811.20 Defense (M) Turkey/35a: Telegram
The Secretary of Stateto the Ambassador in Turkey (Steinhardt)41
358. 1. Contained in this telegram is a summary of the present and projected U. S. preemptive buying program in Turkey. It has been agreed by the Department, the Board of Economic Warfare, and the United States Commercial Company. It has furthermore been discussed with the British Embassy in Washington, and this same telegram is being sent to London for the information and suggestions of the Joint Preemption Committee.[Page 711]
2. This program is basically designed to supplement the British preemptive program in Turkey, and in general it comprehends only commodities which it is our present understanding that the British are not purchasing. Our information regarding the full scope and effectiveness of the British buying program is incomplete, and further information on this subject may call for appropriate adjustment in ours. Furthermore, the knowledge in Washington of the actual situation in the various commodities in Turkey is necessarily restricted, and estimates given of the surpluses in various items may well be inexact. Your comments and criticisms will be most welcome. The objective can be simply stated as preempting, in company with the British, maximum quantities of all commodities in which the Axis currently has or may develop a supply need. For the accomplishment of this end, the Board of Economic Warfare is issuing extremely broad purchasing directives to the United States Commercial Company.
3. Of necessity the program is to a great extent discretionary in form, since the Department and Board of Economic Warfare well realize that you are in the best position to judge the most effective and practical measures by which the enemy may be denied. It is expected, therefore, that the broad purchasing powers will be applied in such form and measure as your judgment dictates. You are familiar, of course, with the preemptive operations of the British in Turkey, and close consultation with your British colleague will naturally be required in order to insure correlation of our joint efforts. Until such time as the United States Commercial Company has its own organization in Turkey, it is envisaged that you will freely avail yourself of the facilities of the UKCC for handling all physical details, and you are fully empowered in such cases as you determine actually to delegate to the UKCC purchase authorities within the broad limits established by the USCC. The latter have been set with the purpose of covering the entire estimated exportable surplus of the various commodities with dollar limits calculated to give free play. Admittedly, actual purchases may well fall far short of such a target, and your comments as to the validity of the estimates or the practicability of the contemplated buying operations are solicited so that the appropriate adjustments in the authorizations can be made.
4. Given below is a recapitulation of outstanding authorizations, some of which have been fulfilled in part or in toto.
- Opium. 2,200 chests at a price limit of $30 per kilo bought at $18.70 per kilo.
- Antimony. 205 tons at a total dollar cost of approximately $40,000. The three deals comprising this tonnage have been closed. The USCC hereby authorizes the purchase of an additional unspecified tonnage up to a total expenditure of $100,000. An estimate of the annual exportable surplus of antimony would be welcomed.
- Mohair. 3,000 tons of mohair at an all-inclusive total price limit of $7,000,000. The release of 800 tons it is now understood has been agreed. It is contemplated that whatever tonnage is actually obtained of this commodity will be resold by the USCC at their cost to the UKCC, payment being made by the latter in Turkish commodities to be bought by UKCC for USCC account.
- Copper. A total of 8,000 tons has been authorized for purchase at a total all-inclusive price of $5,740,000. 2,000 of the total have been purchased at a cost understood to be about $1,240,000 leaving an outstanding authorization for 6,000 tons at a total limit of $4,500,000. It is understood that 2,000 tons previously promised but not closed are currently in suspense.
- Woolen rags. The purchase of an unstated quantity up to a total value of 1 million dollars has been authorized. (See the Department’s 345 of July 1742).
5. Authorizations for purchase by the USCC are in addition herewith issued on the following commodities:
- Cotton clippings, waste and rags up to 1,800 tons (estimated) and up to a total expenditure of $800,000.
- Molybdenum up to 35 tons metal content (estimated) and a total expenditure of $60,000.
- Flax up to a total of 2,000 tons (estimated) and a maximum expenditure of $1,000,000.
- Hemp up to a total of 4,000 tons (estimated) and a maximum expenditure of $2,000,000.
6. In addition, the USCC herewith authorizes at your discretion the expenditure of up to $8,000,000 for cotton. The estimated tonnage amount is 18,000. It is understood that at the present time the export of this commodity is prohibited by the Turkish Government. In the absence of the removal of this prohibition or its evasion by illicit methods, it is assumed that no purchases are necessary for preemptive reasons. If for any reason you believe that the fundamental purpose of denial to the enemy would be served by purchase of these commodities, either for export or storage within Turkey, you are fully empowered to act within the above limits as your judgment dictates.
7. Finally, the USCC authorizes expenditures up to $1,000,000 for the chartering of caiques if, after consultation with your British colleague, such action is in your judgment desirable.
8. It is understood that the British are purchasing in maximum quantities obtainable olive oil, wool, sheep, lamb, goat and kid skins, valonia and valex. It is assumed, therefore, that our entrance into these markets is unnecessary and as a consequence no authorization is being currently made by the USCC. The Department and the Board of Economic Warfare would appreciate being informed if [Page 713] for any reason you believe activity on the part of the U. S. in these markets would be advisable.
9. The above authorizations cover the Turkish products which in the opinion of the Board of Economic Warfare lead the list of possible purchases on preclusive grounds. One broad category, however, which does contain preemptive interest is edible oils of all sorts, including oil cake, linseed, ground nuts, seasame seed, and sunflower seed. Your opinions and recommendations as to the desirability and scope of operations in these markets would be appreciated.
10. As you have recommended in the past, it is intended that the essential basis for the U. S. buying program shall be payment to the Turks in dollars. This decision, however, is not intended to exclude the acquisition from the British of Turkish pounds for use in payment of certain of our purchases. By taking over from the British such Turkish pounds at cost to them and translating this cost into dollars at the official pound sterling-dollar cross rate, it is currently possible, as you are aware, to acquire Turkish pounds at a lower dollar cost than through the direct purchase of Turkish pounds by the U. S. at the official Turkish pound-dollar rate. Until and unless it is possible to place all or a substantial part of our Lend-Lease transfers to Turkey on a cash basis, it is desirable to make certain that no Turkish exchange available either to the British or ourselves be overlooked. It is therefore anticipated that upon consultation with you, the United States Commercial Company will direct that certain preemptive purchases in the future (as has been the case in the past) shall be paid for by the British from their Turkish pound balances. In addition, continued examination will be given the possibility of acquiring the Match Company’s Turkish pounds.
11. The machinery by which the USCC will reimburse the UKCC for such purchases will necessarily take into consideration the fact that the USCC and the UKCC are jointly operating preclusive activities in Spain and Portugal. Repayments for Turkish commodities acquired by the UKCC for USCC account may therefore take the form of reimbursement in commodities as well as in money. It should be stated, however, that any such procedure as developed is not intended to alter or affect in any way the financial arrangements whereby the U. S. is purchasing chrome43 from the British Government.
12. The USCC is actively seeking appropriately qualified individuals to represent it in Turkey. It is not intended at the present time to build up a large USCC organization. The final selection of such representatives will be subject to your approval, and they will operate in Turkey in close collaboration with the UKCC and under [Page 714] your supervision. It is anticipated that the established organization and facilities of the UKCC will be heavily relied on, and there is no intention of needlessly duplicating existing establishments.