462.00R296 B. I. S. Special Reports/60
The Consul at Basel (Cochran) to the Under Secretary of State (Castle)
[Received July 23.]
Dear Mr. Castle: I have pleasure in submitting the following data in continuation of my series of International Bank Notes.
. . . . . . . . . . . . . .
Gentlemen’s Agreement. In my cablegram dated July 12, 4 p.m., I gave you the complete text of the Gentlemen’s Agreement, initialed at Lausanne on July 8. Before this Letter arrives, you will have seen much comment upon the policy involved in this secret diplomacy. According to American despatches now reaching here, the Department has already received evidence of the interest of Congress in this particular phase of the Lausanne negotiations.
For convenience, I am reproducing herewith the full text of the Agreement:28
. . . . . . . . . . . . . .
[Page 689]From the above wording, it is not clear whether the countries whose representatives signed the above Agreement, namely, Belgium, Great Britain, France, and Italy, will individually or in a group approach the United States. Furthermore, it is not clear as to what may be considered a satisfactory settlement. There has been criticism of the Agreement in the English Parliament, as a measure likely to hurt the chances of the United Kingdom to procure from the United States favorable reconsideration of the British war debt. As a result of the demand for the exact terms of the Agreement, it is understood that publicity will be given thereto simultaneously in London and Paris tomorrow, July 14.
I kept you informed as to Germany’s opposition to such a linking of reparations and war debts. France insisted upon a safeguard. Italy had to have this in lieu of outright all-around cancellation. The British are understood to have yielded reluctantly. In a letter dated July 8, addressed to the French Minister of Finance, Germain-Martin, the British Minister of Finance, Chamberlain, regretted that, in the absence of a general agreement concerning the cancellation of war debts and reparations, the British Government was also unable to cancel the French debt to Great Britain.29 However, the British Government expressed its readiness to suspend the payment of annuities agreed upon in the Caillaux-Churchill Agreement30 until the ratification of the Lausanne Act. While no official announcement to that effect has been seen, it is reported that Great Britain granted the same treatment to Italy. Great Britain thus gained the adherence of these two countries to the Lausanne compromise Act.
. . . . . . . . . . . . . .
The French appear to consider the great result of the Conference the fact that France, after entering it as the isolated Power, came out in a unified line-up, as far as debts toward the United States are concerned, and, furthermore, with a much desired alliance with Great Britain which, as the Franco-British Pact of Confidence,31 has today been made known through the following announcement:
. . . . . . . . . . . . . .
From the text of the Gentlemen’s Agreement information was lacking as to the steps that the various countries would take in approaching [Page 690] the United States. This second document, to which Belgium and Italy will at once become parties, throws considerable light on the plans.
Outlook. The Lausanne Agreement was received here as constituting a big move forward, principally because of France’s yielding on the question of reparations to an extent that had not heretofore seemed probable. A compromise was the only possible solution, considering the opposing ideas with which the Powers entered the Conference, and the strength of political pressure behind several of the representatives.
Some observers are of the opinion that it is just as well that the real attitude of the Allied debtors in Europe toward their American obligations should be expressed as frankly as has been done at this time. One alternative was to draw the Conference out until December 15 and negotiate with America at the time payments were falling due, and decide the reparation question thereafter. The present scheme may at least be time-saving, unless it proves so distasteful to the United States that opposition to reconsideration of war debts is strengthened and final ratification of the Lausanne Act by the parties to the Gentlemen’s Agreement is rendered impossible.
As to the acceptance by the European Powers concerned, the only doubt would appear to be on the part of Germany. With the Cabinet unanimously approving the Act and with such opposing leaders as Brüning and Schacht supporting von Papen’s position, the outlook is favorable. Dr. Luther of the Reichsbank has expressed here the personal opinion that Germany will be willing to ratify.
. . . . . . . . . . . . . .
Very sincerely yours,
- See supra. ↩
- On the same date, July 8, Mr. Chamberlain sent a letter of similar purport to the Italian Finance Minister, Antonio Mosconi; for text, see Great Britain, Cmd. 4129, Misc. No. 8 (1932), p. 5.↩
- Signed on July 12, 1926, by Winston Churchill, British Chancellor of the Exchequer, and Joseph Caillaux, French Minister of Finance; see Great Britain, Cmd. 2692, French War Debt (1926): Agreement for the Settlement of the War Debt of France to Great Britain. ↩
- See note from the British Embassy, p. 694.↩