862.51/3999b: Telegram
The Secretary of State to the Ambassador in Germany (Dodd)
62. Department’s 61, May 14, 5 p.m.50 The Department is following with close attention and concern the negotiations concerning the service of German foreign debts. It has the assurances of the German Government, expressed most recently in its memorandum of March 2951 (your 60, April 2, 11 a.m.50), that it is resolved, in so far as the means available for Germany in any way permit thereof, to see to it with all her strength that the private obligations entered into by Germany and German private individuals are fulfilled in good faith. The Department, of course, does not wish to intervene in the complex and changing details of the negotiations. It would view with particular concern the acceptance by Germany of any arrangement conflicting with the principle of non-discrimination among bondholders of different nationalities or any arrangement which would appear to be prejudicial and unfavorable in fact to the thousands of scattered American holders of German obligations.
As has been indicated to the German authorities from the first (see memorandum of conversation between the Economic Adviser and Dr. Schacht at London, June 13, 193352), the American situation in this matter is characterized by the number and dispersion of the holders of German bonds. The latter are now represented by the Protective Council of Foreign Bondholders and it is obvious that the adjustment by Germany of the present problem on terms which it would be difficult for the Council to recommend or justify might have wide repercussions on sentiment.
[Page 356]You may bring the foregoing expression of concern informally to the attention of the German authorities, of Dr. Schacht, and of the bondholders’ representatives.