462.00R296/2890½: Telegram
The Chargé in France (Armour) to the Secretary of State
216. Reparation No. 244. Considerable reaction caused here by your statement given to the press yesterday on proposed International Bank. This morning Young and Morgan sent for me and told me that Moreau had stated to them that in view of attitude of our Government he was unable to go on with discussion either of the German conditions or of distribution. Moreau has put great faith, apparently, in proposed bank as solution of the reparation problem and he feels that without the support of the Federal Reserve System, both bank and proposed plan of settlement would be substantially weakened. In his talk with me, Young emphasized point that Moreau was sincere in his position, that he was looking at the entire picture as a banker and was not in any way attempting to use the proposed [Page 1072] bank as an agency for tying reparations up with war debts. Moreau said that he would put his views into writing and submit them to Young. If he does this, Young will probably request me to transmit them to you. Meantime, Morgan is conferring this afternoon with Moreau in effort to persuade latter to change his views.
This development seems greatly to have discouraged both Morgan and Young. They say that matters were practically at point of settlement. The German conditions were found susceptible to agreement and they have hoped to reach accord in principle on question of distribution either today or tomorrow. They seem to feel that every hour counts as Schacht is bombarded by continual attacks from the Nationalists in Germany and it is increasingly difficult to keep him in line. This morning the German experts advised Young that there had been renewed attacks from Germany on ground that the United States now disapproved bank scheme. Young seems to feel that success may be jeoparded by a few days’ delay.
This morning the Paris press published news despatches giving your statement of May 16. They published Havas despatch also, to effect that it had been added that there would be no objection raised on the part of our Government to participation in the banker’s bank by private American banks. This latter statement was not direct quotation, however, as was your statement on participation by Federal Reserve Bank, and it has had little or no effect, apparently, on opinion here.
- Telegram in two sections.↩