462.00R296/4035: Telegram
The Secretary of State to the Ambassador in Italy (Garrett)
90. The conversation reported in your 101 of June 22, 5 p.m., has much surprised and concerned me.
The debt statement of the President is an effort to bring about relief by giving all debtor nations time to breathe without changing the legal relations and obligations existing between them and their creditors, at a moment of dangerous tension and in the face of a major crisis. This Government, to do this, contemplates a far greater sacrifice than any which would be entailed for Italy by the suggestion. According to your 101, I now find that Grandi told you that Italy was disposed to come to the assistance of Germany but could not grant Germany a complete remission of reparations for a year without Germany, on her part, undertaking not to proceed any further with the Austro-German Customs Union during that period.
I can hardly believe that there is not some misunderstanding of Signor Grandi’s meaning, in view of the fact that such an attempt to inject political bargaining into a relief measure designed to meet a great crisis is so contrary to the obvious requirements of the European situation and to the spirit of the President’s suggestion. You may recall, as Grandi pointed out, that no political terms were imposed when assistance was finally arranged for Austria, who, at the time, was involved in a most difficult financial crisis. A most painful impression was caused by the very suggestion that such terms might be asked, which came as a shock to this country. To me it is evident that no Government would in exchange for financial safety accept such conditions.
It is impossible for me to reconcile Signor Grandi’s attitude which is expressed in your No. 90 of June 10,18 with those which your No. 101 contains. From your 90 and 91,18 I gathered that Italy had been among the first to recognize that this question needed a generous and far-sighted attitude and that in such a movement Italy was prepared to take the lead. It seemed to me to be certain that she would welcome a broad move for relief made on her own suggestion, as it were.
The World Court has had referred to it the legal aspects of the proposed Austro-German Customs Union, and my understanding is that the decision of the Court in the premises must be accepted by Italy, as well as by France, Germany, and Austria. Any intimation at this time that the Court’s decisions were to be so perfunctory that member [Page 221] nations were disposed not to await them before attempting to impose political conditions connected with the Customs Union on the parties who had submitted their disputes to the Court would shock us and if such a state of affairs were revealed to opinion in the United States, it would certainly draw the most discouraging conclusions.
I should say at once that there is no chance of getting through Congress any other type of measure, and if it were felt by Congress that advantage was being taken of the President’s suggestion as a means of exacting political concessions in Europe, its withdrawal would at once be insisted on by Congress. The Government which had injected political demands into this relief measure would have to bear the responsibility for the situation thus created and public sentiment would be deeply exercised against it in this country and, I believe, in many others.
Grandi should be cautioned by you with regard to the effect in this country of any public report of the views he expressed to you. A revulsion of feeling against the plan and against Italy would ensue if this came to the knowledge of the leaders with whom the President has consulted and on whom he relies for the furtherance of his proposal.
The unfortunate impression which has been made on the President and me and which will be made on Congressmen and the public by Grandi’s message has only been mildly described in the foregoing. However, the danger of the obstacles which might be created by exciting in members of the Italian Government the strong feeling which their message has excited in us is realized by me, and in the presentation of the case, I rely upon you to use your judgment in view of your closeness to the Italian Government.
I desire you to see Grandi and to talk with him on the basis of what I have said in the preceding paragraphs. You should make it plain to him that we are relying on his unfailing statesmanship to make it possible for the suggestion to be welcomed by Italy in the same spirit in which it was offered by the President.