The Ambassador in the Soviet Union ( Davies ) to the Secretary of State
[Received January 20—9:15 a.m.]
12. To the President and Secretary Hull or Judge Moore.19 A few hours before departure from Berlin I had most unusual visit with Schacht. It was expressly personal and specifically unofficial. Because of its unusual frankness and the explicitness and comprehensiveness of its character the writer concluded to forward information by cable.
Schacht expressed the greatest admiration for the extraordinary abilities and powers of President Roosevelt in domestic matters and expressed the hope that these powers might be used for the preservation and establishment of world peace. He stated the following: that the present condition of the German people was intolerable, desperate and unendurable; that he had been authorized by his Government to submit proposals to France and England which would (1) guarantee European peace; (2) secure present European international boundaries; (3) reduce armaments; (4) establish a new form of a workable League of Nations; (5) abolish sanctions with new machinery for joint administration; all based upon a colonial cession that would provide for Germany an outlet for population, source for foodstuffs, fats and raw material; such cession of colonies to be by joint agreement of other powers and with colonies themselves; that France (Blum) was surprisingly agreeable thereto in principle and suggested that France approach England; that England flatly rejected the proposal; that he had tried to secure opportunity for informal discussions with the English Foreign Office but the overture was rejected.
Schacht earnestly urged that some such feasible plan could be developed if discussions could be opened; and that if successful would relieve European war menace, relieve peoples of enormous expenditures for armament, restore free flow of international commerce, give [Page 30] outlet to thrift and natural abilities of his countrymen and change their present desperation into future hope; that resulting therefrom the present artificial barriers of international commerce would be broken down and revision of currency control and other reforms would automatically follow.
Schacht stated that he hoped the President would call an international conference in Washington.20 To this the writer suggested that possibly the President would be indisposed to become entangled in these matters unless there was some assurance of success. Schacht suggested that the conference should not be called unless situation had been practically agreed upon in advance; that matter for discussions should be used only as ancillary to the general purpose and as a cap to the whole arrangement; that the conference if called should not be called an “economic conference” but a “peace congress” or some such words.
Writer stated that in frankness he should observe that while peace loving people of the world sympathized with the straits of the German people, that there was nevertheless apprehension arising out of past aggressive acts, speeches (Nuremberg) and other publications that militarism, regimentation, persecution of races and religions indicated not a spirit of peace but a lust for conquest and domination. Schacht earnestly, and I believe sincerely, rejoined that these recent manifestations were simply an effort to restore the morale of the German people after years of disappointment as a democracy in its negotiations with powers for 12 years and “were the manifestations of the desperation and terrible plight of a people bottled up and being economically starved in a world of plenty.” He intimated that armaments and the like were really trading stock to force a measure of justice upon realistic and selfish nations who had been enemies of his people.
The writer did not have the opportunity to advise Ambassador Dodd of the foregoing before leaving. Prior thereto the writer had reported directly to Ambassador Dodd as follows.
The writer had several conferences with old friends in the German Foreign Office and through them met some of the other official technical experts. The purpose of these discussions was to obtain some information upon the Spanish situation. From each the writer obtained the same view, namely, that the Spanish crisis was over, that both outside and inside Spain all parties were generally agreed that it should be a Spanish internal problem and should not be settled by [Page 31] outside interference, through volunteers or otherwise, and that as a menace to European peace, the crisis was over. In the opinion of the writer the face saving process for Hitler was in progress and that the policy of withdrawals from Spain had been agreed upon at least as a policy to be aimed at. Further the opinion was unanimous that the peoples of Europe did not want war. It was significant that this expression came from official sources.
Ambassador Dodd was most courteous and helpful.