611.623/247
The Acting Secretary of State to the German Chargé (Thomsen)
Sir: I refer to the Embassy’s note dated October 22, 1936, concerning certain types of transactions which the German Government proposes to permit in furtherance of German-American trade.
I have received the following communication from the Treasury Department in relation thereto:
“It is the understanding of the Treasury Department, based upon the contents of the above-mentioned note and conversations between representatives of the German Government and the Treasury Department, that, in respect of German products which are to be exported [Page 255] directly or indirectly to the United States and which are subject to ordinary duties upon entry into this country, the German Government intends to permit:
- “1. Payment of the purchase price, in whole or in part, with the use of controlled mark credits, provided that the credits so used have been, from the time they became subject to German governmental control, continuously owned by the person for whose actual account the merchandise is purchased for direct or indirect shipment to the United States.
- “2. Payment of the purchase price, in whole or in part, with the proceeds of the sale in Germany of merchandise exported from the United States, provided that such proceeds, until so used, have been continuously owned by the person for whose actual account the American merchandise is sold in Germany and the German goods are purchased in that country.
- “3. Combinations of the foregoing two procedures.
- “4. Exchange of merchandise between single German and American parties without any monetary transaction actually taking place.
“It is further understood by the Treasury Department, that the German Government will not permit, in respect of German products which are to be exported directly or indirectly to the United States pursuant to agreements entered into after August 2, 1936, and which are subject to ordinary duties upon entry into this country, the use of any currency other than foreign currency or reichsmarks freely usable within Germany without legal restrictions for all commercial purposes, except as above specified, and that the application of bond and scrip procedures, or the direct or indirect allowance of any form of public or private subsidy will not be permitted in any instance. Moreover, the use of controlled mark credits or direct two-party barter will be permitted, as above specified, only when the German Government has assured itself that any sale of American goods which may be involved in the transaction and the purchase of the German goods involved have been effected at the current fair German open-market prices for such goods in the quantities involved, and that any direct barter of American exports for German goods will be on the basis of such German market prices.
“After a careful consideration of the plans of the German Government, as understood by this Department and described above, the Treasury Department is of the opinion that they do not involve the payment or bestowal of any bounty or grant within the purview of section 303 of the Tariff Act of 1930 (U. S. C, title 19, sec. 1303). It should be understood that this opinion contemplates that the purchase of German goods will be made for the actual account of the original and continuous owner of the controlled mark credits used, or of the American vendor of the American exports sold in Germany, and that in no case will the German funds of such owner or vendor be used to purchase German products for the account of any other person or organization; and likewise that the German products exchanged for American goods in any permitted barter transaction will be received for the actual account of the person or organization for whose actual account the American exports were shipped to Germany. The Department [Page 256] does not deem it necessary or advisable at this time to express any opinion as to the applicability or non-applicability of section 303 of the United States tariff act in any circumstances not described in this letter.”
As an exact understanding by the Treasury Department of the transactions in German-American trade to be permitted by the German Government will probably be of considerable advantage to traders, I should be glad to receive the German Government’s confirmation of the above-stated understanding of its intentions. On receiving such confirmation it is believed that the Treasury Department will wish to make public the contents of the present communication, since the subject-matter is of current interest to many persons.
Accept [etc.]