851.248/139: Telegram

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

91. Your 276, February 13, 10 p.m. Your replies regarding aircraft credits are approved: although the bearing of the Johnson Act on credits of the type in question has not been defined by judicial decision, nevertheless it is very doubtful whether in view of the provisions of that Act banks would risk such transactions as those suggested; in House Banking Committee hearing February 9, on Export-Import Bank legislation, in reply to a question Jesse Jones39 is reported to have said that the Bank had not and would not lend money to France to finance airplane purchases; token payment, while it might produce favorable reaction as a gesture of actual acknowledgment of indebtedness, would not affect Johnson Act prohibition. There is no recent evidence what terms of debt settlement Congress might accept except that Hungarian proposal of last February40 to [Page 505] apply all past payments against capital amount originally borrowed and to pay the remainder of that amount without interest in thirty annual instalments has not yet been taken up for Committee consideration, the reluctance of Congress to consider it being obvious. Applied to French debt, this basis would require 30 annual payments of about $97,500,000 each.

  1. Chairman of the Board of Directors, Reconstruction Finance Corporation.
  2. February 7, 1938; for text of aide-mémoire, see Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1938, pp. 298–300.