THE SECRETARY OF THE TREASURY                
 
                         WASHINGTON                         
 
 
January 17, 1939
 
 
                MEMORANDUM TO THE PRESIDENT                 
 
 
This is in response to your memorandum of December 27, 1938,
in which you ask me to check the figures submitted to you
by the State Department on investments and current payments
between the United States and Germany.
 
 
1.  The figures in the memorandum, obtaining from the 
Finance Division of the Bureau of Foreign and Domestic 
Commerce, are the best available and are accurately presented.
More recent data on investments available to us do not 
substantially alter the results.
 
 
2.  However, the memrandum does not appear to adequately
point out the range of possible error in the date. Figures 
of German investments in the United States are subject to even
a wider range of error than are figures of the investments of
most other countries because of the incentive to avoid the
foreign exchange restrictions of Germany. For instance, it
has come to our attention that substantial amounts of German
capital -- rumored at being more than $50 millions -- have
come to the United States in the past four months, but these
funds did not show up in our figures because the nationality
of the owner was effectively masked.
 
 
3. The estimates of the flow of payments between the 
two countries are also the compilation of the Department of
Commerce and are the best figures available. It must be
remembered, however, that at last 50 percent of our trade 
with Germany is carried on by barter. The stated value of
imports from Germany on barter transactions is about 25 percent
more than the amount of dollars called for to pay for
the imports. Therefore the stated value of our imports from
Germany in 1938 should be reduced in the balance of payments
by $10 - $15 million.
 
 
 
H. Morganthau