811.20 Defense (M) Turkey/338: Telegram

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

303. Your 132, February 12, 9 p.m. [midnight]. This Embassy is entirely in agreement with the view of the Department and Board of Economic Warfare that it would be unwise to relax our preemptive operations in Turkey because of possible impairment of German purchasing power. Relaxation of our purchases would in all probability result in price decreases which would obviously be of great assistance to enemy buyers whereas by continuing in the market and maintaining or even temporarily increasing prices we render the German shortage of funds more acute.

We cooperate closely with United Kingdom Commodity Corporation in all our purchasing operations but in this instance it is believed that their method of operation, with purchases based on prior authorization from the Turkish Government would make it difficult for them to capitalize on the current German difficulties. In our case it has always been a part of our various purchasing programs to interfere wherever possible with outstanding German contracts. We have frequently been successful in diverting from Axis countries merchandise already sold and awaiting shipment. For instance we recently obtained 250 tons of gallnuts sold to Germany on a compensation basis several months ago which were already packed for export awaiting arrival of the compensating imports. We have secured [Page 1118] several sizable lots of rags contracted for by Axis firms, and by our manipulation of oilseed prices made it impossible for Germany to secure much more than half of the 5,000 tons of seed contracted for with the Turkish Government.