800.51W89 Great Britain/567
Memorandum by the Under Secretary of State (Phillips)
The President told me that, in his recent conversation with the British Ambassador on the subject of debts, Sir Ronald had dwelt on the iniquities of the word “default” and had inquired whether something could not be done by an amendment to the Johnson Act getting rid of this word.
The President had replied in the negative and said that there was nothing to do but to admit the situation as contemplated under the Johnson Act. The Ambassador then asked what the President had to suggest. The President said that if he were the British Government he would hand this Government a note setting forth at length the conditions of the British Treasury, referring to the favorable balance in their budget, but also to the extent of the taxation under which the British people were suffering; that, for social and other reasons, it was necessary to lighten this heavy taxation which would automatically unbalance their budget; however, that they recognize their responsibilities under their debt and desire to discuss the question of final disposition of the debt and that they would leave these discussions or conversations to be held, either in Washington or in London, according to the wishes of this Government. The President told the Ambassador that he thought if such a note was received it would certainly improve the June 15th situation and perhaps the next semi-annual “pay-day.”
Sir Ronald did not seem to receive the President’s suggestion in a very happy spirit.