be sold in this country to supply the necessary dollar funds for duties, whereas 80 bales would be used for the purchase of the German merchandise. There would be financing difficulties and there would also be certain guaranties which would have to be given to the farmers so that they actually would receive their German merchandise, but all this might be ironed out. Just the same, the people present at the meeting didn't seem to have great hopes that any quantity of barter business could be done on this basis. Dr. Tannenberg mentioned something about certain Congressmen and Senators suggesting that the State of Texas might build roads and buy certain German equipment against the sale of cotton. This, however, also would meet with difficulties since most of the State jobs are subsidized by the Federal Government, who would have to be considered adverse to any such barter deals. The consensus of opinion, however, was to give to Dr. Tannenberg all the cooperation that could be given even in a financial way since something might actually come of it. We feel that there is an opening here for new business, particularly for those firms who have sufficient funds to finance good risks. The main thing, however, is to show Dr. Tannenberg our good will, because if we do not help out in doing something which Dr. Tannenberg believes offers opportunities, somebody else will. Very sincerely yours, SCHILDGE, VON RUMOHN & CO., INC., EXHIBIT No. 562 [Resolution by the Board of Trade for German-American Commerce, Inc., New York, dated March 24, 1939. From the files of Transmares Corporation, New York] RESOLUTION ADOPTED AT THE MEETING OF THE BOARD OF TRADE FOR GERMANAMERICAN COMMERCE, INC., AT THE BILTMORE HOTEL, NEW YORK, N. Y., ON WEDNESDAY, MARCH 22, 1939, RE 25 PERCENT COUNTERVAILING DUTIES ON ALL DUTIABLE IMPORTS FROM GERMANY The Board of Trade for German-American Commerce, Inc., a New York association established in 1924 for the express purpose of fostering trade relations between the United States and Germany, most vigorously protests against the United States Treasury decision of March 18, imposing countervailing duties of 25 percent on all dutiable German imports, effective April 23, 1939. This strong protest is made on the basis of many compelling economic facts which have not found adequate and equitable recognition in the reports to the public regarding the true circumstances in the situation. The decision constitutes a needless and serious financial loss to American importers who have continued purchases of German goods on the free exchange rather than on the barter basis. Beyond this the decision, if carried into effect, will practically destroy all commerce between the United States and Germany with consequent disastrous effects, not only on the exporting and importing trade in general but also on American banking, shipping, and the employment of American labor. The true consequences of the damaging United States Treasury decision have been publicly understated by drawing attention to the trade with Germany alone in order to minimize the full extent of the anticipated loss of trade that this country is bound to suffer. The facts in the situation are that under the ruling the substantial trade of the United States with the former Republic of Czechoslovakia will equally be a total loss to this country. United States exports to Germany amounted to $107,588,000 in 1938. United States exports to Czechoslovakia were $26,493,000, which indicates a total loss of American export trade of $134,081,000 using the statistics of 1938, a very poor year in foreign trade. American firms holding substantial credits in inland accounts see their assets in serious jeopardy due to the fact that it will be very difficult, if not at all impossible, to liquidate these credits through a future purchase of German merchandise, the sale of which will be practically impossible after the addition of the 25 percent countervailing duty Among the variety of American export articles, cotton would suffer more directly than any other commodity through the effects of the last Treasury decision, putting the brunt upon the American cotton farmer. In former years, Germany has been consistently one of the best customers of the United States, buying more than 2,000,000 bales of American cotton annually. Any criticisms condemning Germany's present trade system should fully consider the fact that the arbitrary devaluation of the United States dollar created a situation in which free economic competition of all those nations dealing with the United States became seriously endangered. Against her own will, Germany for the past 8 years has been increasingly compelled to the adoption of a system of economic restrictions which, in the words of her economic leaders, she would gladly abandon if she could. Fully aware of the far-reaching effect the new Treasury Decision will have on the importing and exporting trade, the board of trade in the meantime will continue to make every effort to encourage a spirit of understanding in the approach to these mutual problems in order that not only a modus vivendi but also a final agreement can be reached whereby Germany and the United States may join hands in the work of trade recovery for both Nations. We therefore urgently request an immediate reconsideration of this decision. In view of the suddenness of this decision and in order to avoid serious financial losses, we also suggest a postponement of at least 90 days for the time being as many American firms have contracted sales on the basis of the present tariff rates and import shipments in most cases cannot be expected by April 23. We also respectfully request that the deposit of 25 percent of the invoice be not required on importations of merchandise which have not heretofore been paid for out of inland account and importations of merchandise to be paid for with either United States of America dollars or free reichmarks. EXHIBIT No. 563 [Undated report on United States trade with Germany by E. Roedel, secretary, GermanAmerican Chamber of Commerce of the Pacific Coast. From the files of Transmares Corporation, New York] UNITED STATES TRADE WITH GERMANY (By E. Roedel, Secretary, German-American Chamber of Commerce of the Pacific Coast) President Roosevelt by Presidential decree has ordered the Secretary of the Treasury that penalty or countervailing duties be applied to hundreds of items of German goods. While details of this decree are not obtainable yet here, having been caused according to press reports by German Government subsidies to aid its exporters in underselling abroad, there is hardly any doubt in the mind of anybody that this order is a purely political one due to the administration disapproval of Germany's policies in Europe. The press comment, so far, has described this Presidential decree as a "stunning blow to German business," and where figures are quoted they are merely those of German exports to the United States. When one begins to compare with them, however, the figures of our own exports to Germany, one cannot get rid of the feeling that somebody is cutting off his nose to spite his face. For that this decree will be followed by a further loss of exports to Germany, there can be no doubt. Here are the figures for the last 10 years. Those who are and have been producing these commodities for export markets, of which Germany normally is and has been in the past either the most important or one of the most important, will undoubtedly suffer an even more "stunning blow" than the one experienced by the German manufacturers. I want to mention but a few of these items. Cotton, lard, and of special interest to the Pacific coast, salmon in various forms of preservation, lumber, and fruits. Here are the figures of Pacific coast-German trade for the last 10 years: Trade between Germany and the ports of Los Angeles, San Francisco, Portland, and Seattle 1 Some Seattle figures include imports from and exports to Czechoslovakia. 1937 and 1938 figures refer only to imports from and exports to Germany. It is hardly necessary to reiterate the causes of the shrinking of German purchases here. Briefly, they are: 1. Germany has lost her gold reserve. 2. Germany, in order to buy abroad, must therefore sell goods abroad in order to have foreign exchange with which to pay for the goods imported from abroad. It is useless to theorize about this fact. 3. The devaluation of the dollar and the discrimination against German goods advocated by various groups within the United States has made it even more difficult for Germany to sell her goods here. Pacific coast products are wanted in Germany. To those who know the driedfruit situation it is not only no secret, but frankly acknowledged, that with eventual continuance of normal sales to Germany there would be no necessity, for instance, for relief action for the prune growers in the form of a prorate program, which many growers claim does not really relieve the small grower. And if one considers that, unlike hog or wheat production, California prune production is more or less confined to five counties, the economic shock is so much more centered and therefore much greater. The cotton situation which California and Arizona share with the rest of the cotton-producing States is already so bad that the eventual loss of the former second-best market for United States cotton will greatly accentuate this economic debacle. Some people may say: "We here in the United States are so wealthy and during the last 6 years have spent so much money to get over depressions and recessions that we can afford, for principle's sake, to throw away the balance between German purchases and German sales here." This is emotion, however, and neither economies nor business. Germany used to buy, for instance, one-seventh of the entire California prune crop when her population was 65,000,000. Today she buys for a population of 80,000,000 or more. Somebody arguing in favor of refusing to buy German goods called the reasoning that our farmers and growers have to foot the bill of these losses, a sordid viewpoint. However, he was not a California prune grower, but a New York lawyer with a million-dollar income. It is not the purport of this outline to discuss the political goings-on in Europe. But I am at a loss to see why that part of our body economic, which can least afford to add some more losses to its present harassed condition, should lose muchneeded business because of what has happened during the last 2 weeks in Europe. Facts, circumstances, and causes are still too much clouded or camouflaged to permit even an estimate. Henry Hazlitt, of the New York Times, reviewing a recent book, The New Western Front, by the well-known American economist, Stuart Chase, and discussing "actions" on the part of "democracies" against "Fascist countries," said a few days ago: "Rather than actions like nonintercourse which would only increase our own economic difficulties while making a delicate international situation still more tense, it would be much more profitable to devote our energies to promoting our own economic recovery." EXHIBIT No. 564 [Letter from C. A. von Rumohr, vice president, Schildge, von Rumohr & Co., Inc., New York, to German-American Chamber of Commerce, San Francisco, Calif., dated March 24, 1939] MARCH 24, 1939. GERMAN-AMERICAN CHAMBER OF COMMERCE, San Francisco, Calif. GENTLEMEN: We have received your recent review of the newly developed situation, and wish to congratulate you for your very precise and just portrayal. Yours very sincerely, [Letter from C. A. von Rumohr, vice president, Schildge, von Rumohr & Co., Inc., New York, to Lentz & Hirschfeld, Bremen, dated March 24, 1939] LENTZ & HIRSCHFELD, Bremen, Germany. MARCH 24, 1939. GENTLEMEN: We have been wanting to write you about events as they recently took place, but have refrained from doing so because matters progressed so quickly that information that we might have given you yesterday would no longer be true today. We are attaching, herewith, quite a few pieces of literature which will give you a better understanding of what has taken place. There have been meetings of the cotton committee; meetings of the GermanAmerican Board of Trade; meetings with our lawyers-all of which we will not go into specifically. As we see the situation today, the practical upshot is as follows: 1. From the American point of view, the inland accounts can continue to be used. 2. From the German side, we understand, through the telegrams received, that inland accounts will be opened until the end of the year. Against this, however, stands the opinion, and the efforts of Mr. von Knoop and Mr. Tannenberg, in trying to kill the inland account procedure from the German side in order to be able to build up something new. 3. On any merchandise which is entered for consumption, or withdrawn from warehouse for consumption up to April 22, no countervailing duties will apply. Any merchandise coming in after that date will be assessed with a countervailing duty, equal to 25 percent of the invoice value of the merchandise brought in. If it can be proven that the merchandise was not bartered, in other words, if no bounty was paid in Germany, an affidavit to that effect will have to be signed and the 25 percent will be refunded. It is not at all sure as to when such refund will take place and up to this time no definite statement has come forth on this point. As you will readily see this means that if merchandise is paid in cash by dollar check, or free Reichmarks remittance, the importer is penalized with a deposit of 25 percent. On the other hand, if the importer continues to use a cotton inland account, he will save 25 percent on the payment for his merchandise. Since the countervailing duties are assessed in either case (even though in the case of payment in cash, such deposit for countervailing duty is to be returned) the customer will actually lose 25 percent liquidity of his working capital until such time that his deposit is returned. In oral discussions with our customers we have brought out this point. However, we have not written our customers in this regard since we are not sure whether the countervailing duty deposit on merchandise, as paid in dollar check, or free reichsmarks, will be maintained. As a matter of fact, we feel fairly sure that this deposit will either be completely waived or at least arranged in some manner to have such funds returned almost immediately after entry of the merchandise. 4. As regards our customers-they have placed tremendous orders and hope to receive shipment before April 22. They are using all of their liquid funds for the payment of duties and will wind up their cotton contracts at such time as funds are accumulated anew. This will mean that our business will continue for at least some time to come. This applies particularly to what we can see in regard to Zeiss (see our special letter). 5. Reasons for the Treasury release are given in Mr. Murphy's exposé. There is, needless to say, a political reason in back of the legal explanation. 6. Some people are hopeful of a new solution being found in order to again work German imports against shipments of cotton on a similar basis as the inland account. We do not feel any too optimistic in this regard since at the moment at least the political fashion against Germany has won out. It is quite likely that export interests (cotton, copper, fruits, lard, wheat, etc.) will make themselves felt in Washington, and that pressure being brought to bear will make Washington amenable to a new solution which would be mutually advantageous. However, this will all take time. 7. Cotton Committee: There have been several meetings of the Cotton Committee, and various ideas have been brought forward on the basis of which a new possibility for trade seemed likely. There is only one idea that we wish to mention here that seems to have a certain amount of feasibility. Example: (a) Lentz & Hirschfeld would buy from Zeiss, Jena, merchandise worth 1,000 marks, equal to $400. (b) Lentz & Hirschfeld would sell this merchandise against dollar check to Zeiss, New York, for $400. (c) Lentz & Hirschfeld then would use the $400, with a permit from the German Government, to buy from Zeiss $300 worth of cotton, for which they would pay to Zeiss the amount of $400. By not tying these two transactions together at all, and this is possible, there should be a chance of using this arrangement, since American exporters can sell anywhere in the world merchandise that he wants to sell at whatever profit he can get. Just the same, this is just a roundabout way, and it is questionable as to whether Washington will approve of such methods. Yours very truly, SCHILDGE, VON RUMOHв & Co., INC., EXHIBIT NO. 566 [Letter from Adam T. Schildge, president, Schildge, von Rumohr & Co., Inc., New York, to Lentz & Hirschfeld, Bremen, dated August 8. 1939] LENTZ & HIRSCHFELD, Bremen, Germany. AUGUST 8, 1939. GENTLEMEN: We are returning, herewith, clipping you mailed us with your letter of July 27. We are also sending you, under separate cover, bulletin issued |