market, it had to subsidize the manufacturers of the finished product in order to permit them to compete with other countries. The question of wheat seems to be much more simple, especially if I have an opportunity to discuss it with Bruening or some one who appreciates that the needs of Germany lie more in the financial line than in the agricultural balance. The Minister of Agriculture seems to be chiefly concerned with the agricultural balance. I shall pursue this matter as rapidly as possible. Nevertheless, I must wait for additional conferences with more intelligent members of the Government. In the meantime, if the Department can consider again the cotton situation in the light of the above remarks, it will be helpful. SACKETT 811.61311 Germany/7: Telegram The Ambassador in Germany (Sackett) to the Acting Secretary of State BERLIN, July 31, 1931-2 p. m. [Received July 31-12:10 p. m.] 155. Embassy's 147, 24th of July, 4 p. m.; the Department's 130, July 22, 7 p. m. In the presence of the Chancellor, I have continued to hold conversations regarding wheat with the Acting Minister of Economics and the Minister of Agriculture. According to the latter, his Government could take in the next 12 months not more than 500,000 metric tons. The previous estimates of 50,000,000 bushels had been based upon imports of former years. Last year the production of domestic wheat showed a considerable increase over former years. Consequently, the requirements of hard wheat are much reduced. The Minister of Agriculture claims that the requirements of Germany as to these 500,000 tons fall into the following three categories: (1) 100,000 tons of No. 1 and 2 amber durum; (2) 200,000 tons of northern Duluth spring and hard Duluth spring corresponding to Manitoba 1 and 2; (3) 200,000 tons of the usual commercial deliveries of first grades of hard winter. I need additional data on the question of price. On the quotation of what grain exchange and on what grades would your prices be based to arrive at the average annual price to be paid? Schiele, the Minister of Agriculture, is of the opinion that only if the newest crop of wheat is delivered could this sale be carried through. He also asks if deliveries can be made of equal amounts quarterly instead of monthly. Yesterday, the Minister continued, the Federal Farm Board offered good hard winter grades at $.56 per bushel c. i. f. European ports and American shippers offered durum at $.602 to $.611⁄2 c. i. f. European ports. SACKETT 811.61311 Germany/8: Telegram The Acting Secretary of State to the Ambassador in Germany (Sackett) WASHINGTON, August 1, 1931—2 p. m. 146. Story from Berlin of negotiations for purchase of Farm Board wheat and cotton appears in this morning's press. The Department stated to the press last night (not for quotation) that "Ambassador Sackett has suggested to the German Government that perhaps it might be of assistance to Germany if the Farm Board were to sell on liberal credit terms substantial amounts of its holdings in wheat and cotton. However, neither the Farm Board nor the Government has yet received any request from Germany along these lines." [Paraphrase.] After a meeting yesterday, the Farm Board stated that it had no proposal from the German Government but that it would sell to Germany on credit terms if it would assist Germany and increase the consumption of commodities. Embassy's No. 155, July 31. In our opinion the time is now opportune for you to inform the German Government that your only interest was to assist it financially by ascertaining if the supplies of the Farm Board could be sold on long-term credits at low rates of interest. You know now that such is the case and that neither the Government of the United States nor you can negotiate contracts. Such negotiation is the province of the Farm Board; and you should tell them that if they are further interested they should appoint an agent in this country who would deal directly with the Farm Board. Your good offices, you should stress, were purely in the nature of a guide to them in locating, indirectly, a large amount of foreign credits. Confidentially, this is more necessary, since the German Government is obviously consulting with dealers who are antagonistic to the Farm Board. These dealers wish to sell their commodities and are obviously misrepresenting matters in an attempt to forestall any action. This is also necessary because the Government cannot undertake either details or haggling over such matters. Moreover, our opinion is that the moment has come when we have done everything that the Government could do in this matter of assistance; that we ought not to expose ourselves to the charge that as a Government the United States is attempting to sell commodities. [End paraphrase.] 591381-46-VOL. II- -27 WHITE 811.61311 Germany/9: Telegram The Ambassador in Germany (Sackett) to the Acting Secretary of State [Paraphrase] BERLIN, August 4, 1931-5 p. m. [Received August 4-1:30 p. m.] 157. Department's 146, 1st of August, 2 p.m. This matter was telegraphed from Washington and was published for the first time in the Berlin press on the afternoon of Friday, July 31. This preceded by about 1 hour your telephone call to me. Since that time complete accounts of the proposed trade in cotton and wheat have been published here and many of the news reports have included prospective deals in copper and other commodities as well. Canada, either the wheat pool or the Government, I have just learned, is evidently aroused by this publicity and is on the verge of approaching the German Government with a like wheat offer. I received a telephone call from Sprague, the financial adviser of the Bank of England who is now here assisting the German Government. According to him he was considering conferring with the Germans about this today. He agreed with my suggestion, however, that it would be inadvisable to bring up the matter at this time. In accordance with the instructions in your telegram, I have suggested to the Foreign Office that some one be appointed to conduct negotiations for Germany directly with the Farm Board. The German Foreign Office appears to be anxious to continue discussions here at least to the point of concluding an offer to be sent through me to the Farm Board in both commodities. The reason is that the German Government has no one available in the United States just now who is competent to act for it. It is my expectation that tomorrow I shall cable some offer from it of a definite nature. At their request the Foreign Office officials assembled in a conference today. They seemed to be deeply interested in our suggestions. SACKETT 811.61311 Germany/10: Telegram The Ambassador in Germany (Sackett) to the Acting Secretary of State [Paraphrase] BERLIN, August 5, 1931-6 p. m. [Received August 5-5:45 p. m.] 159. Embassy's 139 and 147, July 21 and 24 respectively. An offer to the Farm Board in regard to cotton resulted from conference at Foreign Office yesterday and today. In the telegrams under reference difficulties as to price were set forth. These difficulties are confirmed by the Foreign Office experts. Therefore, they propose a purchase without maximum or minimum prices. Their preference within the scope of the total order would be to make each purchase separately at the price governing in the New York Cotton Exchange upon the date of sale as according to paragraph 4 of the offer. As an alternative which they prefer not to use otherwise, they offer, however, a price based upon the monthly price in New York for all cotton shipped within that month. After conferring with the spinners and other users of cotton, the Foreign Office alleges that it is not practical for the Germans to handle this cotton unless they have definite knowledge of the price at which the cotton can be turned over to the manufacturer whose competition from other countries is based on spot prices. Although the quantity they can use is substantially reduced under the amount of the previous years' imports because much of the former imported cotton was resold, by the brokers buying it, to other countries, the officials at the Foreign Office are quite anxious to do this business. The proposal of Germany is as follows: 22 "Basic principles of a contract concerning a cotton transaction between the Federal Farm Board and the German Government. 1. The German Government obligates itself to purchase from the Farm Board a total quantity of 600,000 bales with an option on a further 200,000 bales of American cotton. The German Government may entrust a special bureau with the carrying out of the transaction. 2. The purchaser determines the individual quantities to be bought and shipped in each case as well as the qualities and the steamer on which shipment is to be made. In case the Farm Board cannot supply certain qualities in the quantity demanded the German Government can demand that the total quantity of 600,000 bales be reduced by a corresponding quantity. 3. The acceptance and shipment must take place within the 12 months following the signing of the contract and in every month about one-twelfth of the total quantity is to be taken over. If desired the Farm Board will also supply larger monthly quantities. If the purchaser in any month takes less than one-twelfth of the total quantity he must pay the storage charges for the quantity not taken starting with the end of the month insofar as the deficiency in the amount taken is not balanced by previous excess purchases. The individual purchases must as far as possible not amount to less than blank bales (the number to be inserted here to be agreed on later, the idea being that not less than a shipload is to be purchased). 4. The price for each purchase, id est, call for delivery, is determined by the official quotations on the New York Cotton Exchange. " Quotation not paraphrased. 5. In the absence of any provisions to the contrary in the contract the terms usual in international cotton transactions and the draft of agreement (form) of Liverpool and Bremen contracts at the choice of the purchaser are to hold good for the transaction of the business. 6. The Farm Board grants the German Government a credit of 3 years for the payment of the purchase price. Interest is to be paid on the coupon at the rate of 42 percent. The interest is to be paid yearly. 7. The German Government gives as security for the price of each purchase note in dollars which becomes due 3 years after shipment. 8. The two parties will agree upon a court of arbitration. 9. The use to which the cotton is put, the participation of German private importers and of the Bremen Cotton Exchange, as well as the conditions of the use of the quantities purchased, are the private concern of the German Government. Alternative proposal for section 6: The price for the purchase made in a calendar month is to be determined by computing the average of the official quotations on the New York Cotton Exchange on all business days of the calendar month for the qualities in question. These average prices during the calendar month apply to the purchases during that month. Alternative proposal for section 7: The German Government gives as security a bill in dollars for the total price of the purchases in a calendar month computed as per section 4, the bill to become due 3 years after the end of the calendar month". Embassy's 155, 31st of July. I was asked again by the Foreign Office about the basing point for calculating the average wheat prices and whether the Farm Board would agree to base them on the Rotterdam and Liverpool markets with adjustments for American grades and also whether the grades mentioned in that telegram could be supplied by the Farm Board in those approximate quantities. On the hypothesis that the Department replies in the affirmative to both of these questions, the Germans are preparing a proposal for wheat which will probably be submitted to us in a day or two. I have insisted that should they desire to do any wheat business, the prices which you quoted to me must be the basis of any proposal coming from them. SACKETT 811.61311 Germany/11: Telegram The Acting Secretary of State to the Ambassador in Germany (Sackett) WASHINGTON, August 7, 1931-noon. 148. The German proposition has been sent to the Farm Board without comment. Our desire is to avoid further discussion of the matter through diplomatic channels. Furthermore, the Department |