800.51W89 France/671: Telegram
The Ambassador in France (Edge) to the Secretary of State
311. Your 184, May 9, 5 p.m.38 I saw Flandin personally last night and urged arrangements be made immediately for putting the agreement into effect providing for the Hoover 1-year debt suspension payment in accordance with the law authorized by Congress. He assured me that France was entirely ready to sign the agreement covering the 4 percent rate of interest just as soon as he was advised by Mr. MacDonald, Chairman of the General Conference held in London following France’s acceptance of the moratorium, that the same interest arrangement was acceptable to Germany. He further stated that immediately upon receipt of the information contained in your circular of February 26, 11 a.m., the French Government had referred the matter to Mr. MacDonald but to date had had no definite response. He promised to immediately get in touch with the British in regard to the matter.
Flandin takes the position that this conference accepted the decision of the experts at the meeting held in London on the question of interest and that while he thoroughly understands the action of the United States Congress set the rate at 4 percent while the experts recommended not more than 3 percent this difference could only be reconciled by an agreement of all the governmental representatives. Flandin is very positive in his view that inasmuch as the experts at [Page 609] Paris recommended that the rate of interest should not exceed 3 percent and the United States insisted upon 4 percent Germany having been the main beneficiary should accept the increased figure as both classes of debts were included in the moratorium.
The German Embassy here has received no word that its Government is prepared to agree to the 4 percent rate. If, as the Department indicates, Germany is prepared to accept this rate it would apparently settle the matter if they would officially so advise MacDonald.
You can understand that F[landin?] only temporarily holding the Treasury portfolio is not in a very receptive frame of mind to any action particularly that would give Germany an advantage. I urged him to expedite action which he promised to do and pointed out the serious consequences of the failure to put in legal form the moratorium proposal to which they had agreed. I, however, did not reveal to him the time limit suggested by the Treasury of May 25th particularly in view of his apparent readiness to authorize Claudel to sign the agreement if Great Britain arranged the matter with Germany.