800.51W89 France/981

Memorandum by the Under Secretary of State (Phillips)26

I asked the French Ambassador to call this morning and said I was in a position now to give him an answer to his inquiry of a few days ago with respect to partial payments on war debts. I said I had discussed the matter with the President yesterday afternoon and the President felt he was bound by the Johnson Act.27 In other words, [Page 568] that partial payment after June 15th would not prevent a debtor country from being in default. I pointed out that the President held that all debtor governments were free to approach this Government with any proposal which they desired to make.

The Ambassador expressed his regret that, just at a moment when the French Government and people were prepared to adopt, apparently, a “new orientation of policy” with respect to debt payments, the doors were closed at this end. The Ambassador felt, however, that the British were in a worse position than were the French in this respect.

We discussed the question of the Ambassador submitting to Paris the thought that the French Government could still lay before this Government any proposal which it had in mind and de Laboulaye said he would probably recommend, on his own initiative, that if his Government was disposed to do something along these lines, it might best be done after the adjournment of Congress rather than before.

It was evident that the Ambassador was greatly disappointed and mentioned again the proposition which he had submitted to his Government and which he felt sure was receiving careful consideration in Paris—that a substantial payment on account should be made on June 15th—in the belief that new negotiations would then be undertaken looking towards a final settlement of the debt problem and that, while these negotiations continued—which might be for some time—no new debt payments would be required.

William Phillips
  1. Transmitted to the Embassy in France as telegram No. 181, May 9, 8 p.m.
  2. 48 Stat. 574; for correspondence on this subject, see ante, pp. 525 ff.