The Ambassador in France (Edge) to the Secretary of State

No. 2214

Sir: Events have transpired with such rapidity since January 3 last, the date on which I received the Department’s confidential telegram No. 1, January 2, 2 P.M., transmitting for my information a copy of the Department’s Aide-Memoire handed to the French Ambassador on December 29 last, that it occurs to me that it might be of some value to the Department were I briefly to review events that have taken place since that time and put down in rough form my impressions as to the present situation.

On Monday, January 4, I left for Berlin to spend a night with Ambassador Sackett and to have the advantage of an exchange of views. I returned to Paris on the morning of the 7th, travelling on the same train as the French Ambassador, when the latter informed me of his talk with the German Chancellor with regard to the possible postponement of the Lausanne Conference. (See my telegram No. 10, January 7, 5 P.M.).92

Two days later, on the evening of January 9, the French press published the statement made by the German Chancellor, Dr. Brüning, to the British Ambassador in Berlin, in which Dr. Brüning is reported to have said that Germany could not pay any further reparations; that in any event a moratorium could not be considered, etc. (What Dr. Brüning claims actually to have told Sir Horace Rumbold is set forth in telegram No. 8, January 9, 7 P.M. from our Embassy at Berlin to the Department.92)

[Page 657]

On January 10, I reported to the Department M. Flandin’s reply to this declaration of the German Premier, in which the French Minister of Finance stated that the proposal was equivalent to putting an end to the Young Plan and the Treaty of Versailles;93 that France could not accept the unilateral denunciation of contracts freely entered into and that the declaration had the virtual effect of making the Lausanne Conference useless. (Embassy’s telegram No. 19, January 10, 3 P.M.).94

On January 16, roughly one week later, M. Laval requested me to call upon him and after informing me of the latest British proposals regarding a moratorium to Germany of reparation payments to the creditor Powers, to be followed later by the calling of a general conference, asked me to ascertain whether my Government would be willing to consider the extension of the Hoover Moratorium for one year from its date of expiration, June 30, 1932. (See my telegram No. 41, January 16, 5 P.M.).

On Tuesday, January 19, M. Laval went before Parliament with the ministerial declaration (Embassy’s telegram No. 51, January 19, 7 P.M.)94 setting forth his Government’s position with regard to the whole question, and on the same evening M. Flandin, the Finance Minister, called upon me for the purpose of reviewing Franco-British negotiations, with particular reference to the French Government’s position. (Embassy’s telegram No. 49, January 19, 5 P.M.).94

On the night of January 22, M. Laval, after two days of interpellations by members of the Opposition and after a vigorous rejoinder on his own part, secured a substantial majority in the French Chamber, which expressed confidence in the policies of the Government. (Embassy’s telegrams No. 60, January 22, 9 P.M. and No. 62, January 23, 1 P.M.)95 The principal points brought out by Laval were that France could never abandon her rights as written down in the treaties which represent the reparation of only a part of the damage which she suffered, and furthermore that the report of the Bale Advisory Committee showed that Germany was not justified in cancelling or attempting to cancel reparations.

So much for the chronological order in which these events occurred. We are still awaiting word as to the next move in the Franco-British negotiations. It seems very probable, in fact it has been more or less definitely announced, that Laval and MacDonald will meet either in England or in France and that this meeting will probably occur [Page 658]toward the end of this week or the beginning of next. From my talks with Laval, Flandin, various bankers and others, as well as with the British Ambassador, I summarise the situation at the moment about as follows:

France is unwilling to accept or to consider seriously Germany’s contention that she is incapable of resuming reparation payments or to contemplate the possibility of their cancellation. She insists that in the forthcoming negotiations the discussions must be confined to the question of a further moratorium, and that the question of a definite settlement unless along the lines of the French proposals cannot under present circumstances be considered. Great Britain, on the other hand, appears to be willing to cancel all reparation payments from Germany, both conditional and unconditional, leaving negotiations with the United States as to debt settlements for future consideration. It has been suggested in the press here, however, that recent discussions in England—notably a speech delivered on January 12 by Sir Walter Layton, stressing the comparatively strong position in which total cancellation would leave Germany,—have had the effect of weakening the British stand with regard to total cancellation, and that Great Britain might now be willing to consider a compromise with the French which might permit the setting up of a common front vis-à-vis the Germans.

From a conversation I have had with Lord Tyrrell, I gather that Great Britain has an open mind on this matter. According to the British Ambassador, the British Government would prefer complete cancellation, but would probably agree to Germany paying some additional reparations in some form or other when she is in a position to do so. If this solution could be reached, France would favor asking the United States to accept some portion of Germany’s future payments on account of war debts and to cancel the balance. Just how France would agree to divide the balance of Germany’s payments seems indefinite.

It would seem probable that when Laval and MacDonald do get together, an effort will be made to agree upon a date for the postponed Lausanne conference (probably not earlier than June, following the German and French elections) and to reach an understanding that will make it possible to accord Germany a further moratorium for approximately five months from July 1st, the date of the expiration of the Hoover Moratorium. Difficulties will undoubtedly be encountered as to whether or not the moratorium shall be absolute, and the position of France that the unconditional annuity must pass through the B.I.S. as at present, with immediate reloan to Germany against railway bonds. The position of France [Page 659]on this point, as outlined to me by Laval himself, is that the special provisions of the Hoover Moratorium with regard to unconditional reparation payments must be continued in connection with any question of extension. (However, the French are prepared, as indicated in my talk with M. Flandin, reported in Embassy’s telegram No. 49, January 19, 5 P.M., to consider a plan based on that outlined in my telegram No. 30, January 13, 3 P.M.,98 namely: (1) to accept a moratorium of two years on the conditional annuity, and to cancel this annuity if the United States ceased to require payment of the war debts; (2) to mobilize the unconditional annuity through the creation of railway bonds—the United States to be offered a portion of these bonds as part compensation.)

If Great Britain and France can agree upon a common policy, and discussions regarding this will certainly continue after June, they will then present a united front to the United Stages, and on some date after the American elections, that is, about November 15, request war debt adjustment or cancellation, depending upon what arrangement with regard to Germany may be arrived at. I believe that the British are more disposed now to consider the French plan, for reasons mentioned above, than they were at the time that it was originally proposed to Sir Leith-Ross. I have reminded both Laval and Flandin of the fact that no payments are due from France to the United States until December 15 and therefore they have several months ahead of them in which to discuss with the British and the other allied creditors on reparation account, as well as with the Germans, ways and means of solving the difficulties with which they are faced.

The temper of the French Chamber during the recent debate showed unmistakably that no French Government could contemplate the wiping out of Germany’s reparation obligation, under present circumstances, or, in fact, could safely go beyond the lines indicated by the French Premier. It would be difficult to predict what might be the result of the coming elections in France. A swing to the left, with the formation of a Cartel Government might, it is true, be more leniently disposed towards Germany, but a very large measure of unanimity exists in regard to French policy on the reparation and war debt question, and it appears certain that no government would consent to a reduction of what was due as reparations, except in so far as a parallel reduction was accorded in respect of the war debts, unless, perhaps, some arrangement is reached similar to that mentioned in my telegram No. 30 of January 13, and referred to above. In connection with the consideration that [Page 660]might be given to the reparation question, should the elections bring about a definite swing to the Left, the position taken by Léon Blum, leader of the Socialist party, in the recent debate, is not without interest. M. Blum admitted that the terms of the treaties could not be regarded as forever unchangeable. However, Blum emphasized that reparations were not a tribute paid by one country to another, but were an equitable measure of compensation for the destruction wrought in the devastated regions of France during the war. The leader of the Socialist party then proceeded to put forward the following proposal: there should be an international inquiry into the relative amount of the sums paid by Germany to France-and the expenditures of France on her devastated regions. Blum suggested that this inquiry might be undertaken by the Financial Section of the League of Nations. In view of the opinion held in Germany that the German Government had paid over more than the amount expended in the devastated areas, Blum considered that it was necessary to establish the truth. The leader of the Socialist Party declared in conclusion that, if it was found that German payments had exceeded the sums spent on reparation, the Socialists would consider that the German Government had legally acquitted itself of its reparation obligation. However reasonable the suggestion outlined above might be, it appears very unlikely that any French Government would ever agree to such a procedure.

My feeling is that the position tentatively taken by the British Government that any moratorium granted must be absolute, and that at the end of the moratorium France and the other creditor Powers must consider complete cancellation of reparations, is weakening. These are the two points, I believe, which have up to now proved a stumbling block to the reaching of an understanding between Great Britain and France. If this is true, such a united front may bring about a change in the intransigent attitude of Germany. In any event, public opinion here is awaiting with anxiety the outcome of the exchanges of views now going on between the two governments, and the projected meeting between MacDonald and Laval. That they both have material interests to defend vis-à-vis Germany, there appears to be no question, and in view of the seriousness of the situation, very determined efforts will be made by both governments to arrive at a common basis of understanding.

Should Germany fail to meet the views of France as concerns the reparation obligation, the question of course arises as to whether or not France would take advantage of the provisions of Annex I to the German Hague Agreement99 and appeal to the Hague Court. [Page 661]Referring to these provisions in his declaration before the Chamber on January 22, M. Laval said:

“I have no need to say to the Chamber that, if the German thesis takes the character provided for in the text referred to, the Government, assuring the continuity of French policy, will not permit the proscription of any of the titles secured by its predecessors.”1

In the event that the Hague Court decided that Germany had “committed actions revealing its determination to destroy the New Plan”, the creditor governments would automatically recover their liberty of action. The question of possible sanctions would then presumably arise. In this connection certain nationalist and moderate organs of the press have mentioned the possibility of occupation of the Saar or the Ruhr, or both. A more moderate suggestion has been made that France should insist on maintaining the status quo in the Saar until Germany decided to meet the French views on the reparation settlement. Other proposals put forward concern economic and financial sanctions, such, for instance, as denunciation of the Franco-German Commercial Treaty of 1927, refusal to renew the French quota of twenty-five million dollars in the credit of the Reichsbank, the revival of the 26% reparation recovery duty, and the attachments of German credits abroad. However, it is very doubtful that any reasonably-minded Frenchman would look with favor on the idea of reverting to Article 430 of the Peace Treaty. In fact, most of the newspapers that have mentioned occupation admit that no French Government would ever consent to such a step. As concerns the other sanctions mentioned, the press is beginning to realize that such procedure would undoubtedly rebound to the detriment of French interests.

January 26, 1932.

Since the above has been written, I have learned to-day that all attempts thus far made to reconcile the British and French points of view have failed and that they are still far apart. In view of this, I am told that the meeting between Laval and MacDonald, has, for the present at any rate, been abandoned, as it is felt that there would be no point in holding such a meeting with public attention, as of course it would be, focussed on it, unless and until they would be in a position to announce agreement.

I expect to see Lord Tyrrell within the next few days, however, and I shall perhaps then be in a better position to advise the Department more fully concerning the whole question.

Respectfully yours,

Walter E. Edge
  1. Not printed.
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  3. Treaties, Conventions, etc., Between the United States of America and Other Powers, 1910–1923 (Washington, Government Printing Office, 1923), vol. iii, p. 3329.
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  9. Great Britain, Cmd. 3484, Misc. No. 4 (1930): Agreements Concluded at the Hague Conference, January 1930, p. 28.
  10. Journal Officiel de la République Française, Débats Parlementaires: Chambre des Députés, Séance du 22 Janvier, 1932, p. 117.