462.00 R 296/60½
Memorandum by the Secretary of State of a Conversation with the French Ambassador (Jusserand), November 7, 1923
Reparations Inquiry.—The Ambassador called to give M. Poincaré’s response to the Secretary’s request that he should clarify the limitations that he desired to impose upon the expert inquiry. The Ambassador stated in the first place that M. Poincaré thought the Secretary had given too dark a picture of conditions in Germany; that the Germans were disposed to exaggerate their difficulties in order to escape the payment of reparations; that it was not thought that the situation was so critical with regard to the means at their command as, for example, with respect to their supplies of food. It was, however, admitted that there was a serious condition in Germany.
Replying specifically, the Ambassador said that M. Poincaré meant by his limitation as to the Ruhr that the experts might make inquiry in this region the same as on the left bank of the Rhine provided they observed the clauses of the Treaty. The Secretary said he did not understand this. Were the experts to be allowed to consider the economic questions relating to productivity in the. Ruhr? The question [Page 92] of production was the essential one. What did M. Poincaré propose with respect to inquiry into conditions of productivity? The Ambassador said that he could not answer that question specifically, but that he would inquire. M. Poincaré had taken a definite position and the Ambassador did not feel that he could go beyond the terms of his instructions. The Ambassador then referred to the paper from which he was reading, (he left no copy or memorandum of this) and said that the experts “could not consider the legality of the occupation nor the system of collection of taxes established by the French nor the guaranties which had been seized nor the agreement with the industrialists.” The Secretary asked what agreement had been made with the industrialists. The Ambassador said that he did not know but that it could not be touched. The Secretary asked what was meant by “guaranties seized.” The Ambassador said that it was difficult to translate into English; that the French was “gage”; for example, it might refer to a mine that had been taken. The Secretary suggested that the equivalent in English might be “properties seized as security.” The Ambassador said he thought that was a correct translation.
With respect to German capacity to pay and the intent of M. Poincaré’s limitation as to examination of “present capacity” or “for a brief period”, the Ambassador said that the examination of the experts was not to go beyond the year 1930 and that in M. Poincaré’s opinion it would probably be necessary before the expiration of that period to have another inquiry. The Secretary said that he understood from that statement that M. Poincaré proposed that any question as to capacity of Germany to pay after 1930 was barred. The Ambassador replied that the experts could examine the balance sheet of German resources, internal and external, including capital in foreign banks, how these resources could be utilized and how Germany could reestablish her financial situation, but repeated that the examination by experts of Germany’s capacity to pay was not to go beyond the year 1930.
The Secretary said that he would lay M. Poincaré’s reply before the President, but that the Secretary had no hesitation in expressing his personal opinion that the limitation proposed by M. Poincaré would render the inquiry futile for the purpose for which it was designed. The Ambassador said that the period allowed by M. Poincaré was longer than the Ambassador had supposed he would allow. The Secretary said that, on the other hand, he was disappointed. The Ambassador said that M. Poincaré had mentioned this period because it was the period to which reference was made in sub-division (c) of paragraph 13 of Annex II of Part VIII of the Treaty. The Secretary said that whatever M. Poincaré’s reason may [Page 93] have been he imposed a limitation which would defeat the proposal of the inquiry to establish an appropriate financial plan. The Ambassador said that if Germany came back to normal conditions another inquiry would be needed. The Secretary said the point was to restore normal conditions and this required an adequate plan and it would not seem to be appropriate merely to take the periods of great difficulty and make no arrangements for a period that could be considered normal; that this would defeat the very proposal of creating conditions now which would permit recuperation. The Secretary said that while, of course, France must judge of her own interests, he could not refrain from venturing the personal opinion that M. Poincaré was taking a very serious responsibility. This Government was not standing in the way of France securing reparations but there were none in sight; that Germany must be able to resume production; that for this purpose there must be such a settlement as would permit credits, importation of necessary foodstuffs, raw materials, and the element of hope which would permit industry to go forward.
The Ambassador asked what period the Secretary would suggest that the inquiry should cover. The Secretary said that he did not desire any limitation imposed other than those which he himself had suggested, to wit: that the inquiry should be an advisory one; that no Government should be required to surrender in advance any of its rights under the Treaty and could retain fully its rights and accept or reject such plan as might be proposed. The idea of the Secretary was that the French expert could sit with the other experts and they would try to develop a plan which was adequate to meet the exigency. If the plan was a good one, it would go on its merits; if it were not, objection could be taken to it. So long as the inquiry was advisory and the governments were not required to make any commitment in advance which would relinquish their rights under the Treaty there was no reason, so far as the Secretary could see, to hamper the inquiry of the experts, but if M. Poincaré desired to limit the inquiry, it was important that he should point out exactly what limitation he desired. This was the object of the Secretary’s inquiry which M. Poincaré had answered and, in view of his answer, the Secretary was bound to say that he thought the restrictions would make the inquiry futile.
The Ambassador said he would communicate again with M. Poincaré. The Secretary said that there would be most insistent demands from the press to know the nature of M. Poincaré’s reply and he asked whether he was at liberty to give the substance of it. (The Secretary had taken down the chief points in the presence of the Ambassador.) The Ambassador said he would prefer that [Page 94] no statements should be made until a definite result had been reached. The Secretary said he would immediately consult the President and he felt that a definite result could be stated, on the basis of what M. Poincaré had said, in a very few minutes. The Ambassador said he would like to communicate with M. Poincaré again and asked that the Secretary postpone making any statement until he had received further word. He said he would communicate with M. Poincaré immediately.
Later. The Secretary then consulted the President, who took the same view of the matter as the Secretary had taken, and, thereupon, the same afternoon, the Secretary called up the French Ambassador and told him of the President’s views, confirming what the Secretary had already said.