662.116 Fruit/18
The Ambassador in Germany (Sackett) to the Secretary of State
[Received September 30.]
Sir: With reference to my telegram No. 189 of this date I have the honor to report as follows.
Pursuant to the Department’s instructions contained in its telegram 111 of September 19, I called at the Foreign Office yesterday afternoon, accompanied by Mr. Gordon, and had a conversation with Drs. Dieckhoff and Ritter. I set forth the views contained in your telegram under reference and then developed some additional arguments which had previously been elaborated in a series of discussions with the Consul General and the Commercial and Agricultural Attachés to this Embassy.
I particularly emphasized the point that if it were determined to impose quotas on certain imports and the amount of such quotas were to be measured by percentages of former imports, care should be taken not to choose such periods for the application of these percentages as would either constitute in fact a discrimination against our imports or inevitably give rise to the impression in the United States that such discrimination was being practised. In this connection I pointed out that our agricultural exports to Germany which were likely to be chiefly affected were lard and fresh fruit—in primis, [Page 360] apples—which were essentially seasonal exports and therefore would suffer especially severely unless equitable periods of past importation into Germany were made the basis of quota percentages.
I also pointed out, inter alia, that according to my information, the only branch of the Hapag-Lloyd shipping combine to make a profit last year was the branch serving our Pacific Coast through the Panama Canal and that this profit arose mainly from its transportation of Pacific Coast apples.
The Foreign Office officials were quite ready to agree with my observations that the imposition of quotas is bad economic practice, and especially so at this time of world economic depression; that it was calculated to make trouble and to lead to reprisals, and thus created a vicious circle. They contended, however, that, beginning with France, so many European countries had now adopted the quota system that, at any rate as to the agricultural products under consideration, Germany was now practically the only country furnishing a free market of any extent. They stated that the Foreign Office would prefer not to see quotas imposed and indicated that other Cabinet Ministers were opposed to the proposed policy. However, the inference I drew from their conversation was that the agricultural interests are so insistent and so powerful that the Government will decide upon the imposition of quotas on agricultural products, and, as indicated in my telegram of today, this decision is expected to be reached by the Cabinet before the end of this week. In fact, Baron von Braun, the Minister of Agriculture, is scheduled to make a speech in Munich Sunday night in which he will outline the agricultural policy decided upon by the Government.
I rather gathered that some of the points raised during the conference were new to the Foreign Office officials and on the whole, as stated in my today’s telegram, I have the impression that it was a useful step to make our views known, and I am glad that the Department instructed me to do so.
In conclusion Dr. Ritter, in reply to our questions, stated categorically that there was no intention of extending the imposition of quotas to industrial products, and informed us that the Government had decided that such quotas as would be decided upon would be global—that is to say, allotted between the German importing firms dealing in the commodities in question, with no attempt to allocate shares of this global quota among the various countries exporting such commodities to Germany. Generally speaking, this would seem in our case to inure to the benefit of our cheap lard and to the detriment of our expensive apples—and I suppose it would [Page 361] work out equally diversely with respect to other affected American export commodities.
The intimations of Drs. Dieckhoff and Ritter as to the hostility of various Cabinet members to the quota principle bears out my other information; in my telegram No. 185 of September 17 [16]89a I mentioned that Minister of Economics Warmbold is opposed thereto, and last night at my house Minister of Finance Count Schwerin-Krosigk told me very categorically that he also was opposed. I have further been informed by Dr. Kastl, Executive Chief of the Reichsverband der Deutschen Industrie, that last Friday the most powerful and best organized German industrial associations made another concerted and strong protest to the Chancellor against the imposition of these quotas. Dr. Kastl, in stating that the industrialists had now done all that they could, indicated that the pressure of the agricultural interests was so strong that he felt that the Cabinet would decide upon the imposition of quotas. However, as a result of the opposition which has developed on the part of German interests—helped along in some slight measure, perhaps, by our representations of yesterday—the conclusion may be drawn that such quotas as may eventuate will be appreciably less onerous than their proponents originally hoped for.
Respectfully yours,
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