462.00R296/4716: Telegram
The Acting Secretary of State to the Chargé in Great Britain (Atherton)
240. For Gibson. Reference is made to your telegrams of July 25, 1931, Nos. 267,54 268, and 269.54 In the light of the interpretation which the Department has placed on the contents of these telegrams, three principal points have been dealt with in the discussions up to the present: (1) The length of time for the repayment of the deferred annuities upon reparations and debts; (2) the extent of the priority of the postponed payments as compared to future normal payments; and (3) the rate of interest which will apply.
[Page 171]With respect to these three points the Department wishes to comment as follows, leaving to your judgment the method and the time of introduction of these observations into the discussions:
- With regard to (1), although we would not oppose any scheme whereby the original simple plan of postponement and resumption was adopted, as long as it were adopted by all Governments, and although we can accept any plan which might lead to that result, this kind of agreement seems very unlikely to be realized because of the position of the French Government; and it should be understood in this connection by the British that we cannot inaugurate any new steps on this point ourselves. Moreover, an arrangement whereby different methods of repayment were allowed the different debtors of this Government could not be accepted by us. You should make it plain to the British Government, however, that the American Government would be pleased to agree to any arrangement extending the time of repayment so long as this arrangement was agreeable to all of the interested nations.
- With regard to (2), the question of the priority of the deferred payments as compared to future normal payments, this should be settled between the Governments receiving reparation payments and the Government of Germany. Whatever agreement might be arrived at would in all probability be acceptable to us. The American Government does not wish to be involved in the solution of this matter.
The third point, that of changing the formula previously used into a uniform rate of 3 percent, would arouse considerable Congressional opposition. While I do not wish to attempt a prophecy, in my opinion the formula used would be financially as advantageous as the rate of 3 percent to our debtors.
It is desired by the Department that its policy shall permit of as great a flexibility as possible while adhering to the spirit of the Hoover proposal. The Department trusts, therefore, that these statements of what it cannot do will not be considered a fixity of mind but rather a fixity of principle.