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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 346

to prevent any infringement of the opportunities for bartering Ger-
man goods against cotton which might arise from admitting another
commodity to this special treatment. The oil companies suggested
that no American importers already participating in cotton barter
deals be permitted to establish special oil inland accounts, a measure
which it was thought would preclude all possibility of diverting
business from cotton to oil. The German authorities, however, elected
to impose limitations on the basis of the commodities against which
oil may be imported. They are of the opinion, it is understood, that
if importers who had engaged in cotton transactions were excluded,
the number eligible for the oil accounts would be reduced to such an
extent as to make oil barter unnecessarily difficult, if not quite imprac-
ticable. They therefore decided to prohibit exchange of oil for certain
types of goods which were being exported against cotton, and to put
this into effect stated that two clearly defined lists of commodities
would be compiled for cotton and oil barter respectively. This appears
to have the additional advantage of broadening the base of German
exports to the United States.
  The oil companies welcome, of course, this alteration of their plan,
seeing in it the possibility of widening their scope of business. They
attached particular importance to the third to last paragraph of Dr.
Landwehr's letter (enclosure 4) in which, following the principle
common in Germany's system of economic control, he says that when
after careful investigation circumstances seem to warrant it, he would
be prepared to make exceptions to the rule regarding commodity lists
and to permit in specified cases the export of goods on the cotton
commodity list through the use of oil inland accounts, or vice versa.
The oil companies' representatives maintain that opportunities for ex-
port of a number of items on the list of goods for which it has hitherto
been permitted to barter cotton have been exploited either insufficiently
or not at all. They state further that they have been given to under-
stand that Dr. Landwehr is ready to exercise his discretionary power
in their favor in such instances.
  During the course of these negotiations, Mr. Archdeacon has several
times called to talk over the matter with Mr. May and with various
members of the Embassy. He was assured that the Embassy is, of
course, ready to render him every possible assistance by way of in-
formal discussion of the different aspects of his project. At the same
time occasion was more than once taken to point out that whereas,
in so far as the Embassy is aware, the Treasury Department's ruling
of December 23, 1936, was not restricted to any one commodity but
was general in application, the decision as to whether or not the
suggested oil barter arrangements complied with the terms of that
ruling appeared to rest with the appropriate officials of the Treasury

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