Memorandum of Trans-Atlantic Telephone Conversation35

Mr. MacDonald: There is very bad news from Berlin this afternoon. Norman has talked with me about it. The situation has suddenly become very critical.

[Page 30]

Secretary Stimson: I can reassure you on that; no time is being lost. The President has been engaged all day in sounding out the opinion of the leaders of Congress and he has met with gratifying success so far. He is making a partial statement to the press to that effect, because it had begun to leak. The proposal which he was discussing was a suspension of all intergovernmental claims, including reparations, debts of all kinds, except debts owed to private citizens commercialized, for one year, and he is meeting with gratifying success. I have sent for your Ambassador and he has not yet arrived. I have sent for the French Ambassador and told him of it and he received it very warmly. But I am anxious that you should use whatever power you can to put pressure now on Paris. I want your help on the point that it must be mutual or it will not go at all. It must include claims of all sorts except those which have been commercialized to private citizens and any lack of mutuality on the part of France will result in nothing being done. Things are moving very rapidly and very possibly the President will be in a position to put out a statement in a day or so. But he is putting out a partial statement this afternoon which has already been issued. Just now. On account of a leak. It is an incomplete statement and does not give a full statement of what he is doing, but only indicates he is doing something. That is about the extent of the news now. It is the best we can do and it was enough to astonish the French Ambassador.

Mr. MacDonald: I suppose you have heard that the French agreed after all to put up sixty-five million schillings to the Austrian loan.

The Secretary: I did and I was delighted, for it indicated that even a sinner can change his heart. The Cabinet has turned it down?

Mr. MacDonald: They have reimposed those conditions.

The Secretary: They will meet a blast of public opinion if they try that.

Mr. MacDonald: There has been a big run on the Reichsbank today. Their reserve this morning was only one hundred million marks above the legal minimum. They have lost today seventy million marks on foreign currency.

The Secretary: That is the critical position which has suddenly arisen? Well, we are off now—we are moving, and I hope it will not be too late. Do not forget about putting pressure on Paris.

  1. Between Mr. MacDonald in London and Mr. Stimson in Washington.