800.51W89 Great Britain/337

The Secretary of State to the British Ambassador (Lindsay)

Excellency: I learn with satisfaction of the decision of your Government “to make payment of the amount due on December 15 under the Funding Agreement of June 18, 1923.” But in view of the statement in your note that “in the view of His Majesty’s Government therefore the payment to be made on December 15th is not to be regarded as a resumption of the annual payments contemplated by the existing agreement”, I must call attention to the fact that the Secretary of the Treasury has no authority to accept payment from your Government except as provided under the terms of the Funding Agreement.

As I pointed out in my note of November 23, 1932, there is reserved to the Congress of the United States the ultimate decision in respect of the funding, refunding or amendment of those intergovernmental obligations under consideration. The Executive has no power to amend or to alter them either directly or by implied commitment. Accordingly, it should be understood that acceptance by the Secretary of the Treasury of funds tendered in payment of the December 15 installment cannot constitute approval of or agreement to any condition or declaration of policy inconsistent with the terms of the agreement. The sum so received must be credited to principal and interest as provided therein.

I therefore assume that in paragraphs five and six of your note you are not proposing to make this payment otherwise than in accordance with the terms of the Funding Agreement but that you are stating your views as to steps which your Government may desire to propose subsequently after a reexamination of the entire problem.

I have emphasized these facts with a view to avoiding any possible future misunderstanding. I believe that our future course as pointed out by our correspondence is clear. In your first note of November 13 [10?] you asked for an exchange of views at the earliest possible moment with respect to the regime of intergovernmental financial obligations and, in your second note, you welcomed the expression of our willingness to facilitate such discussions, and referred [Page 779] to the desirability of a close examination between our Governments of the whole subject in preparation for the International Economic Conference. In my last note of December 8 [7] I replied that the President of the United States was prepared through whatever agency may seem appropriate, in cooperation with your Government to survey the entire situation (in which the debt of the British Government to the United States necessarily plays a part) and to consider what means may be taken to bring about the restoration of stable currencies and exchange, the revival of trade and the recovery of prices.

But in the meanwhile, as I informed you in my note of November 23, great importance is attached by our Government and people to the maintenance of the original debt agreement in force and that a satisfactory approach to the whole question would be greatly increased by the pursuance of such a policy.

It would seem to me therefore to be undesirable that any steps be taken which, by causing misunderstanding, would increase the difficulties that must be overcome in finding an ultimate solution satisfactory to both nations.

Accept [etc.]

Henry L. Stimson