800.51 W 89France/50a: Telegram

The Secretary of State to the Ambassador in France ( Herrick )

493. Extracts from statement of so-called “balance sheet of France” issued by Finance Minister Clémentel21 has [have] been given wide publicity in press and have caused most unfavorable impression. It would appear that Clémentel endorses a policy not in accord with the statements heretofore made to you as reported in your letter of December 12th,22 or with the statements made to the World War Foreign Debt Commission by M. Parmentier. For instance, the report is said to contain the following:23

“This technical exposition of the elements which constitute our debt to the United States and Britain doesn’t seem, however, sufficient to justify a brutal addition to our liabilities of the sums which it seems to represent.

“The question of a settlement of our debts to Britain and America has just raised the general problem of interallied debts, an examination of which has not yet been seriously taken up because of the uncertainty existing from a lack of accord among the Allies on ways and means of the payment of reparations by Germany. …24 If we abandon the juridical plane and look on the matter from the higher view of cooperation and fairness, strict justice would seem to demand a general pooling of war expenditures and their allotment among the allied States proportionately to the riches of each one, and without taking count of the particular engagements which the necessities of the moment imposed. …24 at least France could hope that the rank she occupied on the long list of sorrows and devastations would give her the right to legitimate concessions in the domain of compensations.24a

. . . . . . . . . . . . . .

If the abstention of our principal debtor has not yet permitted us to undertake a settlement, for which we first hoped, nevertheless we cannot consider the possibility of assuming the burden of annual [Page 135] payments which may be fixed until we have first completed the work of reparation of the damages which our devasted regions suffered, and until the payments due us under the peace treaty have created for us the necessary resources.25

. . . . . . . . . . . . . .

France doesn’t intend to repudiate any contracts she has made, and her signature always will be held sacred. But she is convinced that an appeal to the sentiments of justice which grouped so many nations around her in the war will not be in vain, and she is convinced that her allies and friends will respond to the hopes she places in their conscience and their sentiments of justice and solidarity.”

M. Clémentel is also reported as advancing the argument that France should receive due compensation for the fact that her soil was the common battle ground; that inasmuch as the Governments of Britain and the United States collected large sums in taxes by virtue of expenditures which France made within their borders, the total of these taxes should be deducted from the French debt; and that advances made by France to her Allies of some fifteen billion francs should be taken into consideration. France’s debts to Great Britain and the United States are spoken of as so-called political debts.

2) Senator Reed, of Pennsylvania, whose friendship for France is well known, discussed the Clémentel statement in the Senate yesterday. After stating the amount of the advances to France, Senator Reed pointed out that in order to pay the current interest which French tax payers should have paid, we have taken from our tax payers approximately eight hundred million dollars in the last 6 years. He said:

“We have a full understanding of France’s difficulties. We understand how hard it is for her and for Italy and for Belgium and these other countries to collect what is coming to them from Germany, and that is why our people have not wished us to press unduly for the payment of these foreign debts; but the debtor nations have taken no steps toward refunding the debts, they have paid no interest upon it, and they have not even given authority to any of their official representatives to come to any terms with our country toward refunding.

Mr. Parmentier came here in 1922 absolutely naked of authority to come to any settlement, or even to recommend any settlement to his own Government as far as we were able to learn. The French ambassador—Mr. Jusserand—has done the best that his great talent enables him to do, but he is without authority. He has done much to keep the situation placid. He deserves the gratitude of his country to an extent that I believe few of his own countrymen as yet understand, because his efforts have gone far toward preventing this question from becoming acute. But now, Mr. President, from France itself, and from Paris, and from the cabinet of the present administration, comes a step which our people can not fail to regard as being some evidence of an official intention to repudiate that war-time [Page 136] debt—the publication of a balance sheet, listing the obligations of the French Republic, that absolutely omits the debt to America or the debt to Great Britain incurred during the time of the war—and I do not believe that the United States Senate ought to take an adjournment after the publication of that balance sheet without some voice being raised in protest against it.

I make no threats. I do not believe that anyone in the Senate desires to make any threats. I know that I speak wholly out of friendship for France, but with an acute realization of the fact that American taxpayers are paying every day a debt that France owes. France must be told by her friends that her inaction in this matter throughout the past 5 years has puzzled those of us who look toward her most affectionately, and she should be told that this publication of last week has alarmed her friends and alarmed them very gravely. France must be made to see—and when I speak of France I speak of her because this publication comes from the French ministry, although what I say applies as well to the other countries that are still in the same position—that her present course can result only in a chilling of that affection that she has found to exist here in America throughout the past decades. It can have only that result, Mr. President, and she must be told it by her friends, and she must be told that each day of delay in achieving a refunding of that debt makes it more difficult to grant her leniency in terms of payment. Her taxpayers deserve consideration. Their sufferings must be remembered, and the terms of payment must take into account the difficulties of payment on her part, but each day that she waits makes that more difficult of achievement. And, finally, she must be told by her friends that future French loans in America would be made impossible by a repudiation of the existing debt.”

3) In reply to an inquiry from one of the correspondents at the morning press conference yesterday, I pointed out, not for quotation, that

“What Mr. Clémentel had said was not an official communication to this Government; that it had not been communicated to this Government directly or indirectly. So far as its communications to us were concerned the French Government had never suggested that it repudiated its obligations or asked for their cancellation. On the contrary the French Government had always stated to us that it expected to pay although it had stated its difficulties in arranging for payment and that it would like to have easy terms. Only recently the French Ambassador had stated that France did not ask for a cancellation of its debt and when the French Commission was here some time ago, headed by Mr. Parmentier, while they were not ready to make a funding proposition they did not ask that the debt should be cancelled or repudiate its obligations. So it is my understanding that France acknowledges her debt and intends to pay. While the United States does not wish to be oppressive, we recognize no grounds in law or equity, (there can of course be no question of our legal position), why the debt should be reduced or cancelled.

The attitude of the American Government has been made clear again and again in official pronouncements. These statements had [Page 137] been made by the President himself. This Government had always opposed the cancellation or an international conference which would bring our debt into discussion. An analysis of the manner in which the debt was incurred would show that our position was entirely equitable. After our army went to Europe there were vast purchases in France and large obligations incurred by our Government to France which were set off against the indebtedness owed by France to us. Besides enormous sums lent France during the war an additional billion dollars was lent her after the Armistice, exclusive of the $400,000,000 for purchase of surplus army supplies after the war. It would be a very serious mistake not to recognize our debt and provide for its discharge as international credit should be maintained.

The United States would not consent to any arrangement for the pooling of our debt. This Government regards the debt question as a matter for Congress, and a Commission was formed for funding the debts owed to the United States.”

[Paraphrase.] 4) While this Government has not received an official communication of the Clémentel statement, it has nevertheless been widely published and cannot, therefore, be ignored. In order to make clear our position and to remove any misunderstanding in regard to a proposal for partial or entire cancellation of the debt, you will please find an early occasion to take up the matter informally with the Premier and the Minister of Finance in the light of the foregoing. They should understand that public opinion in this country reacts promptly and definitely to statements such as those of M. Clémentel which raise a question as to the French Government’s intention to pay its debt or as to the equity of such payment, and the United States Government must expect that the French Government will take an early occasion to give evidence of its intention to pay and make proper provision for refunding of its debt.

Results of your conversations should be cabled and please advise also as to desirability of making formal written communication of our views. [End paraphrase.]

Hughes
  1. Inventaire de la Situation Financière de la France au Début de la Treizième Législature, présenté par M. Clémentel, Ministre des Finances (Paris, Imprimerie Nationale, 1924).
  2. Not printed; see the Ambassador’s telegram No. 550, Dec. 8, p. 132.
  3. Inventaire, pp. 72–74.
  4. Omission indicated in the original telegram.
  5. Omission indicated in the original telegram.
  6. Omission which follows is indicated in the original telegram.
  7. Omission which follows is indicated in the original telegram.