462.00R296/5549: Telegram

The Ambassador in Germany (Sackett) to the Secretary of State

60. With reference to the Department’s circular February 26, 11 a.m., Dr. Dieckhoff of the Foreign Office handed me the following aide-mémoire to consider: [Page 615]

“The German budgetary and devisen situation has become so much worse since President Hoover’s statement of June 20, 1931, and the London Experts Conference of August 1931, that it is difficult for the German Government at the present moment to come to new agreements concerning the payment of Government obligations. It is not only difficult to make promises as to future payments without having a general survey of the total German payments to foreign countries actually to be made and actually possible, but it has even become doubtful whether the commitments vis-à-vis the European creditors entered into last year in connection with the Hoover year can be met. The German Government hopes that the international negotiations of the next few months will result in the necessary clarity, enabling it to make more positive statement in respect of the individual problems. Naturally it continues to be the endeavor of the German Government to satisfy the just claims of the United States as far as possible, but in view of the appeals of individual European creditor powers which have already been made and are to be expected, the German Government believes that the present moment is not favorable for an early settlement of this question and therefore regards it as expedient in the general interest that the question of the payment of the interest due at the end of this month be postponed for the moment without prejudice to the mutual legal position.”

Dieckhoff added orally that it was not merely the question of the payment of interest but rather the complications which could be expected from other countries which would contend that such a payment was a breach of the Hoover moratorium. He therefore believed postponement highly desirable. He insisted that the German point of view had not changed since the attempted negotiations at the London Conference.