800.51W89 Belgium/212: Telegram
The Ambassador in Belgium (Gibson) to the Secretary of State
[Received December 13—8 p.m.]
92. My telegram No. 91, December 13, 8 p.m.63 At the conclusion of the Cabinet meeting this evening Hymans asked me to call on him.
He began by saying that he wished to talk about the question of the debt payment and told me that the Cabinet had today concluded its discussions on the subject; that the matter had been considered with great thoroughness and with a preconceived idea in favor of payment but that after canvassing financial situation, hearing the Governor of the National Bank and the Treasury Committee, the decision was taken by unanimous vote not to make the payment on December 15. He said that before telegraphing May or issuing a communiqué to the press he desired to apprise me of the decision and the reasons for it.
He stated that the recent dissolution and political disturbances had been largely due to the Government’s financial situation which is much worse than is generally known—it boils down to the fact that for some time they have been living beyond their means to the tune of 200 million francs a month and that the deficit is being filled up with borrowed money which is more and more difficult to secure. He cited old-age pensions, unemployment doles, and other forms of squandering which contribute to the difficulty. He assured me that all our arguments for the payment which have been persistently dinned into them here lately, had been given their full weight and that practically all the Cabinet favored the principle of settlement but that after hearing the true state of the Nation’s finances they felt that the only way open to them was to withhold payment.
Hymans said that as soon as the new government was definitely constituted it proposed to tackle the financial problem with a view to getting back on a sound basis and that he expected that within a few months they would be prepared to discuss the entire matter of debt payments with us in a reasonable way.
It was clear that Hymans recognized the serious character of the statement he was making. He also recognized that the arguments in favor of payment had been very adequately brought home to the Government here and that the decision not to pay was taken only because of financial conditions which he described as “very grave.” A note will be telegraphed to May tonight.
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