462.00R296/4734: Telegram
The Chargé in Great Britain (Atherton) to the Acting Secretary of State
[Received July 27—4:53 p.m.]
270. From Gibson. I was asked this afternoon to call at the House of Commons to see the Chancellor of the Exchequer. The Chancellor [Page 172] stated that in his opinion repayment of the suspended annuities over a 10-year period, as provided in the Franco-American Agreement, would prevent the full benefits of the Hoover proposal from accruing to Germany. Furthermore, he had a more direct interest in the results of this method of repayment on the finances of Great Britain. The Chancellor said that he would prefer adopting one of the following methods, which are listed in the order of his preference:
- (1)
- Moving back the clock 1 year without any repayment plan such as that set forth in the Franco-American Agreement.
- (2)
- Providing for repayments over the entire period of the debt services.
- (3)
- In case agreement could not be reached on (1) or (2), spreading repayment over “as long a period as necessary.”
My reply to this was to the effect that the American Government had wanted a longer repayment period than that provided for in the Franco-American Agreement, but that in order to get the French to join the scheme we had consented to the 10-year period. Consequently we were not in a position to take the initiative in urging them to agree to a longer time. Acting in accordance with the views expressed in your telegram of July 8, 1 p.m., No. 43, I gave him an opportunity to infer that we would not be displeased at any effort made by the British to extend the period of repayment.
According to the Chancellor, the Japanese and Italians were admittedly in accord with the British viewpoint on this matter. He felt that an early understanding should be reached as the French Government would not consider changing the period, and had informed the British that the 10-year term was being adhered to just as firmly by the Americans. Consequently, the Chancellor would like to have your reactions to the above three means of repayment. Because of the fact that the British thought it was better to avoid open discussions on this subject at the present stage of the proceedings, the French views were given only in private conversations. However, as there may be a general discussion at any time, I would appreciate having your instructions as soon as possible.
I was further informed by the Chancellor that news had reached him this afternoon from the B. I. S. to the effect that notice had been received from the Federal Reserve Board that it would not name a representative on the Committee to inquire into the credit needs of Germany. This was considered very disquieting by the Chancellor, who said he would like to have some direct information on the position taken by the Federal Reserve, which he felt to be of great importance in the light of existing conditions.