You wrote: "For the monthly payments of 250 marks for 1939 I cannot give you a declaration of refusal now." We do not agree with you here. The situation is such that you are employed by Mexpo and are no longer connected with our firm. Nothing was agreed upon for your departure, nor can we explain that we should pay you 250 marks per month-so that a declaration of refusal on your part in the affirmative or negative does not mean anything to us. The idea that we are obligated to make these payments to you is only your idea. On our part this amount was originally thought of as a help for your wife as long as you were on the way and were considered to be travelers. We want to clear this situation. If we induced A. T. Schildge, Inc., to pay the above dollar amount to you, we wish to strongly emphasize since you obviously interpret this differently, that this payment was not an obligation on our part, but was meant as a help and assistance. Schildge and we wished to assure you a sufficient income. You earned the following: or approximately 800 pesos per month. (In January you did not have a salary in pesos but you received the equivalent for your expenses in dollars, so that these figures form a basis.) After a conference with Mr. Schildge we suggest a fixed salary of 600 pesos for Mexpo to give you, starting on January 1, 1939, to be paid monthly. And you will have a claim to a profit share of 10 percent as agreed upon. According to our information which we have from several sources this salary is considered good for a man in your position in Mexico. You will be able to judge this best yourself and undoubtedly you will agree with us. A businessman (or salesman) is not merely an office holder, but his earnings are closely connected with his success in his work. Consequently, it seems appropriate that you should be interested in earning more through your share of profit. In large business transactions you have good prospects of earning considerable profit. Large business deals can be made in Mexico; we refer you to Rekowsky's successes and to the successes of others. On this occasion we must tell you frankly, after we have observed the development of Mexpo's activities for more than 1 year, that we are not quite satisfied with the results. We realize you have difficulties and can estimate and appreciate them; we know they stand in the way of your work and success. On the other hand, Mexpo has not achieved anything new except paper businesses, which were more or less assured from the very beginning (even if they demanded constant attention with changing conditions). Further, we know and appreciate that you have cultivated the cotton business and have built up the Rosita connection. But this did not succeed in equaling Mexpo's expenses as we have seen from the annual balance from New York. Added to this, we have heard that you have spoken about your salary to several Mexican importers and you have implied that you were not well treated in reference to this by L. & H. nor by Schildge, Inc. We are telling you this frankly but confidentially. This naturally surprised us as we thought a business director of a firm would not discuss business with his customers. Unfortunately, you do not seem to get along too well with Mr. Schaur, who is one of the most important connections you can possibly cultivate over there. It is absolutely necessary that you, as representative of Schildge, von Rumohr & Co. and of German interests, should have the right attitude toward these things and especially toward political things. Especially your political attitude is very important in a city like Mexico. You must feel obligated and you must control yourself. We have told these things frankly and confidentially because we think that only absolute frankness can solve these things, and on the long run will maintain a friendship. Schildge, Inc., will receive a copy of this letter. EXHIBIT No. 554 [Translation of confidential letter from Lentz & Hirschfeld, Bremen, to C. A. von Rumohr, vice president, Schildge, von Rumohr & Co., New York, dated February 21, 1939] LENTZ & HIRSCHFELD, Bremen, February 21, 1939. Confidential. Mr. C. A. v. RUMOHR, Schildge, von Rumohr & Co., Inc., New York. MY DEAR MR. VON RUMOHR: We discussed the situation of Cía. Mexicana de Exportacion with Mr. Schildge during the last few days. Mr. Schildge expressed his dissatisfaction with Mr. Hentze and gave his reasons for it. We are enclosing a copy of a letter we shall send to Mr. Hentze in 6 days. We are sending it to him later so that you will be informed in advance and will be able to adopt a negative attitude toward him. Mr. Schildge and I thought it would be a very good thing if you would go to Mexico for a few months to reestablish the connections Mr. Hentze neglected. They have become unfavorable since your last stay in Mexico. At this time you can supervise Mr. Hentze, attempt to get him started the right way, and can educate him politically. Mr. Hentze must realize that his whole political attitude has surely harmed him up to now and that he must pull himself together if he wants to stay with Mexpo. If the last should not be the case, it must be avoided that he should stay in Mexico so that he will not fall into the hands of our rivals. This would probably take care of itself in that he would have to leave Mexico if he were no longer the business director of Mexpo. We do not know what Mr. Hentze will do then. It is not out of the question to make room for a position for him here, at present, but we do not know how things will be in a few months. And it also seems as if Mr. Hentze has little preference for returning to Germany, for reasons which are surely connected with his political ideas in some way or other. Consequently, we should like to ask you to keep us currently informed. EXHIBIT No. 555 [Letter from Willy Hentze, manager, Cia Mexicana de Exportation, S. A., Mexico, dated June 3, 1938] Messrs. ADAM T. SCHILDGE, INC., COMPANIA MEXICANA DE EXPORTACION, S. A., New York. GENTLEMEN: We refer to your letter of June 1 and advise you that Mr. Burand left on a vacation trip to Germany on the 1st of June, steamer Iberia. We have a nice standing with the German consulate as well as Mr. Wirths. Besides the job which Mr. Wirths has, he is partner of Tamm & Co. Yours sincerely, [Letter from C. A. von Rumohr, vice president, Adam T. Schildge, Inc., New York, to Willy Hentze, president, Cia, Mexicana, Mexico, dated June 6, 1938] To: Mexpo. JUNE 6, 1938. DEAR MR. HENTZE: You mentioned that you saw the final contract between Compania Exportadora Nacional de Petroleo and Borcherding & Molsen, Bremen. You also said that you saw the signature being that of Mr. Espinosa Mireles. We consider it rather peculiar that Mr. Hommel shows you original contracts of the firm that he is doing business for. The light will be shed one of these days on what actually is true in this whole business. In your letter of June 3 you mentioned Mr. Wirths. It is good for you to know Mr. Wirths because he is apparently head of the Nazi Party of Mexico. We want to call to your attention to the fact that you should be careful in discussing any business with him because as he is a partner of Tamm & Co. the utmost care should be taken not to divulge any secrets of business that we are doing. As you know, Tamm & Co. and Bischoff have been working together. CAVR: MMC. EXHIBIT No. 556 ADAM T. SCHILDGE, INC., Vice President. [Letter from Willy Hentze, Compania Mexicana de Exportacion S. A., Mexico, D. F., to Adam T. Schildge, Inc., New York, dated May 6, 1938] COMPANIA MEXICANA DE EXPORTACION, S. A., Reg. Dratein & Holste. Messrs. ADAM T. SCHILDGE, INC., New York. GENTLEMEN: So far it was impossible to meet Mr. Holste in his own office and we met him this week in the German Club. Mr. Holste is about 45 years old, and has good relations to the Mexican Government. Mr. Holste is president of the German Club, and has been formerly a workman in the port of Hamburg. He told us that he was informed through his office of our company, and promised that whenever a deal should come up he will communicate with us. We have to be very careful with Mr. Holste as the business which he does is sometimes not straight. We will keep in touch with him. Yours sincerely, EXHIBIT NO. 557 [Letter from Adam T. Schildge, president, Adam T. Schildge, Inc., to George W. Hirschfeld, Bremen, dated November 25, 1938] NOVEMBER 25, 1938. Mr. GEORGE W. HIRSCHFELD, Lentz & Hirschfeld, Bremen, Germany. DEAR MR. HIRSCHFELD: On November 19, in the morning, I called on Mr. T. von Knoop. In front of the Whitehall Building, where the German consulate maintains offices, about 100 employees were parading with banners of the most unusual wording. There were about 20 policemen in front of the building. Inside there were at least a dozen policemen downstairs and a dozen were in front of the consulate's office. I spoke to Mr. von Knoop for about a half hour. He mentioned that an economic war between the United States of America and Germany is quite likely. This, of course, would mean the end of our inland-account business. I realize how difficult it is for anybody employed in the German consulate to be optimistic, under the circumstances which prevail, so I departed quickly in order to meet some more cheerful people. I am writing you all this just to tell you what is happening, but please keep such information strictly confidential. Anyhow, one of these days Inko's will be all over, but there is no use worrying about it in advance. Yours sincerely, ADAM T. SCHILDGE, INC., EXHIBIT No. 558 [Letter from Christian A. von Rumohr, vice president, Schildge, von Rumohr & Co., Inc., New York, to Lentz & Hirschfeld, Bremen, Dated March 15, 1939] MARCH 15, 1939. Confidential. LENTZ & HIRSCHFELD, Bremen, Germany. GENTLEMEN: Mr. Robert E. Lee called yesterday and advised that there were some clouds in Washington as to the barter system. Apparently complaints have been made by some Congressmen that merchandise of German origin was dumped on the American market. The complaint is that the German Government secretly gives subsidy in spite of the arrangement that prevents this, and that through such subsidy, as well as through cotton and copper barter on top of it, prices were brought down to a value that might be called dumping value. The matter is being examined by Washington officials, and it is possible that countervailing duties on certain German merchandise will be put into effect. We have heard of such happenings in Washington for the past month and do not take them too seroiusly. Mr. Lee thought that if anything did happen to effect the barter system, we would be given ample time to liquidate all contracts. In connection with the above-mentioned rumors, Mr. Meyer of Carl Zeiss advised that certain American-Jewish dealers had gone to South America, where there was quite a bit of German distressed merchandise, and had bought up this merchandise at ridiculously low prices out of free ports in South American countries and were bringing it in here. This may have something to do with the matter under complaint. However, we doubt it. Very sincerely yours, SCHILDGE, VON RUMOHR & CO., INC., EXHIBIT NO. 559 [Confidential letter from C. A. von Rumohr, vice president, Schildge, von Rumohr & Co., Inc., New York, to Lentz & Hirschfeld, Bremen, dated March 17, 1939] LENTZ & HIRSCHFELD, Bremen, Germany. Attention: Mr. G. Hirschfeld. MARCH 17, 1939. GENTLEMEN: There have been rumors that Washington has sent to Germany a commission to investigate whether any secret subsidies were given on merchandise that was exported to the United States. Such rumors have been in vogue for quite some time, therefore we do not give much credence to them. However, yesterday Mr. Hamlet, of the Socony Vacuum Oil Co., with whom I had luncheon, advised that he had been informed by his connections in Washington that a certain Mr. Webster Olivier (Mr. Hamlet could not vouch for the correctness of this name) has been sent to Germany by the Treasury Department, with a commission also including employees of the State Department, for the exact purpose of establishing the veracity of the rumors about secret subsidies. All we hope is that such rumors will not be able to be verified. If, on the other hand, they are, there is no question that countervailing duties will set in, and that the Inland Account system will have seen its last days. Very sincerely yours, SCHILDGE, VON RUMOHR & CO., INC., EXHIBIT Nos. 560 AND 561 [Letter from C. A. von Rumohr, vice president, Schildge, von Rumohr & Co., Inc., New York, to Lentz & Hirschfeld, Bremen, dated March 6, 1939] 'Re meeting of cotton committee with Dr. Tannenberg. LENTZ & HIRSCHFELD, Bremen, Germany. MARCH 6, 1939. GENTLEMEN: Mr. Zimmer today called a meeting of the cotton committee because Mr. Tannenberg had advised Mr. Zimmer that he wanted to talk to all the cotton people. A representative of almost every firm was present. Mr. Tannenberg talked for about an hour and a half. He advised that: 1. Lard, wheat, citrus fruits, vegetable oil and cotton interests in this country had approached the German Embassy, through Congressmen and Senators, in order to find out what could be done to get rid of some of their merchandise to Germany. 2. They expressed their willingness to take German merchandise in return for the goods which they sold in Germany. 3. The feeling in this country is quite generally getting to the point where certain Senators and Congressmen are portraying the opinion of the public in that something has to be done in order to get rid of the surplus goods. 4. These Senators talked to the Treasury Department and asked the Department whether barter deals were in order. Mr. Messerschmidt, of the Department, advised that these barter deals were not in the interests of the United States and the Treasury Department, therefore was not interested in such deals. On the other hand, Mr. Hull came out with a statement recently that barter deals were perfectly all right, provided that no subsidy was given by the Government, who was sending goods to this country against American products. 5. Mr. Tannenberg is of the opinion that it is time to coordinate all the interests that are budding in this country for barter deals with Germany, or any other European country, by forming a kind of syndicate which would hire one or two men, who would try to bring theoretical desires to certain parts of this country for barter deals to be put into practical form, and who would make propaganda in a discreet way with such interests that might be benefited by barter deals with Germany by showing them the advantages, on a dollar-and-cents basis. 6. Mr. Tannenberg suggested a corporation be formed with a capital of $10,000, of which temporarily only $2,000 would have to be paid, which money would have to be supplied by the cotton people. This, of course, was only a suggestion given by Mr. Tannenberg for us to think over and decide upon. 7. A committee is going to be elected by the cotton interests, and such committee will go down to Washington and discuss with the Senators who are interested in barter deals what can be done. Mr. Zimmer will call a meeting tomorrow at 2 o'clock, during which a decision will be reached as to whether the cotton people will supply the funds for the syndicate and at which a committee will be elected to go to Washington. It was decided that this committee should consist entirely of American firms bearing no relation to anything German, so I guess this leaves us out of the committee. After the meeting yesterday Mr. Zimmer, Mr. Lange, Mr. Rapp, and the writer met and discussed Mr. Tannenberg's suggestion. It was agreed that for us cotton people the business that could be forthcoming from farm cooperatives, namely, southern farmers, was almost negligible. The cotton farmers in the South were described by people who know them as extremely poor. There are very few things that such cotton farmers can use. Possibly the only items would be barbed wire and fertilizer. Most of the fertilizers coming from Germany are not on the barterable list. However, with the help of Dr. Tannenberg this might be changed. There are many practical difficulties in the handling of such business since the farm cooperatives are very poor and have no cash to pay for the duties. This, however, may be overcome by the farmers giving to a firm who would handle such barter deals, say, for instance, 100 bales of cotton, of which 20 bales would |