800.51W89/872: Circular telegram
The Acting Secretary of State to the Ambassador in France (Straus)
President today sent message on debts to Congress first part of which was devoted to an analysis of accounts due since 1932. Message then read:
“At the present time Finland remains the only foreign government which has met all payments on its indebtedness to the United States punctually and in full.
It is a simple fact that this matter of the repayment of debts contracted to the United States during and after the World War has gravely complicated our trade and financial relationships with the borrowing Nations for many years.
These obligations furnished vital means for the successful conclusion of a war which involved the national existence of the borrowers, and later for a quicker restoration of their normal life after the war ended.
The money loaned by the United States Government was in turn borrowed by the United States Government from the people of the United States, and our Government in the absence of payment from foreign Governments is compelled to raise the shortage by general taxation of its own people in order to pay off the original liberty bonds and the later refunding bonds.
It is for these reasons that the American people have felt that their debtors were called upon to make a determined effort to discharge these obligations. The American people would not be disposed to place an impossible burden upon their debtors, but are nevertheless in a just position to ask that substantial sacrifices be made to meet these debts.
We shall continue to expect the debtors on their part to show full understanding of the American attitude on this debt question. The people of the debtor nations will also bear in mind the fact that the American people are certain to be swayed by the use which debtor countries make of their available resources,—whether such resources would be applied for the purposes of recovery as well as for reasonable payment on the debt owed to the citizens of the United States, or [Page 557] for purposes of unproductive nationalistic expenditure or like purposes.
In presenting this report to you, I suggest that, in view of all existing circumstances no legislation at this session of the Congress is either necessary or advisable.
I can only repeat that I have made it clear to the debtor Nations again and again that ‘the indebtedness to our Government has no relation whatsoever to reparations payments made or owed to them’ and that each individual Nation has full and free opportunity individually to discuss its problem with the United States.
We are using every means to persuade each debtor nation as to the sacredness of the obligation and also to assure them of our willingness, if they should so request, to discuss frankly and fully the special circumstances relating to means and method of payment.
Recognizing that the final power lies with the Congress, I shall keep the Congress informed from time to time and make such new recommendations as may later seem advisable.”
Please release to press immediately. Repeat by wire with similar instructions to London, Rome, Geneva, Warsaw and Prague. Airmail all other European missions.