[Enclosure]
Oral Communication
In our view the main purpose of the Economic Conference is to restore
both commercial and financial confidence between the nations of the
world. We hope to achieve international agreements for cooperation
on policies aiming at the restoration of free and stable exchanges
and the raising of world prices by credit expansion, better
distribution of bank reserves, removal or lowering of trade barriers
and abolition of exchange controls, and all these topics are
interconnected,
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and must
be attacked comprehensively. But international agreement on these
questions presupposes general confidence. No fresh disturbing
influence must be allowed to arise in the near future. And no
confidence such as is desired can exist so long as there is
uncertainty as to the ratification of the Lausanne agreements43 or on the question whether interallied debts or reparations
may be reopened. This was the meaning of the sentence in paragraph
15 of your [our] memorandum to which
exception has been taken. It was a simple description of the
European situation as it appears to us and ought not in any way to
be taken as an ultimatum or a bargaining point. The views expressed
are unanimously held by the principal experts of the Preparatory
Committee as stated in their declarations at Geneva as well as in
their report. We are at a loss to understand the suggestion that our
statement is inconsistent with that contained in their published
report.
The Geneva report says “until there is such a settlement or definite
prospect of such a settlement these debts will remain an insuperable
barrier to economic and financial reconstruction”.44
We said that “any hope of arriving at better conditions is dependent
on the satisfactory settlement of war debts having been reached or
at least assured.” There is no material difference between the two
statements. It is well known that we would prefer a prior settlement
of the war debts; but we have also made it clear that we would
discuss the subject of debts concurrently with world economic
problems if this prior settlement is unattainable.
Such is still our position but perhaps we should explain it more
fully in view of the American comments contained in their
memorandum. We believe that, failing a prior agreement as to how a
final settlement of war debts can be reached and in fact is to be
reached, progress at the conference on any financial and economic
problem will be attended with the greatest difficulty. Failing such
an agreement some of the most important issues of the conference can
only be dealt with provisionally, as indeed was the case at
Lausanne. But if it is impossible in the available time to reach a
final settlement, and if it becomes clear that no decision can be
reached during the conference involving cancellation, or that not
even a moratorium (if the United States Government dislike the word)
can be arranged, yet it ought to be possible to reach some practical
arrangement under which, during the period of the conference and for
that period, any debt instalment
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would be regarded as held in suspense. We feel
convinced that the conference will not only be severely handicapped
but may even be wrecked if, before it has well begun, its work is
interrupted by claims which at once raise the whole disputed issue
of debts isolated from the other matters which concern the world
situation. But we also believe that if this does not happen, then
the conference could get to work early, and discussions for a final
settlement of debts could proceed concurrently though independently.
This is an objective statement of the position in Europe and is not
an ex parte argument.
The Prime Minister’s reply45 to the President’s invitation makes it clear that
his object is to confer on world economic problems with especial
regard to the conference, and on disarmament. In the foregoing
paragraphs we have stated our view of the relation of the war debt
question, and particularly of the June instalment, to the economic
conference and no mention has been made of this subject in the Prime
Minister’s reply to the invitation. We nevertheless hope that the
President will bear these considerations in mind in connection with
Mr. MacDonald’s visit for we feel sure that he is as deeply
interested as ourselves in promoting good will and in solving the
problems common to both countries and to the whole world.
