462.00R296/4106
The French Embassy to the Department of State 59
The French Government has examined with keen interest the proposal of the President of the United States and declares itself in cordial agreement with the lofty sentiments which have inspired that proposal.
The French Government more than any other is desirous of seeing affirmed, in action for the economic reconstruction of the world, a solidarity with which it has always been inspired, both in accepting the successive reductions in the German debt and in executing in advance the evacuation of the third Rhineland zone in exchange for a complete and definitive settlement of the program of reparations decided upon at Geneva, September 16, 1928.
[Page 63]It desires to emphasize before world opinion the extent of the new sacrifice which is asked of France after all those to which she has already consented.
In response to President Hoover’s proposal, the French Government is prepared to ask the French Parliament, whose intervention is indispensable and whose decision is sovereign, that France provisionally, and for a period of one year, forego the retention of any payment made by the Reich.
But, in view of the character of the freely accepted and recently signed engagements of the Young Plan, the solemnity with which was recognized the definitive and nonpostponable character of the unconditional annuities which express the permanent necessity of the principle of reparations, there would be great risk of shaking confidence in the value of signatures and contracts, and thus of proceeding contrary to the aim in view, if in the proposed suspension of payments the nonpostponable annuity should be treated like the conditional annuity.
The French Government emphasizes, in particular, that a formal assimilation has been established between the private debts of the Reich (Young and Kreuger loans) and the unconditional annuity not yet mobilized.
To suspend the payment by Germany of the unconditional annuity while permitting that the Young loan disposed of to the public should continue to be serviced, would go directly against a fundamental principle and express stipulations.
The Government, therefore, considers that there is a moral interest of the first order in not postponing in any way the payment of the unconditional annuity, even during the period contemplated by President Hoover.
The French Government, being desirous of collaborating fully in every effort made to attenuate the consequences of the present crisis, believes that it should point out, in the very interest of the success of this effort, that the mere general suspension of payments would furnish an inadequate remedy. The dangers now threatening German economy and more generally, European economy, have another origin and are especially due to important restrictions of credit and withdrawals of foreign funds. The solution of the German crisis, therefore, does not appear to lie only in the diminution of the charges on the budget of the Reich but in an extension of credit.
That is why the French Government declares its readiness, subject to the approval of Parliament, to place at the disposal of the Bank of International Settlements a sum equal to its share for one year of the nonpostponable annuity with the sole exception of the amounts necessary to the execution of the balances of the current [Page 64] contracts for payments in kind, a proceeding which, moreover, is advantageous to Germany economy.
In making this proposal, the French Government expects that the other beneficiaries under the Young Plan will adopt the same decisions and it even hopes that other measures may be taken to favor the beneficial restoration of credit and confidence in the world.
The sums thus turned over to the Bank of International Settlements could be utilized at once for improving credit in Germany as well as in countries of Central Europe, and especially those in which the suspension of the execution of the Young Plan during one year might create financial or economic disturbance. It goes without saying that the amounts so employed would again become available at the expiration of the period of one year contemplated as the limit of the provisional suspension of the Young Plan.
The French Government also believes that all necessary precautions should be taken in order that these sums as well as those to be derived from the easing of the budget of the Reich as a result of the suspension of the Young Plan payments for one year may only be used for economic purposes, all danger of financing of dumping being eliminated.
Lastly, it will be advisable to contemplate before the expiration of the period of one year an examination of measures to be taken by Germany for the resumption of her payments.
The proposals of the French Government and the adjustment, which will be suggested by the application of the American offer and which will necessarily be the subject of a subsequent exchange of views, thus appear to be perfectly compatible with the dominant idea of President Hoover’s proposal.
In placing at the disposal of the Bank of International Settlements, on the conditions contemplated above, her part in the unconditional annuity, France is deprived, during the suspension period, of what had been allotted to her on account of the charges which she has to meet for the reconstruction of her devastated regions.
Without wishing to insist on the difference between the sums which she has received and the sums which she should have received, France recalls that the amount of her public debt is about four times that of the debt of the Reich and that her effort at financial restoration carried on and accomplished by her own means barely four years ago should not be endangered.
The French Government can, therefore, affirm the solidarity of the French Republic and of the Republic of the United States at the moment when, faithful to their traditions, the two countries are cooperating in precautionary measures in a crisis which is considered grave. They have a right to hope that a response will be made to [Page 65] their international good-will, by respect for treaties, and by the restoration of confidence between peoples, on which the future of peace depends.
- Translation supplied by the editors. The original bears the notation, in English, “Text of French Note—June 24, 1931.”↩