862.51/1538: Telegram

The Ambassador in Germany ( Houghton ) to the Acting Secretary of State

[Paraphrase]

172. The statement which was made to you by the German Chargé d’Affaires, August 26, did not pass through the Foreign Office but came direct from the Chancellor himself. It simply means this. The Chancellor regards as final the proposition now being considered by Reparation Commission, in which German industrialists guarantee Government against failure of coal and wood shipments. The Chancellor can go no further. The Chancellor will be unable to agree if France refuses proposition covered by [sic] Government demand for mines and forests and it is possible that his government may fail. The Chancellor’s note is, therefore, a personal appeal to the Government of the United States to urge an acceptance of the proposition which is now before the Reparations Commission.

The Government also fears any offer on the part of the Belgians to accept German Government bills of exchange guaranteed by the [Page 163] Reichs Bank or D Banks, (1) because neither Reichs Bank nor D Banks will give guarantee and (2) because Government considers it an indirect attack on gold reserve. The feeling here is optimistic that the Commission will, in some form, accept proposition.

I have no comment to make on the above except to state that I doubt if any member of the Government really seriously expects the United States to take active steps to influence Reparation Commission. However, they realize that even an indirect expression of approval, as for instance through Logan,9 would have much weight. Being familiar with the desperate situation existing here, they cling to the hope that the United States will make its influence felt in some way in their behalf.

I am inclined to think that the English position here is somewhat weakened. I have reason to suspect that Foreign Office now believe England is seeking rather to weaken France by making a German loan impossible than to help save Germany. Therefore, any friendly gesture on the part of the United States will be very much appreciated.

Houghton
  1. American unofficial assistant representative on the Reparation Commission.