The Ambassador in France ( Sharp ) to the Secretary of State
[Received November 14—3:25 a.m.]
5830. For McAdoo from Crosby. Number 666. Referring further to the matter presented in my telegram number 664 and to my letter dated October 25th1 I beg to lay before you the following facts and considerations:
- A movement exists in France and in Italy and with somewhat less force in Great Britain, tending toward the maintenance of governmental control of the industries of those countries for a period, the length of which is not to be determined by the date of the peace treaty but by supposed internal conditions. Some suggest one year, some up to five years.
- In France and in Italy there seems to be an assumption, not yet officially expressed, on the part of France that beyond the date of the peace treaty the United States Treasury, through new legislation if necessary, should continue to lend to European treasuries during period of control and that our governmental agencies should combine with European governmental agencies in determining the distribution of raw materials throughout the world.
- The fact that such distribution supposes a continuation of strong governmental control in the United States of our domestic activities is not seriously taken into account, or if so, it is presumed that it be done in conformity with the corresponding action that is desired by many to be taken in European countries.
- There are, of course, elements practically [particularly?] in Great Britain which run counter to all theories of continued governmental control and which will insist upon a return to individual action substantially on pre-war lines.
- Inasmuch as the actual peace negotiations may be prolonged over a period, during which, outside of the Central Empires, commercial movements will be freed from war restraint, it follows that a continuation of liberal loans from the United States Treasury to the existing governments would strengthen the hands of those who [Page 534] stand for the policies of centralization above indicated and would in fact constitute a large force in shaping both the domestic and international policies of European countries.
- Industrial disturbances possibly leading to radical political changes are feared by many as concomitant of the period of readjustment. This is particularly urged by Italian representatives as a reason for continuing our help. Such occurrences are indicated as possible in all countries. If it should be decided to make loans to prevent such disturbances the demands are likely to be so numerous that a policy of opportunism will be imposed by the necessity of the case. This, I think, can best be exercised if we retain complete freedom of action in the disposal of our resources. This freedom of action, in turn, can best be maintained by restricting the function of Inter-Ally Programme Committees to the mere study and report upon conditions; even this function could be performed by our own representatives seeking information from those who desire to share in our resources.
- Although it has been more or less difficult in the past it will be far more difficult in the future to adopt any guiding principles determining the amount of financial assistance which should go to one Ally as compared with that going to another and hence more likelihood of ill feeling.
- As a possible general exception to the statement that very great difficulty will be had in fixing upon the relative general commercial needs of the Allies it may be said that the need of foodstuffs in an Allied country or any other can be determined with approximate accuracy and would thus lead to the establishment of definite credits without creating jealousies if you desired at any time to take such action.
- You may desire to take into account the fact that the depreciation of the dollar in neutral countries and to liquidate the large neutral balances lying in New York will require shipments of goods which would then be largely curtailed by a continuation of our present liberal policy of calling on credit. Suggest that, if credits be continued for a short time covering purchase of such things as cotton, foodstuffs, and other materials that have been resold by governments to civil population, I be instructed by you to inquire immediately into the possibility of private banking agencies taking the place of governments in this respect, that Allied Governments be put on notice that the maximum effort in this direction will be expected to be made, and that they be notified that assistance from the United States Treasury for these purposes will cease at an early date. I am satisfied that if private assets available in Allied countries be used to a maximum as a basis for credit in familiar or unfamiliar ways, [Page 535] that means will be found to purchase nearly all, if not all, of the materials required by these countries for their general use.
- Provisions to Finance Ministers, copy of which was attached to my letter of October 25th was written for reasons as stated therein, and also because various persons of influence have unofficially proposed to me various plans of international control of exchange. I have no views favoring such control, but desired to make it clear that the way has been opened for official discussion, if Ministers shared the views of those near them who were urging such plans.
- Neither printed.↩