-3-                             
 
 
compensating concessions. The European countries which
consider their trade balances with us to be unfavorable 
are likely to believe that much more can be gained this 
way than by merely entering into ordinary reciprocal treaties 
with us.
 
 
(5) It would be difficult to promise an expansion of the 
American market for any substantial quantity of German 
goods -- (a) because so many of Germany's goods are 
competitive with American products, and
(b) because of the widespread boycott on German goods
in this country.
 
 
(6) Failing the ability to quickly increase the market for 
German goods, we would be likely to be called upon to extend 
credit to the German Government. As bearing on that. it may 
be remembered (a) there would be a great number of prior 
claims on the resources of the German Government, so that 
all German Government paper would have a very dubious 
credit standing; (b) Germany has defaulted on the payment 
of most of the long term government securities held in this 
country.
 
 
(7)