867.5151/207: Telegram

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

94. The Minister of Commerce in an address delivered at the opening of the international fair at Izmir made the following remarks [Page 981] relative to the liquidation of the existing exchange arrears for imports from the United States and Turkey’s foreign exchange situation:

“On the other hand, we had a debt of $3,453,000 to the United States of America on August 1, 1940, and the overdrawn accounts with countries with the interchangeable regime amount to pounds Turkish 1,879,000.

However, we are now in a position already to settle these debts. These accounts could be liquidated in full by the shipment of 10,000 tons of cotton which could be exported before the commencement of the exportation of the 1940 crops, and it is, moreover, more than probable that we can obtain $10,000,000 from the export of wheat when the 1940 export season opens up, and another $10,000,000 from the export of 25,000 tons of cotton.

These new sources of free exchange are quite apart from our normal free exchange resources and may be regarded as an important asset contributed to the country’s economy by the first year of war. Therefore towards the close of the year we shall have the means of paying from day to day the free exchange required by our imports. The functioning of our free exchange sources in the way I have mentioned will ensure the accumulation of a large reserve of free exchange in 1941 which will result in making our currency one of the soundest in Europe.”

Subsequently, in summing up his remarks, he stated,

“Soon we shall have liquidated our debts in free exchange and we shall dispose of reserves for these sorts of independent payments.”

The Embassy will endeavor to obtain from the Minister more definite information regarding the possibility mentioned by him of any early complete liquidation of our exchange arrears.