Evening star., 1934-10-14
New Trade Agreement and
Interest Cut Acceptance
Asked by Luther.
BOTH GESTURES FAIL
OF READY ASSENT HERE
State Department Intimates
Treaty Is Satisfactory as
It Stands Today.
BY the Associated Press.


The German government-despite
two dramatic diplomatic gestures
failed yesterday to achieve immediate
clarification of its tangled economic
and financial relations with the United
States.
DR.. Hans Luther, the German Am
bassador, officially notified the State
Department that the Reich would
abrogate its unconditional most
favored-nation treaty with the United
States on october IA, 1885. He sug-
gested that a new treaty without the
favored nation clause be negotiated to
take its place.
Undersecretary of State Phillips de-
clined to comment on the Amba ssador's
suggestion. 1t was indicated at the
State Department, however, that the
United States still considered the most
favored nation clause an integral part
of American commercial policy. Plain
ly, there was no immediate intention
of negotiating a new treaty with
Germany.
ONSOhu AOPOShA o~ASs
The German governments proposal
to pay American holders of Dawes
loan bonds approximately rs per cent
of the interest due on October Is
through a joint foreign exchange
Reichsmark arrangement also failed
to receive State Department approval.
No official comment was made. but
authoritative indication was given that
this Government still considers failure
to pay Americans a full 100 per cent
as is to be done for citizens of other
nations, a discrimination against this
country.
Germany made plain in renouncing
the trade treaty that its objection was
to the INSTRUMENTATION clause.
This, in short, provides that each ma
ton shall accord to the other the
most favorable treatment granted 1t by
any third nation.
Text of German Note.
Formal notification Of Germany's
intention was made in the following
note presented to Phillips in the abb
sence of Secretary Hull:
THE German Embassy has the
honor, pursuant to instructions from
its government, in conformity with
article 81, paragraph 2, of the treaty
of friendship, commerce and consular
rights between the United States and
Germany of October IA, 1925, to in
form the Department of State that
the German government intends to
bring about changes in provisions Of
article of the aforementioned treaty.
AS has already been repeatedly stated
to the Government of the United
States, Germany is ready at any time
to engage in negotiations concerning
the future shaping of German-Ameri-
can commercial relations"
Embassy officials explained that the
Reich does not Wish to nullify the
treaty entirely, but does desire modi-
fications securing the elimination of
article 7. This is the most-favored-
nation clause.
To eliminate this, however the en-
tire treaty must be terminated and
the revised agreement submitted to
the Senate for approval, or an en-
tirely new treaty negotiated.
New Treaty Desired.
The Hitler governments notifica-
ton, in the opinion Of officials here,
gives clear indication that Germany
desires to have the latter course fol-
lowed and be included among those
nations with whom the United States
plans to negotiate new reciprocal
trade agreements.
Embassy officials had no hesitancy
in declaring that the German gov
ernment admires the Roosevelt trade
program, designed to eliminate ex-
cessively high tariff and other trade
barriers. Hopes were openly expressed
that Germany will be among the ma
tions to obtain new agreements.
Dr. Luther made no explanation of
why Germany opposed the uncondi-
tional most clause.
American officials. however, expressed
the view that it resulted from the
several sharp diplomatic exchanges
growing out of alleged violations of
the clause, together with Germany's
desire to be free to enter into special
arrangements with other countries
without violating the treaty.
Money Plight Factor.
Germany's empty gold Golfers have,
it is explained. made it necessary to
enter into special agreements and
bartering arrangements with other
nations in order to secure vitally nee
eSsary raw materials. To make these
deals it has been necessary to grant
special considerations to some nations.
This has resulted in Determinations
against American products, and the
United States has, accordingly, pro-
tested violations of the treaty.
Abrogation of the treaty, as viewed
here, indicates that Germany has
decided it must continue to make such
special agreements and that the exist
ing treaty therefore hampers its com
mercial policy much more than it
helps.
Abrogation of the treaty also is
expected to stave off any protests
from the United States which might
result from the stringent economic de-
creeS issued by DR.. Hjalmar Schacht,
Germany's economic and financial
dictator, involving control of exchange
transactions, strict regulation of i'm
ports, and activities of the German
Monopoly Committees.