-4-                             
 
 
(7) The formulation of any special trade agreement with 
the German Government at the present time,
even though the scope of the agreement is small, is
not apt to increase the friendliness in economic matters
of those European countries which are at present opposed 
to German policies.
 
 
(8) It is probable that the German Government's interest 
in the transaction is not so much a calculation that its 
trade situation would be greatly eased thereby as (a) 
the knowledge that any special arrangement of this type 
with the American Government would enhance the prestige 
of the Hitler Government, (b) perhaps form the beginning 
of a credit arrangement, and (c) create a generally 
advantageous bargaining position vis-a-vis the United 
States, divested of treaty obligations.
 
 
(9) It may be added, in conclusion, that over a period 
of time, even as short as six months, it would be 
difficult, if not impossible, for Germany to get along 
without a large part of the raw materials now ourchased 
from the United States.
 
 
EA:HF:DJW/LEW