800.51 W 89France/101: Telegram
The Ambassador in France (Herrick) to the Secretary of State
206. Reference Embassy’s 8, January 3, 11 a.m., 188, March 20, noon, and my personal letter of March 19, 1925,30 bearing on French debt.
Clémentel has just sent me a note dated March 28, 1925, of which the following is a translation, enclosing a new text of his memorandum of December 30 which should be considered as canceled.
“My Dear Ambassador: You were good enough to transmit to me on January 3 last certain personal remarks concerning the terms of the memorandum which I handed to you on December 30 with regard to France’s debt towards the United States.
The French Government in its desire to arrive at an understanding between the United States and France is willing after the unofficial [Page 148] exchange of views which you were good enough to initiate and which you were good enough to offer to continue to present to the parliamentary commissions and then if it obtains their favorable opinion to Parliament itself a plan for the amortization of France’s war debt based on the points contained in my memorandum which has been modified by giving the greatest possible consideration to the suggestions you were good enough to make to me.
I desire to say to you, and I am all the more at liberty to do so since it is not yet a question of official negotiations but of unofficial preparatory conversations, that it seems that French public opinion and Parliament cannot go further than I indicated and that great efforts will be necessary, efforts which the Government is prepared to make in order to obtain the adherence of Parliament which as you know is necessary.
France’s proposals must indeed take loyally into account her possibilities of payment and it is difficult at the present time, only six months after the coming into force of the Experts’ Plan, to foresee what her possibilities will be.
I am sending you therefore a new text of my memorandum of December 30 in which the following changes have been made:
(1) France’s entire debt towards the United States would be fixed at its total in capital, that is to say, at about $3,340,000,000 (the value of American stocks included).
(2) This debt would be extinguished by annual payments corresponding to the following table:
| Number of annuities: |
Rate of interest: |
Value of annuities: (in millions of dollars) |
| 5, | ½ percent, | 20, |
| 10, | ½ percent, | 40, |
| 20, | 1 percent, | 55, |
| 20, | 1½ percent, | 70, |
| 28, | 2 percent, | 85, |
(3) The French Government is willing to agree that the rhythm of the amortization in capital of the debt should not be contingent upon the payments which France is to receive from Germany. The portion of the annuities representing the amortization would therefore be paid integrally and regularly to the United States whatever may be the degree of execution of the Dawes Plan.
Only the payment of the portion of the annuities corresponding to the interest of France’s debt would remain dependent upon the payments made by Germany and the possibility of the transfer of these payments.
If it appears to you possible to transmit this memorandum privately and unofficially to the Government of the United States it should be understood that it takes the place of the first memorandum which should be considered as canceled.
Very sincerely yours, (Signed) Etienne Clémentel.”
The new memorandum differs from that contained in the Embassy’s 8, January 3, 11 a.m. as follows: Section 1, paragraph 2 omit “as she [Page 149] herself would have forgiven her allied debtors”.31 Section 3, paragraph 232 should read:
“The adoption of such principles can only be reconciled with very easy conditions of settlement. It is, in particular, indispensable that the amortization table should show quite small annuities at the start in order to permit France: To wait until the Dawes Plan has entered into a period of effective application and the expenses resulting from the war (the pensions, annuity allowances for reconstruction) shall begin to decrease.
It is under these conditions that French public opinion may be led to adopt such a plan as the following: Fixing the nominal amount of the debt to the amount of this debt in capital, that is to say, at $3,340,000,000 (the value of American stocks included); rate of interest and amortization in conformity with the following table: (Here insert table quoted in foregoing letter.)
In order to combine in a certain measure the value of the annuities and France’s possibilities of payment, a principle which is in conformity with all the American declarations, it should be understood that if Germany were to fulfill only a part of the obligations prescribed by the Dawes Plan or if only a portion of the German annuity should be paid to France in accordance with one of the methods provided for in the Experts’ Plan, the portion of the French annuity corresponding to the interest of the debt should be reduced in the same proportion.
But France would undertake to pay regularly and integrally to the United States the portion of the annuities representing the amortization, whatever may be the degree of execution of the Dawes Plan.”
Portion of old text bearing upon American stocks is omitted from the new memorandum.
The new memorandum indicates that the suggested changes which I mentioned in my number 8 January 3, 11 a.m. have received certain consideration. Clémentel’s modification of his first proposal I construe to be symptomatic of the present government’s earnest desire for practical solution of this problem. I venture the opinion that it is an opportune moment to act because the French Government realizes now that the absence of progressive negotiations is restrictive to French credit. Moreover while the payment of entire debt has been unofficially avowed by the French Government yet I believe that important advantages would attach to the official and outspoken recognition of that principle. The harmful and befogging beliefs concerning the French attitude and that we are exacting creditors should then be dispelled. In this connection may I call your attention to the views expressed in my number 79 January 23d, 6 p.m. relative to the detrimental effect of marking time. To reject Clémentel’s new memorandum without a constructive suggestion from our [Page 150] Government as to what might constitute a starting point would have a depressing effect and tend to jeopardize future negotiations.
Accordingly in spite of the fact that the new memorandum does not embody all that is to be desired, nevertheless I earnestly hope that in view of the conciliatory changes in comparison with first proposal it may serve as a starting point. In that case I do not believe that it would be difficult to induce the present government to consent to taking steps along some of the lines suggested by Mr. Hughes in his letter of February 6th, 1925 to me.
Complete text of new memorandum by next pouch.33