800.51W89 France/980: Telegram

The Ambassador in France ( Straus ) to the Secretary of State

355. With reference to the Embassy’s telegram No. 172, March 7, 10 a.m., Department’s reply No. 93, March 8, 3 p.m., also Embassy’s No. 343, May 4, 3 p.m.,23 and 349, May 5, 8 p.m.23 the Embassy hears from various sources all more or less dependable and authoritative and confirmatory of one another that the Doumergue Government has been giving consideration to the question of war debts and perhaps [Page 567] to the possibilities of making a token payment. I have been unofficially approached to make a suggestion of possibly acceptable terms and as on previous occasions have replied that I have no authority to do so and that in any case I regard it as incumbent on the debtor to make a tender.

From the immediate entourage of Herriot24 it is learned that he has precipitated a discussion by intimating that his position is difficult in a Government which fails to take cognizance of this issue before June 15.

Embassy informed this morning from reliable source in direct contact with Léger25 last night on question of war debts that Léger said much depends on the reply which the State Department would give to de Laboulaye’s direct questions. France’s war debt position depended on whether a French token payment made on June 15 would regularize France’s position or whether it would be necessary for France to pay accumulated defaulted interest annuities. If Washington agreed to a June 15 token payment without insisting on the whole payment of the accumulated defaulted annuities the Doumergue Cabinet would very likely consider risking the existence of the national Government by asking Parliament to approve of making a token payment on June 15.

There are two strong arguments in favor of making such a payment, (1st), the value of the dollar in French francs by which the amount of the payment would be discounted about 40%, (2d), the possibility of a drastic total reduction of the debt if France would be promised the same treatment as she understands will be granted to Finland whereby the interest on the French debt would practically be abolished leaving France to pay barely more than the total principal.

Straus
  1. Not printed.
  2. Not printed.
  3. President of French Radical Socialist Party; Minister of State without Portfolio in second Ministry of Gaston Doumergue.
  4. Secretary General of French Foreign Office.