Foreign Relations of the United States Diplomatic Papers, 1934, Europe, Near East and Africa, Volume II

611.6731/163

The Ambassador in Turkey ( Skinner ) to the Secretary of State

No. 237

Istanbul , May 9, 1934.
[Received June 28.]

Sir: It may interest the Department to glance through the exchange of memoranda between the Counselor of the Embassy, who is at the moment in Ankara, and myself, in regard to Turco-American commercial relations.

Respectfully yours,

Robert P. Skinner

[Enclosure 1]

The Counselor of Embassy in Turkey ( Shaw ) to the Ambassador in Turkey ( Skinner )

No. 217

Memorandum for the Ambassador

I should be grateful for your comment and advice upon several questions suggested by a study of your memorandum No. 133.⁵⁴ The questions, in some form or other, are likely to be raised one of these days by the Turks, and I am sure you will agree that it is better to be fortified with suitable replies beforehand rather than afterwards. The questions I have in mind are the following:

1. If Turkey were to place our trade in this country on exactly the same footing as Turkish trade is placed in the United States, would this not inevitably lead to a complete abandonment of the present Turkish policy of a “directed economy” either through an increase in American exports to Turkey or, more probably, through other countries insisting upon receiving the same privileged status conceded to us?

2. What chance have we of inducing Turkey to make any such radical change of policy, and if the chance is negligible are we strengthening our position by formulating such a demand?

3. An insistence on our part that Turkey should organize her import restrictions so as to throw purchases into our market would seem to be an insistence that we shall receive treatment better than that accorded other countries. Our commercial treaty with Turkey⁵⁵ provides for most favored nation treatment or equality of treatment. How is this discrepancy to be reconciled?

4. Has the principle of balance of trade or of payments any juridical standing as between the United States and Turkey? Has it received the Department’s approval in general or with specific reference to Turkey?

5. If the answers to the two questions under No. 4 are in the negative, how far are we justified in urging the principle in question upon the Turkish Government?

6. A new Turkish Ambassador will reach Washington some time next month. He will certainly discuss the matter of American-Turkish trade with the Department. If, in this field, we are urging upon the Turks a principle which the Department has not specifically approved is there not a serious risk that the Department may say something to the Turkish Ambassador which will tend to stultify our representations here?

7. The present attitude of American banks in the matter of extending credits being well known and the scope of the activities of the newly created Export and Import Bank being unknown, how far shall we go in insisting that Turkey shall afford an opportunity to American concerns to present bids for public utility and military purchases?

8. Having in mind (a) the factors in the situation not under the control of the Turks, (b) the limited purchasing power of the Turks, and (c) the difficulties and risks incidental to the doing of business in Turkey by foreigners, what chance is there that the United States Government will place restrictions on Turkish exports to the United States in order to force Turkey to favor American exports to Turkey?

9. If we do not encourage American concerns to seek business in Turkey they will probably not come, but, on the other hand, if we do encourage them and they encounter serious difficulties, such as the Curtiss Wright people are now encountering,⁵⁶ what kind and degree of responsibility have we incurred?

G. H[owland] S[haw]

Ankara , May 8, 1934.

[Enclosure 2]

The Ambassador in Turkey ( Skinner ) to the Counselor of Embassy in Turkey ( Shaw )

No. 143

Memorandum for the Counselor

Your No. 217 of May 8, 1934, about trade matters:

1. Undoubtedly if Turkey placed our trade on the same footing as Turkish trade in the United States it would lead to demands for similar treatment from other countries. Whether they would get it or not would be for the Turks to decide. One answer to such demands might be that Turkey would be delighted to grant such treatment to any country buying the same proportion of Turkish goods compared with its Turkish trade, as in the case of the United States. I believe that Turkey did at one time grant unrestricted privileges to Spain, and I did not hear that she extended the same treatment to us or anybody else, but she was herself considerably disturbed when the Spaniards of their own accord cancelled the arrangement. Of course, you noted that ill my note to you I mentioned that it was not for us to indicate in definite terms how our friends here should proceed to square the account. Rather, it is up to them working on the good neighbor theory, to devise ways and means of building up our trade.

2. I should say as a practical matter, Turkey would be disinclined to make such a radical change as suggested, although I believe it would be justified if she did so. We are not formulating any “demands” of any kind. It is my idea to mention the pertinent facts at convenient opportunities, to keep on repeating them, and to build up an atmosphere favorable to our interests. Some few results in this sense have been achieved. For the moment our concrete demands consist in asking for each and every tariff favor granted to any other country.

3. It is Turkey herself who has been throwing purchases in other markets which might well have been placed in the United States. We must not forget that the Turkish Government, directly, is buying goods and making contracts. When Turkey has had occasion to order military units for her Navy, did she ever even inquire whether our builders were in a position to make tenders? When Turkey purchased a textile outfit in Russia, did she make any inquiries in the United States? When she made various commercial treaties with other countries, did she immediately and deliberately extend all her liberalities to the United States, or did we not have to ask for them, and was there not long delay before we could get our list into formal shape? Was it not the fact that the celebrated list obtained by my predecessor was very far short of the lists granted to other countries? I do not write in the spirit of complaint, but I refer to known facts. My impression is that our Turkish friends simply have not been thinking much about American trade and until lately have not comprehended what a valuable customer we were.

4. The principle of the balance of trade, ever since we have been speaking of it, has no juridical standing as between the United States and Turkey. Neither the Department of State nor myself has suggested any legal measures leading to what you have in mind. All our conversations or correspondence in which it has been pointed out that we buy more than we sell has been for the purpose of directing attention to the fact as one which would encourage reasonable minded persons appreciative of a good customer to trade whenever possible with that customer rather than go to another who was much less valuable.

5. Already answered. We do not ourselves believe that trade should be choked with restrictions, but if some other country chooses on its own account to impose restrictions, and with deliberation frames them so as to favor this country or that, then it would seem intelligent for such a country to apply those restrictions in favor of her known best clients.

6. We must certainly avoid carefully the urging of a principle upon the Turks which we do not practice ourselves, and which the Department has not specifically approved. We are not laying down conditions for treaty negotiations. Our present attitude is simply that we are greatly interested in Turco-American trade and do not particularly fancy the somewhat lethargic attitude of our Turkish friends towards the United States as a furnisher, which has prevailed in the past. Since we know that Turkey has gone in for “étatism” we also know that the Government itself can do a great deal which in ordinary circumstances Governments leave to private traders to do for themselves.

7. I think we can go quite a long way in urging that Turkey shall at least afford an opportunity to American concerns to present bids for public utility purchases, and the like. If our people fail to take advantage of these opportunities, that is their affair. However, as we know that the Administration is strengthening and developing arrangements for financing foreign trade, we can reasonably expect that American firms will be in a good position in the near future to obtain such credits as will place them on an equality with foreign concerns.

8. I do not like the word “force” in connection with discussions of our trading arrangements. Turkey and the United States are mutually concerned in the development of their export and import trade, and we must approach the various aspects of this subject from the standpoint of enlightened interest. Surely the United States has given a splendid example to the world during these recent years in abstaining from applying restrictions right and left despite great provocation. Indications all are that it is now necessary to protect our commerce by means of commercial treaties. The subject is at present before Congress and just what powers are to be granted the Administration we cannot surmise. It is fair to assume, however, that when we begin to negotiate these commercial treaties under new legislation, we shall be guided by those thoughts which I have endeavored, no doubt imperfectly, to convey in the course of this correspondence.

9. Every commercial operation is a hazard. We must encourage American concerns to seek business in Turkey because there is a certain amount of business available. If we do encourage them and they come, and if thereupon they meet with difficulties, they will have to master them with such courage and resourcefulness as they have to fall back upon. Our own degree of responsibility, having done the best we could, would be of very attenuated description.

Istanbul , May 9, 1934.

54. Not found in Department files.
55. Signed at Ankara, October 1, 1929, Foreign Relations, 1929, vol. iii, p. 838.
56. The Ambassador in Turkey reported in despatch No. 198, April 6, 1934, that the Curtiss-Wright Corporation had encountered difficulties in obtaining the assistance of American banks in financing the sale in Turkey of airplanes and airplane parts (867.796 Curtiss/22).