462.00R296A/19: Telegram
The Secretary of State to the Ambassador in Germany (Sackett)
198. Embassy’s 215, November 14, 2 p.m.
1. With regard to negotiations by the German and French Governments for a calling of the Basel Committee, the following is our present view of the situation as formed from your cables and those of others: Before making the request that the Committee be summoned, the Germans have been seeking assurances whereby every aspect of their financial and economic situation will be considered by the Committee, and that the report of the Committee would even embrace a survey of unconditional reparation annuities. The limitation embodied in paragraph 125 of the Hague agreements46 is the chief cause for anxiety in the German Government. On the other hand, the French have seemingly been attempting to secure a pledge from the Germans that neither the Basel Committee nor any subsequent action will question the rights of the French Government to its unconditional annuities. Furthermore, although the reasons for their action are not clear to the Department, the French authorities are apparently seeking to place beyond [Page 346] the scope of the Committee a study of the conditions which affect the ability of the Germans to pay arising out of the obligations which the Germans owe to private parties.
Consequently, before the Committee convenes, both the French and German Governments, each in its own interest, are endeavoring to circumscribe or direct the action of the Committee.
2. Both during and subsequent to the conversations between Laval and President Hoover, the point of view of this government has been that the immediate calling of the Basel Committee was desirable. Both the President and the Prime Minister considered it advantageous, in view of the temporary situation, to proceed with a review of reparations by utilizing the machinery provided for in the Young Plan. Neither the President nor I were of the opinion that the possible scope of the Committee should be predetermined; we felt that the situation would be studied by the Committee without limitation. That is to say, we thought that the Committee’s survey of the subject should not be circumscribed in its scope before employing the provision in the Young Plan to call the Committee.
The initial attempt to have the jurisdiction and function of the Committee exactly defined was apparently made by the Germans because of their fear of paragraph 125. For reasons just stated, we are of the opinion that this is unnecessary. It is my desire that you inform the German Government of this opinion. At the same time, you should tell them that from his conversations with the French Prime Minister, the President gained the impression that the French Government would make no attempt to prevent the Committee from considering all the realities of the situation.
To summarize, the point of view of the United States was and continues to be that the machinery of the Young Plan should be employed to inaugurate an examination of the reparations question amidst the temporary conditions maintaining. The Committee should be free, however, to fix the scope of its analysis and recommendations. Thus the Committee and such future meetings of Governments as might be called would deal with the question of discovering the proper solution for opposing interests. We still believe this to be the most satisfactory and simplest course to pursue.
3. The possible action of the Committee has already been dealt with in conversations between the Germans and French. Should they agree upon definite terms of reference for the Committee, and should the other countries who are parties to the Young Plan be satisfied with the terms, the arrangement will be viewed as one between the parties themselves. The Germans must understand, however, that any terms of reference whereby either the French or Germans attempted to safeguard their own interest in such a manner as to gain a [Page 347] special advantage or to prejudice our interests would of course not be satisfactory to us. We consider it unwise that the question of priority as between types of Germany’s obligations should be brought about by the advance terms of reference.
4. The favorable attitude of the German Government toward making possible at once the meeting of a German bankers’ group pleases me. The problem created by the prospective expiration of the Standstill Agreement would be the subject of negotiation between that committee and the foreign bankers. The short-time credit situation is solely a banking matter to be solved by methods unconcerned with the reparations problem. This has been my point of view ever since I visited Berlin last summer. I clarified this, as you will recall, to both Chancellor Bruening and President von Hindenburg. I was explicit in stating to them that the fulfillment of private obligations by the German people was regarded by us as purely a banking and commercial matter. Our considered position in this respect has not changed.
The attitude of the United States remains therefore that German and foreign banking groups should deal with the short-time debt problem in separate negotiations and that the results of such discussions must be left in the hands of the private groups. Our understanding is that the French will not object to arrangements for a separate negotiation. The objection of the French Government, however, appears to be to the opening of these discussions before the Germans have applied for the Basel Committee. To us this seems to be an unreasonable objection. Certainly it does not correspond with the stand taken by myself or the President last summer or during the visit of Premier Laval.
Confidence in the intentions and credit of the Germans will wane if they postpone for too long a time consideration of this short-time credit situation. You should continue to impress them with this fact. We entertain strong hopes that the German Government will make that imperative move at once—this, in spite of the fact that no immediate issue may be found in the negotiations with the French over the calling of the Basel Committee.
- Great Britain, Cmd. 3484, Misc. No. 4 (1930): Agreements Concluded at the Hague Conference, January 1930.↩