462.00R296/4272: Telegram
The Acting Secretary of State to the Ambassador in France (Edge)
Washington, July 4, 1931—2
p.m.
330. For Secretary Mellon and Ambassador Edge.
- 1.
- In our cable of July 4, No. 329, we stated, in substance, that insofar as deliveries in kind are concerned, the American Government has consistently taken the position that the solution of the problem arising from existing contracts should be a matter for later discussion and solution by experts of the interested powers, but that the solution as worked out should, of course, be within the spirit of the President’s proposal.
- 2.
- We understand from your No. 404, July 4, 3 p.m. that the suggestion has been made that referring this question to a committee of the interested powers would be acceptable providing the limitations which were suggested, namely, that the solution must be within the spirit of the President’s proposal, is not insisted on. In other words, we understand that the French are willing to leave this question to future settlement by agreement among the European creditor powers and Germany providing the President will interpose no objection to any agreement so reached. What the French apparently have in mind is an exception to the general principle insofar as payments in kind under existing contracts are concerned. This would be a clear violation of the fundamental principle laid down by the President that there should be complete suspension of payments for a period of 1 year. It is also contrary to the statement made by the French Government that it would retain nothing in the way of payments during the year of suspension.
- 3.
- But aside from the question of principle, we must point out the inevitable dangers to the success of the whole plan from any exception of this character made for the benefit of any nation. For example, if the French are to receive payments in kind during the year of suspension, then under Annex Ten of The Hague Agreement,26 the British Government is entitled to Separation Recovery Act payments, which they have notified us they will claim. It is probably true that other countries entitled to reparations in kind, even though they be not covered by existing contracts, might insist that they are entitled to their share, as they will probably refuse to recognize the mere fortuitous existence of a contract as the determining test. In short, if once the broad principle covering the entire proposal is impaired and an exception made of this character, it runs the risk of a whittling away of the President’s offer, step by step, until a point is reached where the American people will be the only ones who are making a complete sacrifice. We could not, under any circumstances, go before the American people with such a proposal. Moreover, any departure from this principle, insofar as the important creditor powers are concerned, would be a breach of the understanding reached with the leaders of the Congress and would make it impossible to obtain the necessary legislation in December.
- 4.
- As already stated, however, we believe that the way to deal with the problem now is to have the French Government accept the President’s proposal outright and leave the question of existing contracts covering deliveries in kind for settlement by experts of the interested powers whose conclusions would be acceptable to us if they accord with the spirit of the President’s proposal.
Castle
- Great Britain, Cmd. 3484, Misc. No. 4 (1930), p. 100.↩