462.00R296A1/184: Telegram

The Consul at Basel (Cochran) to the Secretary of State

For Castle. Understand that little progress being made at Lausanne because of the entrenched positions of the French and Germans. Reparation question is the only one now under discussion. The British insist that a decision on principles should be accomplished and that resort should not be now made to naming technical committees. Some of the British including Leith-Ross favor MacDonald making a statement setting forth the position of the various delegates and then declaring the Conference adjourned leaving negotiations to be continued directly between the interested governments. In intermediary role the British have asked the Germans what the political and economic effects would be in Germany if that country were definitely to state at the Conference that further reparations are not to be paid. Von Papen replied that since he has been Chancellor only 2 weeks he could not answer but would summon Luther for advice who should reach Lausanne 24th. The French have not yet answered the British question as to what they would do if the Germans should so repudiate. Various delegations are split. The liberal French wing whose leader is the Minister of Finance19 arguing that after 14 years Germany cannot be expected to pay what is deemed a tribute to the stronger nation, [Page 679]namely France. This wing recommends that after a limited moratorium Germany pay a certain balance into a general fund to help reconstruction in Eastern Europe. Such a fund would be administered by the B.I.S. or the financial committee of the League or committee of the treasuries. This plan would indirectly benefit France. Germany might reasonably ask that other countries agree to make individual contributions.

The Germans are being encouraged from some sources especially Italian definitely to repudiate if they cannot agree with the French. The Italians suggest the other alternative of France giving up reparations thus exonerating Germany in return for which move Great Britain and Italy would join France in a united front to the United States on the war debt question.

British today proposing that all questions before the Conference be decided by a majority vote. This proposition will be resented by the French who feel that the British are endeavoring to make them appear responsible for the deadlock while the French blame the American attitude therefor.

  1. Louis Germain-Martin.