The Chargé in Germany (White) to the Secretary of State

No. 638

Sir: I have the honor to refer to the Department’s telegram No. 33 of March 17, 1 p.m., in regard to the recent declarations of Dr. Sehacht, suggestive of repudiation. In this connection, I enclose herewith copies of the German text of Dr. Schacht’s speech, as published in the Deutsches Nachrichtenburo of March 16, and a translation of the same.44

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It is to be presumed that it was this speech which prompted the Department to send its telegram above mentioned. I may also add that, according to my information, the Department was not alone in judging it adversely. The Embassy has been confidentially informed that Mr. John Foster Dulles, who represented the American issue houses, in the recent negotiations in Berlin, for the protection of long-term bond holders, telephoned to his representative here, Mr. Grazier, in regard to this aspect of the speech. Mr. Grazier went to see Dr. Schacht who denied that he contemplated any repudiation, but would discuss no details.

As far as meeting with the demands for information contained in the Department’s telegram is concerned, Dr. Schacht is really the only source from which much of the material can be obtained. I accordingly addressed to him the enclosed communication.45 It seemed to me preferable to do this by letter inasmuch as it would appear desirable to make my questions as concrete as possible. Moreover, the Embassy has had considerable correspondence with Dr. Schacht of late. Some of the questions addressed to him are, from the Department’s point of view, inverted. This, however, appeared to be the only method of approach. If he does not succeed in answering them plausibly, then the assumption will remain that a debtor should pay what he owes.

As for the last paragraph of the Department’s telegram, the Commercial Attaché is preparing quite comprehensive data, indicating certain German shortcomings from the moral, if not from the legal, point of view. This data will be duly transmitted to the Department.

All this, however, is somewhat in the nature of retrospect; for, as far as the capacity of Germany to maintain the rate of service hitherto provided for by existing agreements is concerned, I do not know of any one here who believes that this country will be able, in the coming months, to do so. The main objective presumably is to save what is possible and to prevent the recurrence of a similar situation.

Respectfully yours,

J. C. White
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