862.51/1576: Telegram
The Ambassador in Germany (Houghton) to the Secretary of State
[Received November 10—10:55 a.m.]
218. From Boyden. B–797. First. Since arrival have read many times and discussed with Houghton his letter of October 23rd. Am convinced of fundamental accuracy his diagnosis of present suffering, probability great increase suffering and consequent despondency this winter. Anyone would know this inevitable result of mark depreciation. But actual visit here changes theoretical deduction to concrete reality which must excuse his and my emphasis on something which we know you know before we say it. No one can say what social disturbance may result. Austrian experience encouraging in this aspect because Austria has lived somehow long after what seemed two years ago limit of human endurance. But conditions here differ. Particularly charity in case of Germany cannot be expected and if possible at all could not be maintained on scale sufficiently large to be effective as in Austria. Certainly one is well within bounds of reason in saying that failure to make whatever contribution is possible towards solution of German problem involves some responsibility for results which may be of most extreme nature.
Second. Thoroughly agree with Houghton that best insurance is hope. In this respect chief responsibility is on France. It is only incidentally that Interallied debt affects Germany’s hope and no action with respect to our debt can affect Germany except so far as might help France to accept conditions necessary to restore hope of Germany. Therefore in spite of much sympathy with Houghton’s idea of using our debt as means of bringing about peaceful conditions in Europe, I prefer to concentrate on reparations particularly as seems to me unlikely administration can either itself or through Houghton put out even informally suggestion he proposes.
Third. My view still is that administration ought to make official statement regarding reparations whether Poincaré invites such action or not. Risk of situation too great to run risk that United States sits by with arms folded while France whether from mistaken conviction opposes [sic] pure inertia or purposeful intent pushes Germany into bankruptcy. In any simple statement of principles [Page 181] involved you have all the rest of world with you and all United States behind you. I should expect such a statement to turn scale but regardless of result it seems to me duty and from point of view of practical politics an opportunity.
Fourth. I would not today lay much stress on bankers committee, or any other method of determining Germany’s capacity, though no harm in adding any such thought to your statement. The psychological point today is fall of mark. The decisive question is whether Allies will or will not concentrate on mark stabilization and do what is necessary to accomplish this. The necessary thing is to establish confidence outside financial centers and Germany itself. Regardless of other reasons this must be done if any hope of reparations is to be saved and it is still possible. These principles stated briefly with authority of the United States behind them will carry conviction.
Fifth. We add one practical consideration. In our judgment administration will find itself confronted say January or February with fact that wheat, cotton, copper, et cetera, cannot be sold to Germany in anything like usual volume. Anything which helps prevent this worth while. Very important that administration record on this point should be farsighted and such record will strengthen your hands in face of obvious political and financial difficulties such situation would create.