was genuinely surprised to learn that a large amount of
the dollar exchange which had been allocated for the payment of
imports from the United States had not been paid out.
In accordance with the Minister’s suggestion, Mr. Kelley38 called upon the Director General of the
Department of Commercial and Economic Affairs on May 13, 1940, and
explained the exchange situation fully to him. As of interest to the
Department there is enclosed a copy of the memorandum which he left
with Mr. Saman.
It would appear that following my representations, the Minister
actively interested himself in the matter since, as will be seen
from the table below, a very large amount of exchange has been made
available since May 17 for the payment of imports from the United
States.
|
Period
|
Amount of
Exchange
Permits
Issued
|
| April 12–18 |
$102,000 |
| April 19–25 |
40,000 |
| April 26–May 2 |
110,000 |
| May 3–9 |
99,000 |
| May 10–16 |
120,000 |
| May 17–23 |
221,000 |
| May 24–30 |
487,000 |
| May 31–June 6 |
625,000 |
| June 7–13 |
403,000 |
It will be noted that whereas in the four weeks preceding May 17 the
total amount of the exchange permits issued was $369,000, during the
four weeks following that date exchange permits were issued to the
amount of $1,736,000. Even though there be deducted from this latter
amount the sum of $479,000, representing the value of the
[Page 976]
exchange permits returned
by the Ford Motor Company, as explained in my despatch No. 1475 of
May 31, 1940,39 the
amount remaining exceeds the figure for the previous period by about
$1,000,000. As a result of the large amount of exchange furnished
since May 17, the arrears for imports from the United States
effected prior to January 1, 1940, have been reduced to
approximately $459,000 (as of June 14th). While the liquidation of
the remaining arrears for pre-1940 imports may be delayed in
consequence of recent international developments, the Embassy will
continue to follow the matter closely with a view to expediting as
much as possible the liquidation of these arrears.
I may add for the Department’s information that the Embassy has not
as yet received any reply to its note of March 19, 1940, requesting
the information specified by the Department in its telegram No. 19
of March 14, 3 p.m. The Embassy has endeavored to expedite the
procurement of this information through both oral and written
representations to the Foreign Office, which maintains that it has
been doing its best to obtain the data desired from the appropriate
Departments of the Turkish Government.
Respectfully yours,
[Enclosure 1]
Memorandum of Conversation, by the Ambassador
in Turkey (MacMurray)
I again brought this question up with the Minister,40 pointing out that, although he had
assured me a year ago that all exchange received from American
purchases would be paid into a special account out of which 80
per cent, would be held available for the payment of American
accounts, that had not in fact been done; apparently, during the
period from January 5 to March 4 last, when the issuance of
exchange permits was suspended, the very considerable sums
received from the purchase of Turkish products by the United
States had in large part been diverted to other uses. The
consequence was that well over $2,000,000 of arrears for imports
from the United States in 1939 remained unsettled; and although
the Ministry’s note of April 24th stated that the sum of
$1,750,000 odd were in course of payment, the payments were in
fact proceeding at a very slow and unsatisfactory rate.
Mr. Saracoglu expressed surprise, and said that he had been
assured by the Minister of Finance that 80 per cent, of all
dollars received
[Page 977]
from
American purchases had been made available for payments on
American account. I pointed out that the Ministry’s note itself
indicated that something under $2,000,000 of the amount of
exchange reserved for American account had not in fact been
paid; and I handed him a copy of the note, so that he might
refresh his memory. He read it with an air of surprise and of
gravity. He then said that, since he himself did not have the
details of the matter in mind, he would suggest that I have Mr.
Kelley go into the matter fully in a conversation with Mr. Bedri
Tahir Şaman, the Director General of the Department of
Commercial and Economic Affairs, or, if I preferred, sum up the
matter in an Aide-Mémoire. He promised
that he would give the matter his personal attention, and do
what he could to assist us in it.
For the first time in any of our conversations of recent months
on this subject, he gave me the impression of taking this
question seriously and recognizing a responsibility on the part
of his Ministry in regard to it.
[Enclosure 2—Translation]
Memorandum by the First Secretary of Embassy
in Turkey (Kelley)41
- 1.
- Exchange arrears for imports of American origin effected
in 1939 amount to approximately $2,300,000.
- 2.
- The existence of these arrears is due to the fact that the
Turkish Government has not made available currently for the
payment of American imports 80 per cent, of the dollar
exchange received from the purchase of Turkish products by
the United States.
- 3.
- In May, 1939, following representations by the Embassy
relative to the considerable amount of exchange arrears for
American imports which had accumulated in the twelve months
subsequent to May 11, 1938, as a result of the utilization
by the Turkish Government for non-commercial purposes of the
greater part of the dollar exchange received from Turkish
exports to the United States in that period, the Turkish
Government assured the Embassy that 80 per cent, of the
exchange received from exports to the United States would be
put into a special account and made available currently for
the payment of American imports and that exchange transfer
permits would be issued by the Exchange Control Officer in
Istanbul in accordance with the exchange availabilities in
this account.
- 4.
- This arrangement appears to have been adhered to up to
January 5, 1940, when the issue of exchange permits was
suspended. No new exchange permits were issued from that
date until March 4, 1940, a period during which large
amounts of exchange were becoming available to the Turkish
Government from the purchase of Turkish products by the
United States. Inasmuch as very small amounts of exchange
have been made available since the resumption of the issue
of exchange permits, it would appear that a large amount of
exchange, approximately $2,000,000, which, under the
above-mentioned arrangement, should have been made available
for the payment of American imports, has been diverted to
other purposes.
- 5.
- The American Government is quite disturbed by the fact
that American trade with Turkey is seriously handicapped by
the exchange arrears which have accumulated in consequence
of the failure of the Turkish Government to allocate an
adequate amount of exchange. As a result of the accumulation
of exchange arrears in 1938–39 imports into Turkey of
American origin have undergone a considerable decline and
there is no question but that American imports in the
present year will show a still further decrease in
consequence of the existence of arrears for importations
effected in 1939. According to Turkish statistics, American
imports into Turkey declined from 17,294,000 Turkish pounds
in 1937 to 15,680,000 in 1938, and to 11,686,000 in 1939,
while Turkish exports to the United States have been
maintained at a high level, amounting to 19,201,000 in 1937,
17,768,000 in 1938 and 18,212,000 in 1939.
