462.00R296/4726b: Telegram

The Acting Secretary of State to the Ambassador in Germany (Sackett)

[Paraphrase]

133. For Mr. Stimson.

1.
Newspaper reports from Germany and other capitals of the Continent tell us this morning the general story that Germany’s needs have not been met, that Germany is still near bankruptcy and that she must have further help or dire things will result. Statements from Bruening are in the same vein. The tendency of all these comments is to undermine still further the confidence of the world in Germany. No nation which claims to be a bankrupt can establish her credit situation. The immediate effect is that it is difficult for us to continue with the banking cooperation. It also makes any extension of further credits absolutely impossible.
2.
These things have been accomplished through the assistance of the United States:
(a)
The relieving of Germany of $400,000,000 in reparations.
(b)
The maintenance of German private credits amounting to $1,300,000,000.
(c)
The accomplishment of all this without involving Germany in any political obligations.
(d)
The provision of machinery which, if the Germans were willing to strengthen their own credit and confidence, might well yield further assistance.

We have done everything we can, but the situation is hopeless unless there is a change in tone out of Germany. Is it possible for you to impress this on the Germans?

3.
We are aware that your visit to Germany was unavoidable. However, the opening words of this morning’s press summary from Europe are: “The question of further financial aid to Germany from the United States will be taken up by Secretary Stimson during his week-end visit to Berlin, where conversations begun at the dinner party tonight left off, etc.” The net result is to link your visit with further aid from the United States. This creates complete uncertainty and is discouraging. It once again takes the responsibility from the bankers and destroys the prestige of the machinery set up by the Bank for International Settlements. It is vital that you announce clearly that your visit to Germany was arranged some 2 months ago and that there will be no discussions of the economic questions which were the subjects of conversation at the London Conference and which will be dealt with solely by the agencies established at that [Page 552] time. We hope that you will take this position and refuse to discuss any economic matters, for anything you say will find its way to the press. The only result would be to raise expectations in the German people which will never be realized and to destroy the value of the B. I. S. machinery for Germany. It is important that this question be clarified immediately both by you and by us. If you succeed in clarifying the situation we shall make no statement here, otherwise we must do so.75
Castle
  1. See statement by the Secretary of State at a press conference held in Berlin at 7:30 p.m., July 25, 1931, Department of State, Press Releases, August 1, 1931, p. 116.