462.00R296/3958: Telegram

The Chargé in Great Britain (Atherton) to the Secretary of State

177. Had short talk with Prime Minister at German Embassy. Following is text of his personal letter to you (see last paragraph of my 175, June 8, 2 a.m.), original of which goes forward by Embassy pouch June 10th on Steamship Majestic.

June 8.

My Dear Mr. Stimson: I am venturing not only in our common interests but for even larger interests than they to break through official red tape and to write you this letter about the Chequers conversations as from one interested friend to another. Mr. Atherton will see the Foreign Office and will report officially but I feel that it would be a great help to you if you were put in possession of an unvarnished and simple statement of what happened.

As you know the invitation was given by me some months ago and was really part of the thoughts which were disturbing my mind when I wrote you that letter about international cooperation in world problems.19 German Ministers have not been received socially and on a purely friendly visit since the war and as I had got them to shake hands with the French for the first time when they came here in 1924 so I was anxious to show the world that personally as well as officially they were sharing in our common life. In addition to that they hold a sort of economic advance post and I feel that if they have to surrender to the forces of revolution either of the Left or to Right the state of Europe is full of very ominous prospects. Nevertheless I had no program of discussions in mind and neither of us were prepared to discuss any specific questions or to come to any specific agreement. It was purely a friendly meeting of men facing very big problems explaining to each other what they considered to be the nature of the problems and the circumstances under which they had to face them. It is quite true that I hoped that from but not at such a meeting both sides might be able to devise policy and helpful methods of handling the situation each in their own field.

You must, therefore, discount absolutely all the stuff that the newspapers have written conveying a different impression holding out expectations for agreements and so on. These reports have not only given us great embarrassment at Chequers but have tended to create a European situation which may bring the German Government down.

I give you a further assurance: The decree and accompanying political statement which appeared in Berlin on Friday-Saturday were quite unknown to us. Some of the phases [phrases?] were awkward and we told the German Ministers that we took that view. They explained to us that they are not [Page 12] always able to consider the susceptibilities of other people because they have to hold their position in Germany as a first obligation and that in order to do so they are compelled on occasions to sacrifice some of their credit in the belief that when both sides of the ledger are balanced the advantage on the whole is with the Government.

The Germans explained to us their position. Politically they are not very strong although they are not anticipating an immediate change unless economic and financial things suddenly turn against them. The Hitlerites, however, are still increasing, so are the Communists. The middle parties are being somewhat crushed between an upper and a nether millstone. There is a hesitation on the part of the majority of the German people to give real confidence to the Hitlerites because they are committed to a very unsettling policy and also because none of them have had any experience in handling first class political affairs. The Communist movement is one of despair. The German Ministers thought that they could, therefore, hold on, but that if they could not, Germany with all its obligations would have to go into the melting pot. If this happens, I agree with them that the revolution and crisis can hardly be confined within German frontiers.

Economically the position is as follows:

Germany is suffering from a lack of capital which is preventing any return to prosperity and, of course, increasing unemployment;
To provide the Reich and municipalities with necessary capital, they have to sell their public undertakings like gas, electricity and water. This is a most deplorable thing and later on will cause very serious political trouble;
The extra taxes and the reductions in salaries which they have imposed, have now even reached the absolute limit. The law of diminishing returns has begun to operate. They gave us information about this which, assuming its accuracy, showed quite conclusively that that was so. They therefore have no chance of balancing their budget by further savings on the economies side or further imposts on the revenue side;
The root cause of their trouble they consider to be the payment of reparations. We pointed out apart from that, which was no doubt a very upsetting factor in their economy, they had to take into account the general world economic situation.

As regards a policy to meet this they told us;

They were contemplating no action except what was laid down in the Young Plan;
They said they could not see how they could avoid asking for a moratorium at a date which they placed in November;
They were very disturbed about the danger of a withdrawal of American short-term credits, but could see no way of avoiding it on their own initiative and action. They wondered if anything could be done about it, but of course we made it clear to them that we could hold out no hope of assistance from us. I do not know if you can do anything;
We suggested to them that if they could do something in cooperation with the other nations at Geneva now considering the Briand proposal, to improve the general volume of European trade by considering whether their tariffs were scientifically designed to increase mutual trade, that might ease the situation without damaging their credit, by setting improving influences in operation;
In reply to a question put by us, they gave us an assurance that so far as they could see, they would not require [be required] to take any step between now and November which would create a crisis and upset equanimity like the [Page 13] German-Austrian customs union proposal, and that [the] edict of Friday [and] Saturday would not have to be repeated—indeed, they said, could not be repeated.

Indeed I ought to say generally that I found Doctor Bruening really very enlightening on these economic problems and I am expecting that something, even if it is very small, may be done which will continue to grow in influence should conditions improve.

They asked us to make some sort of declaration which would indicate our willingness to assist. We were perfectly willing to give them such an assurance by word of mouth because we could warn them that, whilst the spirit was not only willing but anxiously willing, the opportunities of effective assistance were very few and not very good but we pointed out to them that if we made such a statement on paper which was to be published full expectations would be raised which in the end would bring a very serious reaction and they agreed eventually that that was so.

I ought further to report to you that of course the United States was frequently mentioned and in connection with that I took the liberty which however bold and maybe improper it was I know that both you and the President will pardon because (a) it was purely an expression of personal opinion and (b) it was done with the hope that it would help us all. I pointed out your political situation for the next 18 months. I said that from my knowledge of both the President and yourself you were fully aware of the situation and would help to ease it if circumstances, political and other, would allow you to do so. We opposed the wording of a draft which would have been taken to have involved an appeal to you for reasons which you will readily understand. I remarked that there was an American Ambassador in Berlin through whom any approach that the German Government felt it had to make to you ought to be made. They are, however, looking forward to your visit next month20 when they will be happy and willing to put you in possession of the fullest facts. If I might be so bold as to make a suggestion to you I think you will find it advisable to emphasize—not in a way which would indicate that you are apprehensive of misunderstanding but just as a matter of definite information to everyone who is concerned—that your object in going to the European capitals is your interest in disarmament. If you give any sort of expectation that you are coming prepared to discuss economic and financial things I think you will get badly involved in our troubles and there will [not?] be one country on the Continent which will [not?] get into a state of fuss and suspicion. You will pardon me I know in venturing to go thus far with you.

I think that is about all I need say. If you would like information on any specific point unofficially Mr. Atherton always knows how to get it from me and I shall be only too glad to give it to the best of my ability. The official communiqué, which you will have in your hands already, read with this, will I think enable you to see pretty accurately what happened. I will only add that I took Dr. Bruening aside just as they were leaving and expressed a hope that what had happened had been helpful to him and gave him some pleasure. He assured me most cordially that that was so and he left in I think a fairly happy frame of mind. These men are facing a very awful situation and anything which any of us can do to help them discreetly really ought to be done. Of course in these international arrangements one has to be exceedingly careful. I still feel that with all its difficulties the great governments of the world will have to face the general economic situation.

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Again craving your forgiveness if I have overstepped official traditions and asking you to believe that it is only the very exceptional state of things at the moment which would make me even think of such a transgression, may I finally express a hope that this will not in any way be passed into your departments.

Yours very sincerely,

J. Ramsay MacDonald.

The Honorable H. L. Stimson”.

  1. Telegram in three sections.
  2. See telegram No. 49, February 20, from the Ambassador in Great Britain, p. 609.
  3. See pp. 536 ff.