The Ambassador in Turkey (MacMurray) to the Secretary of State
[Received 5:44 p.m.]
175. The Socony Vacuum Oil Company has concluded an agreement with the Turkish Central Bank relative to the liquidation of the exchange arrears of itself, Shell and Steaua Romana for petroleum products imported from the United States whereby the oil companies turn over to the Turkish Government Turkish pounds deposited in the Central Bank for transfer and receive an exchange permit for $971,000 (representing the total arrears for imports from December 4, 1939, to date) which amount is to be paid in six equal installments: on January 1 and October 1, 1941, and on January 1, April 1, July 1 and October 1, 1942.
The bank informed the oil companies that the arrears for imports prior to December 4, 1939, amounting to $224,000 would be liquidated within 20 days. (Of this amount $102,000 was paid Tuesday.) The Embassy understands that the liquidation of these arrears will take place in accordance with the chronological order provided for by the trade agreement, the 20 days being the time which the Turkish Government estimates that it will require to liquidate all arrears for imports from the United States prior to December 4 (the oil companies’ arrears for imports in 1939 comprise by far the greater part of the arrears outstanding for 1939 imports from the United States).
The Embassy has been informed by the General Manager, Levant Division, Socony Vacuum Oil Company, that the advantage gained by the oil companies from the agreement is protection against loss from possible decline in the value of the pound (Turkish) concerning which they have been greatly worried. The exchange permit issued Tuesday specifies the amount of dollars to be paid to them on the basis of the current exchange rate of 132.20. Consequently the liquidation of their arrears will not be affected by future exchange fluctuations and in return for this advantage they were willing to agree to a delay in the actual receipt of the dollars.