500.A15A4 General Committee/726

The Chargé in Great Britain (Atherton) to the Acting Secretary of State

No. 388

Sir: I have the honor to refer to my strictly confidential telegram No. 341, December 18, 7 p.m.,72 and to enclose a copy of a memorandum of a conversation I had with the Prime Minister this afternoon.

Respectfully yours,

Ray Atherton
[Enclosure—Memorandum]

I called on the Prime Minister at the House of Commons this afternoon at 5 o’clock at his request. Mr. MacDonald referred to my visit of last week, reported in my despatch No. 387, December 16th,73 and read me the draft of a note he was intending to send to the various “rapporteurs” of the World Economic Conference,74 seeking suggestions as to future effective work by this body. He then referred to the intense economic nationalism that was to be found generally in the world today, and expressed the hope that the future work of the Economic Conference might in some way be able to combat this tendency. He then referred briefly to the unsatisfactory financial situation existing in France and Italy today, but stated it was impossible to rely on any discussions with these two nations since it was very difficult to make them live up to any agreement if it were reached. I was able to gather, partly by inference, that the Prime Minister also had in mind the negotiations going on at the present time between England and France for a new commercial treaty, the conclusion of which, I am informed, may be expected at an almost immediate date. The Prime Minister asked one or two questions as to conditions in the United States, and said that the foreign exchange value of the dollar in relation to the pound at $5.13 was causing trade losses to British [Page 346] manufacturers, who, in turn, were appealing to their members of Parliament for an expression of Government policy. The Prime Minister said he realized that with the meeting of Congress in January fresh considerations must be met by the Administration, and the British Cabinet were loath at any time to “consider measures of retaliation”, since any such Government policy was merely another spoke in the ultimate recovery of international trade which, he felt very strongly, was the necessary accompaniment to world recovery.

In the matter of war debts, he said that the token payment of last week,75 which was not favored by the whole British Cabinet, had aroused considerable resentment in many important quarters in England, and this resentment was greater than had been anticipated, particularly in view of the less generous attitude of other countries. The Prime Minister then asked as to the feeling in America regarding the British debt payment, and we discussed whether the position set forth in the British note of about a year ago76 was clearly understood. The Prime Minister went on and said that Senator McAdoo, when he visited him some time in the autumn, had laid before him a proposal that England surrender her West Indian possessions to the United States in return for debt cancellation. Mr. MacDonald added that any time a Ministry presented such a scheme to Parliament it would fall over night.

The Prime Minister then outlined British disarmament policy and objectives almost identically as outlined in the Embassy’s telegram No. 339, November [December] 16, 5 p.m. He did add, however, that England today stood solidly by the British disarmament plan and that any attempt of Hitler to suggest in his memorandum of December 11th,77 the text of which was forwarded to the Department in my despatch No. 386, December 16th,78 that a modification of the plan had been agreed to was entirely erroneous. The Prime Minister laid stress on the fact that Sir John Simon in his Geneva discussions had merely stated that under certain circumstances certain modifications might be considered. The Prime Minister also laid stress on the fact that if England was unable to reach any agreement with Germany in the matter of rearmament it would merely mean that Germany would rearm without regulation. Consequently the British Government were continuing inquiries and conversations with the Germans based on Hitler’s memorandum of December 11th but had not yet discussed the matter with France, especially since the Chautemps Ministry up to the present moment had been too engrossed to carry on such conversations. However, during the last few days Lord Tyrrell had been [Page 347] able to make some headway in Paris and Sir John Simon would be arriving there the end of this week.

Mr. MacDonald pointed out that it must be realized England stood squarely by the League. It was evident, he pointed out, that if this disarmament question were attempted by Germany outside the League with a series of bi-lateral agreements, none of these agreements would correspond and what, for instance, would be defensive weapons in any agreement with France would be offensive weapons with Denmark and Czechoslovakia. Also a pact of non-aggression with Holland could not be in any way similar to a pact of non-aggression with Poland. Therefore, if disarmament was really to have any effective benefit it must carry through some central agency such as the League. The Prime Minister referred to M. Avenol’s recent visit here and added that he could imagine there might be a certain amount of necessary redrafting of the Articles of the League, not only to win back League members who had resigned, but also possibly to gain new converts. In particular, the Prime Minister had in mind the elimination of a situation whereby the small Powers without responsibility or military strength could by vote in the League force military action upon the great armed Powers.

The Prime Minister asked several questions as to business conditions in the United States, as to Secretary Hull’s immediate plans and movements, and the possibility of the return of Mr. Norman Davis to Geneva.

In conclusion, he said he would be glad if I should come to see him for a purely informal exchange of views once a month, and that he would make the appropriate arrangements with the Foreign Office that these meetings would be quite understood as informal and exploratory.

  1. Not printed.
  2. Post, p. 760.
  3. For correspondence relating to the Monetary and Economic Conference, held in London, June 12–July 27, see pp. 452 ff.
  4. For correspondence concerning British debts, see pp. 826 ff.
  5. Note of December 1, 1932; Foreign Relations, 1932, vol. i, p. 758.
  6. Ante, p. 338.
  7. Not printed.