Memorandum by the Under Secretary of State (Castle) of a Conversation With the British Ambassador (Lindsay)

The British Ambassador called with notes he had made on the communication from his Government about the conversations at Chequers. These conversations he summarized as follows:

They were frank talks and did not pretend to be anything more than this and, like all conversations, were inconclusive. The people present were, as we already know, the Prime Minister and Mr. Henderson, Drs. Bruening and Curtius. There were called in for part of the conversations the Governor of the Bank of England, the German Ambassador and Mr. Leith Ross of the Treasury. The Germans made the statement that, as to taxation and a cutting of expenditures, they had gone to the limit, any further steps along these lines they believed would imperil the structure of society and open the way to an attack on the Government which might be successful on the part of the Hitlerites or the communists or both. They said that if the last election, for example, had happened to come in December, instead of September, it would have been impossible to get a majority to support the present government; they stated that whatever they might do in the way of asking for a moratorium would be done within the terms of the Young Plan and that that entailed notice of three months; they said that the limit of their endurance under the present circumstances would be next November, but the Ambassador was not sure whether this meant that the notice for relief under the Young Plan would have to be made in November or three months before November. The British answered that they fully realized the truth of all that the Germans had said to them, but pointed out with vigor that the difficulties were not purely German, but were instead world wide. This being the case, they felt that discussions between two governments only would be inconclusive and that rather it was necessary to have a world wide discussion of the whole situation. In the meantime they advised the Germans to use, as far as possible, the subcommittees appointed by the League of Nations in connection with the study of a European union. The Germans said that this would appear to them futile, that it was better to use as far as possible the good offices of the Bank of International Settlement. The British admitted that the committees studying the European union could not deal with reparations, but that the moment had not come to revise the Young Plan; they pointed out that at present only preparatory work was possible as great preparatory work had been done prior to the installation of [Page 16] the Dawes Plan;23 they felt that these various League committees could well undertake the exploration necessary to give sufficient knowledge for some general conference later to work on; they told the Germans that they believed the United States was not yet ready to plan any action for the revision of the debt settlement and probably would not be ready to take this up during the next two years; they pointed out, in this connection, that the Germans must not make the mistake of feeling that the Secretary’s European visit was for the purpose of exploring some method by which the United States could revise the debt settlement. In the meantime they urged the Germans that it was essential to preserve German credit; they told the Germans further that the greatest immediate danger was, in their opinion, in Vienna, largely in connection with the unfortunate condition, due apparently to speculation, of the Credit Anstalt; they felt that a collapse in Vienna might easily spread disaster through eastern Europe and even through Germany, although, in connection with this, they pointed out vigorously the great recuperative powers of Germany. They asked whether the Germans had discussed these matters with the French. The Germans answered, confidentially, that Briand had proposed a meeting early in May for exactly this purpose; that this meeting had later been cancelled, but the Germans were convinced that the cancellation was the result of the Presidential election and that they saw no ulterior motives connected therewith.

The Ambassador said further that the telegram from here, stating that the German manifesto had caused much anxiety in the United States had been communicated to the Germans and that at least they had got the promise from them that no more manifestos were in contemplation.

W. R. Castle, Jr.
  1. See Great Britain, Cmd. 2105 (1924): Reports of the Expert Committees Appointed by the Reparation Commission.