-3-                             
 
 
                        terms of the adjustment of domestic prices or of stimulus
                        to export trade, tend to be lost vis-a-vis Germany. The
                        device aims to establish a special depreciated German mark,
                        and this, of course, implies a corresponding appreciation
                        of the dollar in terms of the German mark.
 
 
                               6. The sale of German marks at a considerable discount
                        is likely to assert a depressional influence on American
                        prices and seriously affect those American industries which
                        are subject to sharp German competition. The power to sell
                        marks at a large discount might have a considerable effect
                        upon a wide range of American prices. The sale of German
                        marks at a discount of 41 percent would be equivalent to a
                        kind of dumping, which might represent a serious competitive
                        threat for many American industries. Consideration needs
                        to be given to the political implications involved in this
                        threatened intensified German competition. Substantially
                        the same result would, to be sure, follow from an open
                        depreciation of the German mark. But there is the.important
                        difference that, under the proposed plan, the depreciation
                        of the mark would be actively promoted by our own action,
                        and, therefore, any unfavorable reaction upon our own
                        industries could be charged directly to our own Government.
 
 
                               7. The proposed plan is clearly to Germany's advantage,
                        but offers little advantage and many disadvantages for the
                        United States. If Germany secures a preferred market for
 
 
                                                                            her