462.00R296/4134
Memorandum by the Chief of the Division of Western European Affairs (Boal)
I called Ambassador Edge on the trans-Atlantic telephone at 7 p.m., and explained to him that an important message regarding the debt question was on the wires, and asked the Ambassador to be prepared to have it decoded at once in order that its text would be available in the morning. The Ambassador said he understood and would make arrangements immediately. He continued that he and Mr. Marriner54 had seen Laval in the course of the afternoon, and had been told by the latter that a Cabinet meeting was to take place in the morning to prepare a reply to the United States accepting the President’s proposal in principle, but stating that the unconditional portion of the reparation payments should continue to [Page 55] be paid into the International Bank. The Bank would be asked to use its judgment as to the best way of applying the amounts so paid in. They might either remain on deposit or be used to assist Germany. The Ambassador said he had sent a telegram, which we would receive in the morning, giving the details of this conversation.
Ambassador Edge added that he indicated to Laval that this counter proposal would probably not be satisfactory to the American Government. I said that our telegram to him contained a paragraph dealing with the rumored French proposal and that our attitude was negative. I told the Ambassador that he should go over our message carefully and use his own judgment as to whether to present it in writing or to take it up with Laval orally. He said it would be difficult to see Laval before the meeting, but he would use his judgment after he had received and read the text.
I also took occasion to give the Ambassador the substance of the message we had just received from Home, concerning Mussolini’s acceptance of the President’s proposal,55 and added that the text of the telegram from Rome was being repeated to him. The Ambassador said the situation in Paris was rather difficult. There is going to be a vote of confidence in Parliament on Saturday and the Government is not in a position to do very much when there is a division in the Cabinet like the one that exists at present. The Ambassador thought that under the circumstances the Cabinet would have to insist on continuing unconditional payments to the Bank in line with the French counter proposal.
In subsequently reporting my conversation with the Ambassador by telephone to the Secretary at Woodley, I pointed out that the French counter suggestion appeared to contain possibilities of a way out by which the French Government could be permitted to save its face with its own people.