862.51/3816: Telegram

The Ambassador in Germany (Dodd) to the Secretary of State

13. Department’s 6, January 19, noon. Neurath41 being detained I saw Buelow42 on the 20th for prompt presentation of note. With [Page 343] his approval I also conferred with Sehacht. I was handed a copy of Foreign Office reply to British. This claims that German private debtors have not delayed in discharging obligations: it is the matter of transfer which is difficult owing inter alia to depreciation of various foreign currencies. In the maintenance of its vital currency interests Germany can not renounce responsibility in favor of representatives of foreign creditors. Referring to Swiss and Dutch agreements note contends principle of equality is not affected thereby since a greater amount will be transferred only for supplementary deliveries of equal value from Germany and that Germany is ready to conclude like agreements with other countries. It further deprecates resort to unilateral clearing systems as calculated to dry up transfers to countries applying them and thus negate the principle of equal treatment of all creditors specially urged by the British. Demand of British that account be taken of objections of creditors to special agreements cannot be accepted.

The British suggestion of a funding scheme for scrip is left unanswered except inferentially by German adherence to existing situation.

British have characterized German reply to them as unsatisfactory. In spite of their protests opinion is held in several quarters that British not interested in transfer matter except from the angle of the elimination of the competitive value of script in the commercial field. Questioned about the probability of applying a clearing, British Embassy financial adviser said recently he was not at all sure this would be done even if situation unaltered by protests.

Unable to see Sehacht until 22nd when he agreed substantially with every point made in Department’s note but added that American creditors and bankers did not seem to understand the delicacy of Germany’s financial situation and that they had no authoritative committee to negotiate any of the matters involved.

He insisted that rates of interest particularly on the Dawes loan should be reduced and denied that there were any except occasional exchange surpluses in small amounts which could be used for repurchasing bonds on the market at low rates.

He emphasized that German gold reserves are lower than gold reserves of Sweden which in his judgment demanded avoidance of heavy drafts on exchange reserves.

There appears to be differences of opinion between competent German officials as to Dutch-Swiss agreements. Sehacht who will not participate in Thursday’s Reichsbank meeting told me in great confidence that he had used his influence against discrimination involved. Ministry of Economics and Economic Adviser of Foreign Office reported to favor these agreements. Hitler told British Ambassador in special interview that decision rested with Sehacht and Minister of [Page 344] Economics. After consultation with British Ambassador I considered it wholly unnecessary to seek an interview with the Chancellor.

Draft of proposed agreement with Switzerland effective until March 31 is similar to expired agreement in principle.

Dodd
  1. Constantin von Neurath, German Minister for Foreign Affairs.
  2. Bernhard Wilhelm von Bülow, German Under Secretary for Foreign Affairs.