462.00R296/4067: Telegram
The Ambassador in France ( Edge ) to the Secretary of State
[Received 8:40 a.m.]
343. I visited the President of the Council late this evening with the ostensible purpose of explaining that France had been the first informed of the decision when taken, as stated in your telegram No. 332 of June 21, 11 p.m. [No. 265 of June 22, 7 p.m.?] Laval fully realized this fact and the circumstances that brought about the premature announcement, and he issued, as we left, a communiqué on this phase of our conversation.
The French Government had the will, the desire, and the parliamentary authority, Laval said, to associate itself with the President’s proposal, so far as it concerned conditional annuities, but the French Government could not, he added, renounce the unconditional annuities which were destined for rehabilitating the devastated regions. He did not consider that Germany should be relieved of all its out-payments in totality, since he questioned whether the usage to which the sums thus gained might actually be put would be welcome either to France or to the United States, namely, (1) armaments; (2) competition [Page 58] amounting to dumping; and, (3) exploitation of the countries to the east.
The reply which the Council of Ministers will approve tomorrow, he said, will be along the lines which Berthelot predicted in yesterday’s conversation, reported in my telegram 334 of June 22, 4 p.m., a cordial accord containing the principle of postponement and a reservation as regards the question of unconditional payments. Laval felt this was a far better answer than was probably expected by the Germans.
The Prime Minister said that the sums received for unconditional annuities might be paid by France into the Bank for International Settlements and that loans or credits could be made from these as at present according to the needs of any states, including Germany and others, as Austria, for instance. As to the acceptability of this proposal I told him that I could make no promise but indicated that I was sure that no French Government could hold out in the face of a united world movement if its proposal were not acceptable. Furthermore, I pointed out that the initiative of the United States had left out of the count these legal distinctions, that the sacrifice of the payments due us did not rest on technical considerations and that it was intended to bring about a better world condition which would obviate all doubts of this nature. The President of the Council agreed cordially with the high purpose and associated himself with it, but was afraid that to attain the ends proposed a one-year delay might not be long enough. He seemed very sure of his position and of the support which his Government might reckon on in Parliament, in view of the fact that the Socialist opposition had passed resolutions of almost identical tenor this afternoon.
Social gossip in Paris anticipates that the Government will fall on this issue on Friday, but Laval insists that his Government’s action is based on the best interests of France and the world and not on a desire to remain in power.