The French Ambassador sought this interview and when he arrived he
produced a memorandum, which is attached hereto, which he said was a
translation of a message he had received from his own government and
that he left it not as a note or as a memorandum but simply as a
message, for my own personal and confidential use, to explain the
situation in which his government was. He told me that it was a copy
of a message which his government was sending to the governments of
Great Britain, Belgium and Italy, (being the other creditor
countries like France) in order that there might be established a
unity of viewpoint on this question of reparations and debts while
the Basle Committee was meeting. At the same time he told me that
his Financial Attaché, Mr. Monick, would deliver to Mr. Mills at the
Treasury another copy of the same paper for the same purpose this
afternoon. I asked him whether I should read the paper then, and he
said yes. I then read it and when I got through I asked him whether
the last paragraph on the fourth page50 referred to
the provisions in the Young Plan under which the creditor nations
are entitled to retain a certain percentage of any concessions which
they may receive from the United States as their creditor and pass
on the remaining percentage to Germany. He said, “Yes, we waive that
provision for the retention.” He then said to me that while Mr.
Laval was under political limitations it was his own (the
Ambassador’s) impression that this message was intended to be
conciliatory in reference to the questions which I had raised in my
[Page 355]
talk with him last
week. I then pointed to the paragraph at the top of page 351 and said
that I understood that this was an admission that the Special
Committee could examine into and report on the entire economic and
financial field affecting Germany, but that of course all action on
its report was a matter for others. He said, yes; that that was his
interpretation and this was intended to remove what he thought was
my principal trouble last week. I said that it was not my only
principal trouble but one of my principal troubles. The Ambassador
then told me that his Financial Attaché was going to sail next week
for France in order to explain to them the situation that he learned
here in many conferences not only with the Treasury but with bankers
in New York. He said, “While I am not authorized to say so, I am
under the impression that this note is conciliatory and the French
Government will go further.” He said, “That is only my personal
opinion, but I think the real situation is that we are approaching
the ‘last ditch’ and unless we wish to lose all that we have got we
shall have to make very considerable sacrifices.”
[Annex]
The French Ambassador (Claudel) to the Secretary of
State
At the moment when the German Government has just addressed to
the Bank of International Settlements a request for a meeting of
the Consultative Committee provided for in the Young plan, the
French Government thinks it advisable to explain its point of
view on the reparations question to the other creditors of
Germany, in order to establish a community of view as complete
as possible. Instructions to that effect have been sent to the
French Ambassadors in London, Brussels and Borne.
The French viewpoint is as follows:—
1°—In order to avoid any misunderstanding, it should be recalled
that the memorandum forwarded by the German Government to the
Bank of International Settlements, although submitted in advance
to the French Government, was not drafted in agreement with the
latter, and the French Government is not bound thereby.
The only purpose of the modifications which took place upon the
request of the French Government was to avoid the obligation, in
which France might have found herself, to make reservations
concerning certain points contained in the memorandum.
Therefore,
[Page 356]
she keeps
her full liberty of action and of agreement with the other
creditor nations.
2°—Germany remains bound by the obligations which she willingly
and solemnly contracted at The Hague.
The exceptional procedure suggested last June by President Hoover
has not altered the validity of previous agreements. When the
German Government made use of the procedure of the Young plan in
order to obtain, at the expiration of the Hoover moratorium, the
reduction which circumstances may render necessary, it took an
initiative which, in the very interest of a bona fide debtor,
should prevent any misunderstanding as to the validity of the
plan.
3°—In its request, the German Government insists upon the fact
that the facilities of payment provided by the Young plan do not
meet any longer the present situation.
Although observing that Germany is largely responsible for her
present financial difficulties, the French Government is ready
to admit that the world economic crisis, the amplitude and
acuteness of which are beyond any prevision, may necessitate a
temporary revision of the Young Plan together with an agreement
concerning intergovernmental debts. Such a revision should be
limited to the period of the economic depression.
The inquiry of the special Consultative Committee could, as the
German Government requests, deal with the whole economic and
financial situation of Germany, taking into account all the
elements which affect such situation, the question of the
private debts of Germany being one of those factors.
The problem raised by this last question should however remain
distinct from the problem of reparations and its solution
belongs to another committee. Although they must be dealt with
along parallel lines, these two questions should not be
confused.
By commercializing the unconditional part of the reparations
annuities, the Young Plan and the Hague agreements have
assimilated that part of the annuity to those external debts of
the Reich which have the character of a private liability. This
is why the French Government could not accept that priority be
given to private debts over reparations.
5°—In the opinion of the French Government, the problem to be
settled is of a more general character. The point is to know
whether in case the German Government agrees to respect its
obligations within the measure compatible with its
possibilities, solutions can be found which will restore the
situation of the Reich and allow normal economic and financial
recovery not only in Germany, but also in all interested
countries.
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The Committee should recommend by way of general conclusions the
measures to be taken by the Reich in order to re-establish its
credit, the interested Governments being responsible as to the
choice of the decisions to be arrived at, for the application of
these measures.
For that purpose, the French Government favours the meeting of an
intergovernmental conference.
6°—When this conference convenes, the French Government firmly
intends to keep the balance due it under the provisions of the
Young Plan for the reparation of war destructions in France.
However, the French Government is in no way opposed to finding
at the convenient time and for a temporary period modalities of
payment which would be necessary to reconcile the various
interests to be considered. These modalities could be found by
way of deliveries in kind or by way of commercial loans that
would be granted the German economy through a part of the
unconditional annuity due during the period of depression.
7°—According to the text of the memorandum of the creditor powers
which is annexed to the Young Plan, the revision of the German
annuities is possible only in case of inter-allied debts being
reduced, said reduction being to the benefit of the Reich for a
part, and of the creditor nations for another part.
The French Government is ready to grant Germany the totality of
the bonification to which it would be entitled according to the
Young Plan if the other powers are ready to make the same
sacrifice.