611.6231/363
Memorandum by the Secretary of State
The Counsellor of the German Embassy, Dr. Leitner, called and again brought up the question of early trade agreement negotiations between his Government and the Government of the United States. I repeated what I had recently told Ambassador Luther—to the effect that I was saying the same thing to several governments who early had spoken to us about similar trade negotiations; that we had not yet built up any organization for the purpose of carrying out the reciprocity measure recently enacted by Congress; that we would find it necessary to have many conferences concerning our methods and plans and programs to be pursued in carrying on negotiations for reciprocity treaties, and that until this was done it would not be possible to take up the question with Germany any more than it was with other governments who also had spoken early. The Counsellor became very persistent, and in the course of his remarks he indicated that his country could make no progress about trade or debts or other phases except as it might be able to increase its external trade. I then reminded him with much emphasis that the American creditors of Germany and German nationals were greatly wrought-up at the course of German affairs which for the present proposed to shut off all payments on debt service of two billions dollars due in the United States; and I stated that these American creditors were violent in their representations to me; that they felt that somehow or other they would be denied any payments on these vast obligations in the future. I told Dr. Leitner that I, of course, felt that this course by Germany was inconceivable, and yet, [Page 430] I added, the German Government did seem to be adopting a policy under the operation of which any Government like Switzerland, which naturally and logically bought more from than she sold to Germany, would have her debts paid, while another country like the United States, which naturally and logically sold to Germany much more than she bought from that country, would be definitely and finally eliminated from any debt payment recognition by Germany. I repeatedly emphasized to the Counsellor that his government could not defend this sort of practice or policy, and that it was hopelessly contrary to every doctrine of right or fair treatment. I elaborated considerably on this phase by illustrating how necessary the triangular trade situation was to international trade policies and international debt payment methods. I said that, of course, if the American creditors had been informed by German spokesmen when these vast loans were being made for the internal rehabilitation of German institutions and industries that none of this indebtedness would be paid unless and until the United States should arbitrarily cut in more than one-half its exports to Germany or more than double its imports from Germany for the purpose of a favorable trade balance, naturally no money would have been loaned by our people to the German people. Again I protested to the Counsellor the gross unfairness of attempting to link up innocent creditors with trade policies, and said that to prescribe a condition precedent before they could hope to secure any payments was absolutely unfair and unjustified. He made no serious reply, except to indicate that at some time in the future something would be paid to our creditors provided German external trade could be increased sufficiently. I again replied to this by raising the point that Germany had no right in the meantime to give preference to other creditors and to discriminate against ours by reason of some sort of trade formula, the discriminatory effects of which were well known and understood in advance both by the German Government and all of its creditors.