462.00R296A1/203: Telegram
The Consul at Basel (Cochran) to the Secretary of State
[Received 2:55 p.m.]
For Castle. The plan discussed in my telegram June 30, 6 p.m., for final payment through German bond issue is progressing. The amount is considered most likely at slight[ly] under 4 billion marks although the Germans are insisting upon 2½ billion. The bonds would be issued to the public at 90 and at least 5 coupons of at least 5 percent and provided B.I.S. certified that the German economy at the time of prospective marketing would permit such issue.
MacDonald formally invited B.I.S. last night to send a representative to Lausanne presumably to advise whether the B.I.S. would be willing to accept the above mentioned responsibility. President McGarrah accompanied by legal adviser left here at noon for Lausanne. I believe B.I.S. would accept the responsibility.
Since the Germans oppose a conditional settlement and state that their permitting a connection between reparations and war debts would be an unkind gesture on Germany’s part towards the United States and since France continues to seek some guarantee to cover possible future war debt payments the following proposal, presumably French, was made this morning: That a final reparation settlement now be reached without reference to the United States but that no parliament ratify this until it may be seen what the United [Page 685] States demands on war debt payments. The agreement would be put into effect just as the Hoover agreement came into force and was executed without ratification. It now appears that the creditors are united in insisting that Germany shall not get off without some payment.