462.00R296/3981: Telegram
The Chargé in Great Britain ( Atherton ) to the Secretary of State
[Received June 15—2:40 p.m.]
187. Vansittart24 sent for me this morning in connection with your conversation on Saturday evening (June 13) with the Prime Minister.25 He said that MacDonald had learned with satisfaction that the United [Page 17] States was prepared to make any necessary approach to the Government of France, since he felt that if that were the case a more immediate response was probable on the part of France than if the British Government initiated the discussion in Paris.
The Prime Minister desired, in this connection, that you should know that yesterday a telegram was received at the Foreign Office from the British Ambassador in Paris26 stating that the French Government was most apprehensive over the German situation and desirous that the viewpoint of the British Government be ascertained by Tyrrell and the Quai d’Orsay advised thereof. In reply a telegram will go forward this afternoon in which the German situation as presented by Bruening last week at the Chequers Conference, will be analyzed. The telegram will indicate that since then the situation has become steadily worse and is now so serious that the present crisis may overwhelm Germany and Austria with grave repercussions in Europe unless immediate steps are taken to alleviate the situation. The telegram from the Foreign Office will point out that no adequate measures of assistance are possible by the British Government and that upon France and the United States rests the initiation of relief. A memorandum was then read to me by Vansittart. It contained points for your consideration in any discussions with the French concerning relief to Germany. These points are as follows:
If the arrangement is to be of any value, it must be applied to all payments under the Young Plan and the agreements annexed to the Plan (not the Versailles Treaty), but not including the service of the Young loan (which is a commercial debt and Germany’s credit would be broken by its suspension). When the United States makes its démarche in Paris, the French will probably exhibit a very strong tendency to bargain for a continuation of the unconditional annuities. It will be fatal to the success of the proposal, however, to admit a concession on this point because:
- (1)
- If the French are to continue to receive unconditional annuities, the Belgians will want their payments for the marks issued in Belgium during the War and then public opinion might compel Italy and the United Kingdom to claim their shares.
- (2)
- Germany will be compelled, therefore, to continue such large payments that the relief to German economy will not be adequate to preserve confidence.
- (3)
- A precedent will be established for suspending the war debts while insisting on the payment of reparations.
A second memorandum was also read to me by Vansittart. This memorandum which the Prime Minister desired you to have knowledge of, stated that yesterday Montagu Norman of the Bank of [Page 18] England had telephoned to the Federal Reserve Board that, in his opinion, the German situation was so acute that a week’s delay before making relief measures effective was too long and that it was only a matter of days for Austria.
The above statement by Norman, I venture to point out, differs from his opinion as quoted to me by MacDonald and as reported in my 175, June 8, 2 a.m. The press here is giving considerable prominence to a Reuter despatch of yesterday’s date quoting the State Department to the effect that should the debt situation become acute, consideration by the United States of whether it would be advisable to change temporarily her clearly stated debt policy would become necessary.