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United States Department of State / Foreign relations of the United States diplomatic papers, 1937. The British Commonwealth, Europe, Near East and Africa

Germany,   pp. 319-405 PDF (32.6 MB)

Page 345

their consideration and reply. The final enclosure is the German text
and translation (made by the Embassy) of the Ministry of Economics'
response signed by Dr. Landwehr, the chief of that section of the
Reichsstelle fur Devisenbewirtschaftung having to do with foreign
exchange in so far as it concerns trade.
  In view of the self-explanatory character of these communications
and inasmuch as their perusal seems in any event necessary in order
to obtain a full understanding of the negotiations to date, it is not
considered desirable to enter into a detailed outline of their contents.
For purposes of convenience, however, it may be stated in brief sum-
mary that the German authorities have expressed their willingness
to permit the importation of oil by the companies named above in
accordance with a procedure corresponding closely to that laid down
for cotton barter, provided that the American authorities give assur-
ances that such transactions would not lead to the invocation of the
anti-dumping clauses of the Tariff Act. It is understood in principle
that the same treatment would also be extended subsequently to such
other oil companies as might wish to participate in this business.
  It will be observed that the proposed oil barter plan differs from
the cotton arrangement in three principal respects. First, unlike cot-
ton, there is no world market price for oil. In the opinion of the
interested oil companies and also apparently of the German Govern-
ment, a uniform price basis can nevertheless be established through
utilization of the German price control mechanism on the one side
and on the other through submission of export price lists by the Amer-
ican Oil companies to the Bureau of Customs in Washington accom-
panied by the guarantee that these prices will be strictly adhered to.
  Secondly, although it is proposed to render the same discount of
about 25%o in the reichsmark, the method contemplated of arriving
at the amount to be paid over the price at which the American seller
disposes of the oil in Germany varies somewhat from that followed
for cotton, according to which a uniform increase of 331/3% is added
to the world market price.
  Finally, contrary to the circumstances surrounding cotton, the
American oil producers would sell oil to the American merchants
desiring to import German goods on the express condition that it be
resold only to the respective German subsidiaries of the oil companies.
It will be noted that Mr. May has raised the question in his memo-
randum whether or not such transactions would constitute valid sales
to American importers of German goods rather than simply the pur-
chase by them of blocked credits in Germany.
  Comparing the reply of the German authorities with the companies'
proposal, it will be noted that the principal change in the suggested
procedure is to be found in connection with the measures to be adopted
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