660F.116/135: Telegram
The Secretary of State to the Minister in Czechoslovakia (Wright)
3. Your 3, January 14, noon. I am very much concerned with the far-reaching effect which the action of the Czech Government in this matter may have not only on cotton exports to Czechoslovakia but also on all exports through Germany and perhaps through any other country with which Czechoslovakia might enter into exchange agreements. The effect of these regulations is to force (certainly as regard contracts already in existence) American exporters to take part payment in a currency other than their own and other than that provided for in their contracts with Czech importers. It may result in American exporters being obliged to take part payment in a currency for which they have no use and upon which they can realize only with difficulty or at a loss. We cannot of course object to any action which the Czech Government may wish to take in respect of contracts entered into between its nationals and German nationals, but the mere fact that the consummation of a contract between an American national and a Czech national has been participated in by the agent in Germany of the American national is no justification for obliging American nationals to take part payment for their goods in German marks. It seems to be an unnecessary governmental interference with the free exchange of goods between the two countries. At the very most the Czech government could expect American exporters to take German marks in part payment only in an amount equal to such obligations as the American exporter may have incurred in marks in Germany, by reason of the transshipment of his goods through Germany. Even this obligation seems a questionable interference with the contractual obligations between the American exporter and the Czech importer, particularly in respect of contracts entered into prior to the announcement of this new regulation.
Please take up this matter at once forcibly with the appropriate Czech authorities and endeavor to work out with them an arrangement [Page 168] whereby American sellers will receive full payment in dollars. If the Czechs insist on partial mark payment where the American seller has by reason of the terms of the sale incurred obligations in Germany payable in marks, this should be limited to amounts actually necessary to a liquidation of the mark obligations so incurred in Germany, and should be calculated from the actual facts of the individual transaction, rather than by taking an arbitrary percentage of the invoice value which may be substantially beyond reflecting the true facts. You should also seek to obtain some appropriate means of exemption from the retroactive application of the arrangement to transactions covering shipments made in fulfillment of contracts entered into prior to the issue of the new regulations.