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

No. 1438

Sir: In amplification of my telegram No. 18 of January 23, noon, reporting the conclusion of the work of the “Standstill” Committee and including a conspectus of its report, I have the honor to transmit herewith copies of the final draft of the agreement (known as the German Credit Agreement, 1932);5 the signed report of the Foreign Creditors’ Standstill Committee,5 briefly summarizing the report and giving a general survey of Germany’s financial and economic condition; and the statement issued upon the termination of the conference by Mr. Albert Wiggin.

The German Committee for Foreign Debts mentioned in section 5—“Essential Features of the New Agreement”—which will be set up by the German Government to advise the latter on all matters [Page 666]concerning German foreign indebtedness, was the subject of correspondence between Dr. Luther, the President of the Reichsbank, and Mr. Wiggin, of which copies, as confidentially supplied the Embassy by Mr. Wiggin, are attached hereto7 as of possible information and for background. The choice of Herren Kastl, of the Federation of German Industries; Jeidels, of the Berliner Handelsgesellschaft; and Schliefer, mentioned in Dr. Luther’s letter as having been nominated to this committee, has received favorable comment, as these gentlemen took part in the recent negotiations and are known to enjoy the confidence of the creditors.

The German press devoted considerable editorial space to comment on the agreement. The consensus of opinion was that, while the German desire to reduce the rate of interest and to fund the short-term debts was not realized—primarily because the time is not yet ripe for doing so—much was gained by a continuation of the creditors’ policy not to attempt to liquidate completely the short-term debts; so safeguarding further German credit. The observations of the report, concerning Germany’s financial condition, were found by the press to support the German thesis that Germany must have a respite from reparation payments, and to emphasize anew the findings of the Basle committees. By implication, it was assumed that section 2 of the report, entitled “The Responsibility of the Governments,” was introduced therein to placate the French delegates whose agreement to the report, it had been rumored, was obtained only with difficulty, especially at a time when Dr. Brüning had wounded French susceptibilities by his categorical statement of Germany’s attitude towards further reparation payment. Parenthetically, the agreement, in view of the uncertainty now prevailing as regards German reparation payments and the question of “priority,” could be no more than a provisional settlement.

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Respectfully yours,

Frederic M. Sackett
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