Office of the Historian

851.248/80

Memorandum of Conversation, by the Adviser on International Economic Affairs (Feis)

[Washington,] June 20, 1938.

Mr. Lamont telephoned me from New York this morning to ascertain whether we had any comment to make on the proposed arrangement for financing the sale of airplane engines to France.

I asked him the question raised in Mr. Hackworth’s memorandum60 as to whether the account which Morgans would have would be in the control of the Bank of France until used for payment, and he said presumably “yes”, though there would be an agreement to maintain it at the amount required to meet the obligation in dollars, and the promise of unrestricted transfer.

I then proceeded to summarize my understanding of the arrangement, to wit:

(1)
That the franc deposit would be made immediately, that the French Government would pledge itself to maintain on deposit whatever amount of francs was required to meet the dollar obligation, but that there would be a promise of unrestricted right of transfer in time of peace or war, and that the promises of the French Government would be supplemented by similar promises from the Bank of France.
(2)
Further, that payment would be made to J. P. Morgan and Company out of this account in dollars immediately upon delivery of the airplane engines.

Mr. Lamont confirmed all of this, and having done so, I stated that we had no comment to make. Mr. Lamont replied that he took this remark of mine in connection with the one I had made Saturday to the effect that if the Department saw any obvious evidence of violation of the Johnson Act61 it would so indicate to him.

I told him again that the Department did not undertake the responsibility of acting as interpreter of the Johnson Act. That duty remained with the Department of Justice. I said, however, that if as at various times a prospective transaction seemed obviously to be contrary to the Act the Department so indicated.

Mr. Lamont stated that he wished to assure me he had every wish to lean over backward in this matter, and his counsel assured him there was no question of the Johnson Act.

He said that he would send to the Department a copy of the Memorandum setting forth the detailed terms of the transaction.

H[erbert] F[eis]
  1. Not found in Department files.↩
  2. Approved April 13, 1934; 48 Stat. 574. For correspondence, see Foreign Relations, 1934, vol. i, pp. 525 ff.↩