800.51W89 France/1007

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

No. 1314

Sir: I have the honor to enclose a memorandum of a conversation with M. Pierre Laval, Minister for Foreign Affairs, at the Foreign Office yesterday morning. I called by appointment, accompanied by Mr. Marriner,40 for my first talk with the Minister since he has taken over the portfolio.

I have already, in my telegram No. 794, October 26, 11 A.M.,41 set forth the substance of M. Laval’s views on the general European situation at present, but he talked at length on the debt situation which had been raised by his predecessor, M. Barthou, and this memorandum gives his views at some length.

It will be noticed that, as a result of his intimate connection with the moratorium discussions, M. Laval has extremely positive ideas on [Page 574] the slight possibility of any present debt arrangement with France, and his rather fine spun legal reasoning is set forth in the memorandum. I am not sure that M. Laval was not encouraged that the debt question was a dead issue by a quotation of an alleged statement by Senator Joseph T. Robinson, which had appeared in the morning papers the day preceding our interview, which purported to indicate that the Senator felt that there was no intention on the part of debtor nations to resume payments. In any case, M. Laval reasserted with much firmness the attitude he has maintained in all discussions on the subject, namely, without the resumption of Reparations payments there can be no payments by France on debts, and anything I could say to the effect that we did not consider these two problems related seemed in any way to shake him. His attitude seemed in contrast to that of M. Barthou who had given more indications of a willingness to listen in an unprejudiced manner to my ideas on the subject, and even to suggest taking the matter up with the Minister of Finance.

From M. Laval’s conversation, I fear that the matter will be in abeyance during his incumbency, unless by some strange chance a rapprochement with Germany bring to a head the question of a final settlement on reparations, or unless the unwillingness of America to forget or ignore these debts is made very clear either by an authoritative statement by the President, the Secretary of State or an influential member on the floor of Congress.

Respectfully yours,

Jesse Isidor Straus
[Enclosure]

Memorandum by the Counselor of Embassy in France (Marriner)

M. Laval, Minister for Foreign Affairs, received the Ambassador, accompanied by Mr. Marriner, at the Quai d’Orsay at ten o’clock this morning, by appointment. It was the Ambassador’s first call on M. Laval since his taking over the Ministry for Foreign Affairs.

The Ambassador said that Mr. Marriner had reminded him that it was just three years ago today that M. Laval had left Washington after his visit there,42 and M. Laval replied that he recollected this very well and that even his brief visit in America had left a tremendous impression with him of the hospitality, force and vitality of the nation. He said he had been very grateful for the kindness of the American Government in delegating Mr. Marriner to accompany him as a liaison with the American Government officials and Mr. Pell as a liaison with the American press.

[Page 575]

The Ambassador said that he had talked with M. Barthou the day before his assassination and had mentioned to him again the long delay of the French Parliament in ratifying the Treaty on Double Taxation, which had been ratified by our Senate over two years ago. M. Laval took a note on the subject and said that he would do his utmost to press the matter. The Ambassador told him that M. Baréty was the Rapporteur.

The Ambassador then said that he would turn to a more important difficulty between the two countries, namely that of the debts, and that if it interested M. Laval he would give him an idea which he had outlined quite unofficially to M. Barthou. It must be understood that the idea was a personal idea of Mr. Straus’s and not by any means a proposition of the American Government.

M. Laval said that this was all the more desirable from his point of view. Because of his own attitude on the debt question, he would not wish at present to appear to enter into any discussions on it before he could have some pourparlers with Germany on the Reparations question.

The Ambassador then proceeded to outline his views, set forth in his despatch to the Department No. 1183 of September 4, 1934, giving the substance of his conversation with M. Barthou on August 31, 1934, with respect to exceedingly long-term bonds at a very low rate of interest for the full amount of the now outstanding French debt, approximating four billion dollars, to be used to finance the movement of goods and services from France to the United States. These bonds would be purchased in the United States by those requiring French exchanges. These would be presented in France to the French Treasury for francs, thus avoiding all question of transfer.

M. Laval said that he would like to have a memorandum on the subject, quite unofficially, so that he could study it with more precision, and suggested that Mr. Marriner should get in touch with M. Rochat, his Chief of Cabinet, quite informally, with no papers of record.

The Minister then said that he wished to outline for the Ambassador his point of view on the whole subject of the debt to the United States. He said that Mr. Marriner would recall the whole course of the moratorium discussions, and his attitude at the time, namely, that the stoppage of payments from Germany stopped all intergovernmental payments; that he had stressed this still further in Washington where the communiqué43 agreed upon the last day of his visit, namely, three years ago to-day, had said that, before the end of the moratorium year, an agreement of all intergovernmental obligations should intervene covering the period of business depression. This, in [Page 576] his mind, clearly indicated that, without some such agreement, the moratorium continued, and while he was aware that a communiqué was not a treaty, and that its contents were not passed upon by the Senate of the United States, nevertheless, he felt that the Senate, in giving its consent to the moratorium in its Resolution of December 23, 1931,45 having knowledge of the communiqué and the negotiations attending it, certainly in no way denied the theory that the moratorium would continue in default of such an arrangement. Furthermore, the business depression had continued and augmented. The Lausanne accords46 were a partial agreement on this subject, made, however, without the assent of the United States, and as they had expressly stated that such consent was necessary, and as they had never been ratified by the French Parliament, it was M. Laval’s belief, not only as Minister for Foreign Affairs, but as a lawyer, that these accords did not exist and that we were still in the same state of moratorium as we had been at the conclusion of the Hoover Moratorium in 1931.

With all this in mind, it was his consistent belief, from which he had never varied, that there could be no payment from France to the United States until such time as the question of Reparations, still in abeyance, should find some suitable arrangement. He said that he realized the position of the United States that these two matters had no necessary relation, but at the time of the moratorium discussions, France had succeeded in having the unconditional annuities of the Dawes and Young loans paid into the Bank of International Settlements for the French account, thence to be reloaned to the German railways. He felt that this act indicated clearly the principle that there was some relation between Reparations payments and all international payments, and that therefore France was justified in considering that so long as the moratorium existed with respect to Germany and France, a moratorium must be considered to exist between America and France.

He said that he well understood that both the United States and England, at the time of the moratorium, had been pushed by their bankers to relieve Germany of Reparations payments, in order that it might have some possibility of paying the enormous charges on the loans made by both these countries within the Reich, but that this gave the French taxpayer a cause to complain that his prior obligations on Germany had been put aside in favor of the service of later loans made to relieve an enemy nation, which was thus escaping the consequences of the war. He said that the Ambassador’s idea had something ingenious [Page 577] in it, and might conceivably offer a means of approach along the same lines to Germany, although he thought that the enormous sum involved,—60 billion francs,—stretched over no matter what number of years, would look out of all proportion to the French mind at present, and that no Government proposing it would have much chance of life with the French Chambers in their present mood. Mr. Straus remarked that there was no reason why the plan he suggested should not begin with a further moratorium and proceed as the plan envisaged in the communiqué. The Ambassador reminded the Foreign Minister that the sum involved had been very much cut in view of the Mellon-Bérenger negotiations in Washington,47 and did not by any means represent the total sums borrowed, and that all interest had been left out of account. Furthermore, the American dollar had been reduced in value, which created on the already reduced total another reduction of 40%. The Ambassador said that the time might come when France would need money once more, and that, with the debt situation what it was and the American taxpayer feeling that he had been called upon to pay the costs of the war, there would be little chance of obtaining credit again in the United States.

M. Laval said that he realized this and that it was one of the problems which he hoped to examine in the friendliest spirit and in a way that would improve the relations between the two countries, which he knew Mr. Straus had close to his heart.

The Ambassador then asked the Foreign Minister his impression of the present European situation. M. Laval said that it was bad; that there certainly existed danger of war, accompanied, perhaps fortunately, by a great and general fear of war among all peoples. The immediate dangers raised by the assassination of the King of Yugoslavia, namely dangers of any form of reprisals, had been avoided. The danger of internal disruption within the Yugoslav State was apparently removed, and if anything the nation seemed unified by this sad event. He had the highest hopes that an understanding with Italy would be possible within a comparatively short time as progress was being made along those lines, and that as soon as that was done, he felt that Italy and Yugoslavia could be brought to terms, in which case it would mean that the Little Entente, of which Yugoslavia was a party, Italy and France could enter into an agreement for the preservation of the territorial integrity of Austria. When this should have been accomplished, with a continuation of the normal relations which France had been having with Russia, and presuming the somewhat equivocal attitude of Poland should get no worse, Germany would find [Page 578] herself isolated in Europe by nations desirous of peace. He said that the present government in Germany, due to the character of the régime and its chief, was extremely difficult to deal with, but that he felt that once they saw that Europe had composed its other differences, they might realize the interest of reaffirming the territorial provisions of the Treaty of Versailles in some definite way, and even perhaps keeping armaments within some adequate restraint, since they would be unavailing against a united Europe. He said that at present Germany was rearming as we all knew to the fullest extent, and had succeeded in alarming all other countries. Even England, the most conservative of all, was feeling the absolute necessity of building up its air defences.

He said that of course the Saar still constituted a sore spot, and he was conferring this evening with the Minister of War for the arrangements to provide, if necessary, requisite police to be at the disposal of the League Commission, in case of disturbances in that region, which of course, he hoped would not take place.

He said, in reference to the general rearming, that Italy was again becoming nervous on the naval side and wished to build more ships. When the Ambassador spoke about the Japanese attitude in London,48 he did not seem well informed, but said that their demands were increasing,—a question which, he said, concerned only England and the United States.

In conclusion, he hoped the Ambassador would feel free to come and see him at any time and to expect from him the greatest possible frankness.

Theodore Marriner
  1. Counselor of Embassy in France.
  2. Not printed.
  3. See Foreign Relations, 1931, vol. ii, pp. 237 ff.
  4. Foreign Relations, 1931, vol. ii, p. 252.
  5. Foreign Relations, 1931, vol. i, p. 248.
  6. See Great Britain, Cmd. 4126, Miscellaneous No. 7 (1932); Final Act of the Lausanne Conference, Lausanne, July 9, 1932; Great Britain, Cmd. 4129, Miscellaneous No. 8 (1932); Further Documents relating to the settlement reached at the Lausanne Conference; Foreign Relations, 1932, vol. i, pp. 636 ff.
  7. For text of agreement signed at Washington, April 29, 1926, see Combined Annual Reports of the World War Foreign Debt Commission, 1922–1926, p. 257; for correspondence relating thereto, see Foreign Relations, 1926, vol. ii, pp. 91 ff.
  8. For correspondence concerning preliminary naval conversations at London, see pp. 217 ff.