800.51W89 Great Britain/558
Memorandum by the Under Secretary of State (Phillips)14
The British Ambassador said that he understood a number of his colleagues15 had made inquiry of the Department with respect to the applicability of the Johnson Act and that, inasmuch as some of them undoubtedly expected Great Britain to take the lead, he felt it was up to him to make similar inquiries.
I admitted that one or two of his colleagues had already ventured to remark that their Governments would undoubtedly follow whatever action Great Britain decided to take. I then gave the Ambassador the same information which I had given the other diplomatic representatives to the effect that all countries which had made payments on account were regarded as not in default, but that on and after June 15th next the terms of the Johnson Act would apply and that it would no longer be possible thereafter for the President to announce that those Governments which had made “token” payments on June 15th were not in default; I said, however, that the President desired that it should be clearly understood that all debtor countries were able to approach this Government with any proposal which they desired to make and that all such proposals would be carefully considered.
The Ambassador said he understood the situation which, in brief, was to the effect that Great Britain would be regarded in default on June 15th next unless she paid her full installment.
[Page 536]The Ambassador said that there was another side to the matter which was probably not worth touching upon, but, nevertheless, he would ask what would happen in the event of a full payment of the June 15th installment. As everyone knew Great Britain was in arrears in its past payments, would the full satisfaction of the June 15th payment clear the British Government from the stigma of default or not? I replied that that was a point on which I could not give him a definite answer, but it seemed to me possible that, inasmuch as the British Government was not now in default, it could scarcely be regarded in default if it should make full payment of its June 15th installment. I said that, if possible, I would be glad to give him a more definite answer. Sir Ronald replied that the point he had raised was really an unimportant one and he gave me the impression that any payments on account were now exceedingly doubtful; he added, “I suppose you realize the feelings which will be created by the application of the Johnson Act and the repercussions which will occur.” I replied that it was better not to talk about repercussions, that there were certainly enough of them running around the world at the present time and that further repercussions would not get us anywhere. The only reply that the Ambassador made was to the effect that none the less repercussions might be expected.