462.00R296A1/197: Telegram
The Consul at Basel (Cochran) to the Secretary of State
[Received 8:55 p.m.]
For Castle. Following the turn which occurred in Lausanne negotiations yesterday afternoon strenuous efforts are being made to reach a definite settlement of the reparation question. At 2 o’clock this morning Finance Ministers agreed to recommend to their Premiers that Germany be granted an absolute moratorium for from 3 to 5 years; that Germany now issue and deliver to B.I.S. as a final payment German railway bonds guaranteed by the German Government which would be mobilized at the end of the moratorium period provided that they would then be marketable on a 5 percent basis; that of this quantity of bonds one-half to two thirds be marketed only if the United States were claiming war debt payments to the equivalent of this amount; that the other fraction be employed for the European reconstruction fund. As to the total amount of the bond the French have suggested 7 billion reichsmarks and the German[s] 1 billion. It is understood that the British suggested a compromise on 3 billion. The Germans admit this is only the basis of negotiations and do not publicly concede the idea that they will make one final payment. Since these bonds could not [Page 684] be mobilized before 3 or 5 years efforts are being made to ascertain how money can be procured thereon for the immediately necessary reconstruction. The central banks are considered the most likely sources. It it understood that Germany has said that European reconstruction is impossible unless disarmament transpires and they press for the Hoover proposal. The French are understood to be the ones now holding back on the above-mentioned plan for three reasons, first, the amount that could be possibly received would be comparatively small and not available for perhaps 5 years, secondly, France would be left uncovered vis-à-vis the United States for at least the moratorium period and the amount payable thereafter might be quite inadequate to meet American demands and, thirdly, the French would probably be called upon now to advance most of the money for the European reconstruction thus not only losing German payments but assuming new obligations.