550.S1/592: Telegram
The Chargé in Great Britain ( Atherton ) to the Secretary of State
[Received April 3—12:42 a.m.]
69. From Davis. Your 62, April 1, 2 p.m. I telephoned today to MacDonald, who was at Chequers, the substance of the President’s message with which he was highly pleased. He said that there were certain aspects of the matter which he would like to talk over and suggested that he come by and dine alone with me on his way in from the country which he did. MacDonald reiterated that although the attitude of the Cabinet has altered considerably as a result of our conversations no affirmative decision has yet been reached. He believes that most of the Cabinet now realize as he does that it was out of the question to get, and in fact unfair to ask, any assurance from the President that he will endeavor to secure authority to deal with the June 15 payment and that the only hope of creating a change in sentiment which would permit of any such action lies in subordinating the debt issue to the broader problem of economic [Page 481] recovery and thus evidence in a concrete form their willingness to collaborate with us in every possible way. MacDonald is personally disposed to risk his reputation and the future of his government by a trip to the United States as the most effective method of showing their desire to collaborate with us in the hope thereby of bringing about that change in public sentiment which would help to make it possible for the President to secure authority to deal as he may deem necessary and advisable with the payments which fall due through the period of mutual endeavor to improve world economic conditions. He says that if the President would prefer he would make every effort to sail on the 15th assuming that Congress might sit until, say, May 6th. If, on the other hand, he should wait until Congress adjourns and if it should adjourn without granting authority to the President to postpone in full or in part demand for payment during the period of negotiations it would put him in an embarrassing position. He fears that opposition would again develop in the Cabinet to his going in view of the fact that almost immediately upon his return he would have to face the issue before Parliament that would arise over being called upon to make payment on June 15.
MacDonald says that irrespective of what kind of settlement may be finally made, with the terms and conditions of which he is not now concerned, he does feel that it would be calamity now to have this issue arise and that he hopes the President will see fit to ask for authority from Congress not to reduce or alter in any way the existing obligations but merely to postpone during the period of joint discussions and negotiations the collection of payments accruing during such interim period. In substance if it will be helpful and preferable for him to get there before Congress adjourns he will make every effort to sail on the 15th or on the 22nd if the 15th proves impossible for him. He says that irrespective of the question of debts he feels that it would be most advisable for him and the President to have a frank and full discussion with regard to the many major problems which confront our two countries in the world today particularly as the solution thereof depends largely upon our cooperation. My own view, however, is that if the President finds it inadvisable to ask for or impossible to secure from Congress authority to accord some temporary relief with regard to the debts for the period of work of the Economic Conference the Cabinet will be opposed to his going after the adjournment of Congress.
My guess is that if the British are faced with the alternative of paying or defaulting on June 15th they will pay but that we can make a better and more satisfactory trade later if we do not force the issue now and hold this as a leverage for use in the Economic Conference.
I would reiterate that I have repeatedly stated that any debt negotiations must be conducted in Washington and that I neither have the [Page 482] authority nor the inclination to enter into any discussions on the subject. You will realize, however, that these people here will not discuss the problems of the Economic Conference without dragging in some reference to the debts and that it has been my task to try to bring them to subordinate this issue to that of working towards general economic recovery. I believe I have succeeded to a considerable extent in bringing them around to the view that under present conditions it is not practicable to attempt to arrive at any mutually satisfactory basis for modifying the terms of existing arrangement and that we should concentrate on the same economic issue in which we have a common basis. [Davis.]