800.51W89 Belgium/203
The Secretary of State to the Belgian Ambassador (May)
Excellency: I fully appreciate the importance of the situation presented by the request for an examination of the problem of the intergovernmental debts contained in the memorandum of the Belgian Government dated November 15, 1932. The fact that such a suggestion is made by your Government in itself makes this a matter meriting the most careful consideration. In a matter of such importance there must be allowed no opportunity for misunderstanding or failure to reach conclusions satisfactory to both Governments and peoples.
In this connection you will appreciate that your present suggestion goes far beyond anything contemplated or proposed at any time in the past either by President Hoover or by this Government. You will also permit me to recall very briefly some of the essential conditions and limitations which would control on the part of this Government any new study of the debt question and might affect its results. Not only is there reserved to the Congress of the United States the ultimate decision in respect to the funding, refunding or amendment of these intergovernmental obligations under consideration, [Page 702] but from the beginning the Congress has itself provided in the past the machinery in the shape of the World War Foreign Debt Commission for the investigation of the facts and for making recommendations upon which such action might be taken. The Executive might recommend, but the facts and evidence were submitted to and the decision made by the Congress, acting through this machinery.
Furthermore, from the time of their creation, under President Wilson, this Government has uniformly insisted that in its handling of these obligations running to itself, they must be treated as entirely separate from reparation claims arising out of the War. Its insistence upon this difference is quite natural in view of its refusal after the War to accept reparations for itself and also in view of the difference of its position as a creditor from that of all other nations. Not only did this Government not receive any compensation in the form of territory, economic privileges, or governmental indemnity at the close of the War, but from the fact that it owed no obligations of any kind to others, treatment of the debts and reparations as though they were connected could only operate to the disadvantage of the United States. No concession made in respect to a payment owed to it could either in whole or in part be set off or balanced against claims owed by it to any of its creditors. On the contrary, every such concession would result in the inevitable transfer of a tax burden from the taxpayers of some other country to the taxpayers in our own without the possibility of any recoupment from others. The debts owed to the United States thus naturally fell into the category of ordinary debt obligations between individual nations and were treated as such. The American Congress has made, with each of its debtors, settlements which were intended to be and were deemed to be liberal and wholly within the capacity of the debtor to pay without jeopardizing its finances and currency or preventing it from maintaining and, if possible, improving the standard of living of its citizens.
I appreciate the importance of the step mentioned in your memorandum which has been taken by the governments at Lausanne in respect to the reparations due them from Germany and the possible effect upon those creditor nations of the loss of that source of income. I am not oblivious to the fact, moreover, that the world-wide depression and the concurrent fall of prices has increased the weight of debts in many parts of the world; nor to the fact that the decrease in international trade has increased the difficulties of obtaining foreign exchange. I also recognize the relation which these facts may bear to the process of recovery. On the other hand, it must be remembered that these incidents of the depression have also fallen [Page 703] with great weight upon the American people and the effects upon them directly as taxpayers or otherwise of any modification of an agreement with respect to debts due to this country cannot be disregarded. I assume that it was for the purpose of deliberately and carefully giving due weight to such conflicting elements in the world situation, differing as they would in various countries, that this Government adopted the system which I have described. I confess that I cannot see any controlling reasons which would be likely to induce the Congress of the United States to act upon the question any differently now from the manner and the principles upon which it has acted in the past. And I believe it would be inadvisable to attempt to enter into discussions on the subject except in that manner and under those principles.
The attitude of the President therefore is that for any suggested study of intergovernmental financial obligations as now existing, some such agency as I have referred to, should be created to consider this question individually with each government as heretofore. As he has several times said publicly, he also believes that some basis might be found for bringing to the American people some adequate compensation in forms other than cash payment. The President is prepared to recommend to Congress that it constitute such an agency to examine the whole subject.
As to the suspension of the installment of the Belgian debt due on December 15th, which is requested in your memorandum, no authority lies in the Executive to grant such an extension and no facts have been placed in our possession which could be presented to the Congress for favorable consideration under the principles to which I have referred. In the memorandum of the Belgian Government reference is made to the action of the Conference at Lausanne. It seems to me that the situation which confronted the conference at Lausanne in its consideration of the question of reparations by Germany was quite different from that presented here in that the conference had before it the report of the meeting of experts at Basle.55
Such importance is attached by our Government and people to the maintenance of the original agreements in force by the payment on December 15th as to far outweigh any reasons now apparent for its suspension, and by such payments the prospects of a satisfactory approach to the whole question, in my opinion, would be greatly increased.
Accept [etc.]
- For text of report, see Great Britain, Cmd. 3995, Germany No. 1 (1932): Report of the Special Advisory Committee convened under the agreement with Germany concluded at The Hague on January 30, 1930. ↩