Memorandum by the Secretary of State of a Conversation With the French Ambassador (Claudel)

The French Ambassador called and we had an important talk. He began with the question of the financial crisis in Germany and asked whether anything could be done. While he did not suggest that he was speaking by instruction I thought it offered an opportunity to get across to him our attitude as to the position of the French Government in this matter. Claudel has shown himself to be an accurate and helpful reporter of our conversations in the past, and so I decided to take a chance here.

In the first place I told him I had been discouraged, much discouraged, by what I had heard of the action of France in regard to Austria. I said I had only one report and it might be distorted, but my information was that when Austria was in a financial crisis on Tuesday and the various central banks were trying to raise money to assist Austria in meeting this crisis, France had mixed politics with finance and had refused to help, and it had resulted in the Bank of England making the entire loan. I told him that my information was that the French banks had refused to advance the money unless [Page 27] Austria should agree not to go into a Customs Union with Germany. I said that did not appeal to me as the proper way to meet a financial crisis.

We then went on to discuss the situation in Germany. The Ambassador said that he regarded Bruening as a great man who was trying to do his best in this situation. I said I agreed with him. The Ambassador said he had been in New York and had talked with the bankers and that they thought something ought to be done. I said yes, they had spoken to me, but that I also saw the difficulties of doing anything. The Ambassador said yes, he appreciated that; that he had been here now four years and he understood the difficulties of our Constitution better than ever before and he realized the difficulties that I was under. I said that it was not only, however, the difficulties of America that I saw but the difficulties of France. I said that in my opinion France occupied the key to the situation; that nobody could help unless France helped. He asked, “Do you mean that you would help if France helped?” I said, “I cannot say that unequivocally—I cannot speak on that subject entirely with authority, but I can say unequivocally that unless France would help we could not help.” He said, “Those are weighty words.” I said, “I know it, and have thought of them for a long time.”

He spoke of a moratorium by Germany. I said, “I cannot say whether the asking of a moratorium under the Young Plan by Germany would cause additional panic. Some of the bankers say that it would not now, because the situation has been so discounted.” The Ambassador said yes, he knew that; that they had said the same thing to him. I said, “But there is some question as to whether a moratorium under the Young Plan would give Germany sufficient relief to make it worth while because it would not free her from making the payments.” He said yes, he knew that to be so. I said, “The least objectionable plan which I have read would seem to be the plan of giving time on the part of everybody for one or two years; that that might give relief, but it must be on the part of everybody, and not on the part of America alone; that no plan which would propose that America should give up her debt receipts and leave France and England free to hold on to their receipts from Germany would have any chance of acceptance by this Government.” He asked, “Do you mean the move must come from France?” I said, “Yes, we shall certainly make no move nor consent to any move until we are certain what France’s attitude is.” He said that might be pretty hard on France. I reminded him that France was looked upon as the rich nation of Europe now, and I reminded him of a message which had come to me from France in which the French [Page 28] Government, as I remembered it, alluded to France and America as the two countries which had the gold. To make perfectly certain what I meant, I showed him the Lazard chart which lay on my table, which he said he had seen, and I pointed out the share of payments which came to France in the fifth row, and putting my finger on the green shaded portion marked 406.2, I said that unless France was willing to give up that portion, there was no chance of America giving up the portion which would come to her (being the white portion marked 432.2), and I pointed out the similar situation in regard to Great Britain and Italy. I said that unless everybody joins, certainly the Great Powers, there will be no possible chance of obtaining the consent of the American Congress. He said he appreciated the force of that position and that he would think over it very carefully. To make perfectly clear there was no misunderstanding before we separated, I again said to him that I had no authority to say to him that this plan would be accepted by the American Government, but I was perfectly certain that the other plan would not—referring to the plan for America to make the only sacrifice. He said he understood that and he understood its force. He said to me that he would think over carefully this matter.