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Barter Plan Doom is Seen in Hull Note

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The plan whereby Germany would obtain 500,000 bales of cotton in the United States in exchange for shipments of Reich products was regarded in well-informed circles here today as virtually doomed to failure because of the State Department’s note charging discrimination by the Hitler government against American creditors.

The note, couched in strong language, was delivered to the Foreign Office in Berlin by Ambassador William E. Dodd upon instructions from Secretary of State Hull. It was made public here yesterday.

ON BOND SITUATION

While the communication dealt primarily with the bond situation, it is felt here that this country would not care to approve the cotton barter deal with the Nazis unless the existing state of affairs were corrected.

Germany was sharply criticized in the paper handed in by Ambassador Dodd for its “policy of relating debt payments to the balance of commercial exchanges between Germany and each individual debtor country,” which has resulted in preferred treatment for nationals of the Netherlands and Switzerland who hold Reich securities.

“The claim that debts should be paid only from a direct sale of goods in the creditor country is inacceptable and dangerous,” the State Department document said, adding that “the development of cooperative economic relations… is impeded when confronted by a policy of national discrimination and of disregard of express obligations voluntarily incurred toward great numbers of private citizens of the United States.”

Normally Germany is the second largest importer of American cotton, taking 1,200,000 bales last year. German cotton purchases this year fell off precipitately and expert opinion is that they will not total half the 1933 mark.

EXCHANGE WOULD HARM MARKET

The basis of the barter plan is acceptance by American exporters of registered marks having a lower value than the gold marks. In this connection, it has been pointed out that acceptance of the registered marks might be interpreted as arbitrary devaluation for the purpose of selling Reich goods here at less than the selling price in Germany, a violation, it is held in some quarters, of the anti-dumping clause of the Smoot-Hawley Tariff Act.

Samuel Untermyer, leader of the anti-Nazi boycott movement, now in London, recently wrote Secretary Hull that the barter deal would, in sum, do America harm since, while the cotton surplus would be reduced, the goods taken in exchange would operate to glut the domestic market.

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