811.61311 Germany/7: Telegram
The Ambassador in Germany (Sackett) to the Acting Secretary of State
[Received July 24—1:25 p.m.]
147. Department’s 130, 7 p.m., 22nd of July. This morning I had a conference with an official from the Ministry of Finance, the Minister of Agriculture, and the Acting Minister of Economics. We discussed the entire question as regards both cotton and wheat. After 2 hours they could not arrive at any decision. The conference, however, will be continued shortly.
I have the distinct impression that no positive decision can be made in this matter until I have gone over the issue with Bruening. It is evident that other members of the Cabinet will not bring questions to a conclusion unless they have first been passed on by the Chancellor. The absence of the latter in London, the foreign statesmen’s visits, and the necessity of Cabinet meetings for consideration of the economic situation will preclude my having a satisfactory conference with Bruening until some time next week.
The cotton situation is developing as anticipated in the Embassy’s telegram No. 139, July 21, 4 p.m. The manufacturers of cotton goods are dependent upon the sales made against the daily price of raw cotton. One of the officials pointed out that it is necessary to know in some way, almost daily or possibly weekly, the price which the German Government would have to pay and could pass on to the spinners. Unless this price can be made known in one way or another, this official continued, the manufacturers would be extremely handicapped in their competition with the manufacturers of Belgium, England, Czechoslovakia, etc. The cotton goods which Germany exports are about equal to the value of the total raw cotton consumed in Germany. This would seem to indicate that 50 to 60 percent of their manufacture is exported. Consequently, it is in competition with the daily quotation of cotton goods from neighboring countries. The quotations are based on the price of spot cotton the day of the manufacturers’ sale. In the opinion of the official, the danger of a possible further decline in cotton prices, even if temporary, would put his Government into a speculative position in cotton which it is unable to undertake. If the Department should find it necessary to put our minimum price limit above the current market price, a real difficulty will seemingly develop from such action. The German Government has recently experienced that difficulty in flax purchases from Russia at a fixed price. Owing to a subsequent decline in the commodity [Page 300] market, it had to subsidize the manufacturers of the finished product in order to permit them to compete with other countries.
The question of wheat seems to be much more simple, especially if I have an opportunity to discuss it with Bruening or some one who appreciates that the needs of Germany lie more in the financial line than in the agricultural balance. The Minister of Agriculture seems to be chiefly concerned with the agricultural balance.
I shall pursue this matter as rapidly as possible. Nevertheless, I must wait for additional conferences with more intelligent members of the Government. In the meantime, if the Department can consider again the cotton situation in the light of the above remarks, it will be helpful.