800.51 W 89France/321: Telegram

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


279. For Secretary Mellon from Mr. Gilbert12 and Mr. Dewey:13

“At present the French situation as to ratification of the debt settlement seems to be substantially the following:

In order to bring about a stabilization of the franc it will be necessary for the French Parliament to ratify before adjournment both [Page 98] the British and the American debt settlements. Probably stabilization is impossible without foreign credits, and such credits or foreign loans either from America or Great Britain will be dependent upon ratification of debt agreements.

The time element is highly important. If the needed steps are taken within a few weeks the probability is that stabilization can be accomplished. In 6 months it may not be possible, and then the course taken by the mark may have to be taken by the franc, which would be most disturbing to international relations generally as well as to Europe.

Provided the present Government can find courage to force the issue it can possibly get both houses of Parliament to ratify the agreements with both Great Britain and the United States. It badly needs to have some face-saving points in order to gather the courage it needs and also to gain the support of some of its numerous opponents.

The present probability is that Caillaux14 will return from London with such a settlement as will provide enough concessions on the part of the British to give him something to discuss in the Chamber of Deputies. All the difference between failure and success of both the stabilization effort and the debt ratification itself might be made if Caillaux could have in regard to the American debt settlement something of the same nature at least as his British concessions.

While recognizing the impossibility of the United States’ giving any assurances in the nature of a safeguard provision, there is still the question whether something of a concession might not be made as to commercialization. Beyond a doubt there is real agitation here in opposition to the paragraph in the debt settlement which contemplates possible public sale of the bonds. It comes particularly from such persons as Poincaré who otherwise would favor the Government’s efforts at stabilization, but fear that the bonds might be sold in Germany or in world markets. How far the Executive of our Government would feel at liberty to proceed in present circumstances we do not know, but it occurs to us that it might be possible even without special legislative authorization for the Secretary of the Treasury to give, as a matter of interpretation, a letter referring to the above-mentioned paragraph of the debt settlement which would be similar to the one reported here to have been sent to Lacour-Gayet15 by Winston,16 and stating substantially that the intention of the United States is not to sell the obligations.

Our suggestion is not that the initiative be taken at this stage in giving out any interpretation. We do raise the question now in order that it may be considered thoroughly, in advance, so that an answer can be given instantly if the question should arise in some practical way. Up to this time there has been no request from the French Government for such a concession, but we foresee that something of the kind may possibly be asked, urgently, soon. It would be most [Page 99] helpful if in Washington, meanwhile, there were a careful and most confidential canvass of the possibilities.”

I entirely concur in the summarization of the situation by Dewey and Gilbert. I believe that such an answer to the question of “commercialization” as outlined might prove to be a decisive factor in bringing success to the plans of the Government. In case a favorable statement by Secretary Mellon proves possible, the thought has occurred to me to cause it to be suggested to Caillaux that he inquire as to the American viewpoint on “commercialization.”

To be useful a reply to this cable must be immediate.17

  1. Telegram in two sections.
  2. S. Parker Gilbert, agent general for reparation payments.
  3. Charles S. Dewey, Assistant Secretary of the Treasury.
  4. Joseph Caillaux, French Minister of Finance.
  5. R. Lacour-Gayet, Financial Attaché French Embassy, Washington.
  6. Garrard B. Winston, Under Secretary of the Treasury. For the letter referred to, dated July 4, 1926, see Lucien Petit, Histoire des Finances Extérieures de la France: Le Règlement des Dettes Interalliées (1919–1929) (Paris, Editions Berger-Levrault, 1932), p. 678.
  7. This telegram was transmitted by the Secretary of State to the Secretary of the Treasury on July 13, Secretary Mellon wrote to R. Lacour-Gayet as suggested, July 14, 1926; for text, see ibid., p. 679.