It will be noticed that, as a result of his intimate connection with
the moratorium discussions, M. Laval has extremely positive ideas on
[Page 574]
the slight possibility
of any present debt arrangement with France, and his rather fine
spun legal reasoning is set forth in the memorandum. I am not sure
that M. Laval was not encouraged that the debt question was a dead
issue by a quotation of an alleged statement by Senator Joseph T.
Robinson, which had appeared in the morning papers the day preceding
our interview, which purported to indicate that the Senator felt
that there was no intention on the part of debtor nations to resume
payments. In any case, M. Laval reasserted with much firmness the
attitude he has maintained in all discussions on the subject,
namely, without the resumption of Reparations payments there can be
no payments by France on debts, and anything I could say to the
effect that we did not consider these two problems related seemed in
any way to shake him. His attitude seemed in contrast to that of M.
Barthou who had given more indications of a willingness to listen in
an unprejudiced manner to my ideas on the subject, and even to
suggest taking the matter up with the Minister of Finance.
From M. Laval’s conversation, I fear that the matter will be in
abeyance during his incumbency, unless by some strange chance a rapprochement with Germany bring to a head
the question of a final settlement on reparations, or unless the
unwillingness of America to forget or ignore these debts is made
very clear either by an authoritative statement by the President,
the Secretary of State or an influential member on the floor of
Congress.
[Enclosure]
Memorandum by the Counselor of Embassy in
France (Marriner)
M. Laval, Minister for Foreign Affairs, received the Ambassador,
accompanied by Mr. Marriner, at the Quai d’Orsay at ten o’clock
this morning, by appointment. It was the Ambassador’s first call
on M. Laval since his taking over the Ministry for Foreign
Affairs.
The Ambassador said that Mr. Marriner had reminded him that it
was just three years ago today that M. Laval had left Washington
after his visit there,42
and M. Laval replied that he recollected this very well and that
even his brief visit in America had left a tremendous impression
with him of the hospitality, force and vitality of the nation.
He said he had been very grateful for the kindness of the
American Government in delegating Mr. Marriner to accompany him
as a liaison with the American Government officials and Mr. Pell
as a liaison with the American press.
[Page 575]
The Ambassador said that he had talked with M. Barthou the day
before his assassination and had mentioned to him again the long
delay of the French Parliament in ratifying the Treaty on Double
Taxation, which had been ratified by our Senate over two years
ago. M. Laval took a note on the subject and said that he would
do his utmost to press the matter. The Ambassador told him that
M. Baréty was the Rapporteur.
The Ambassador then said that he would turn to a more important
difficulty between the two countries, namely that of the debts,
and that if it interested M. Laval he would give him an idea
which he had outlined quite unofficially to M. Barthou. It must
be understood that the idea was a personal idea of Mr. Straus’s
and not by any means a proposition of the American
Government.
M. Laval said that this was all the more desirable from his point
of view. Because of his own attitude on the debt question, he
would not wish at present to appear to enter into any
discussions on it before he could have some pourparlers with Germany on the Reparations
question.
The Ambassador then proceeded to outline his views, set forth in
his despatch to the Department No. 1183 of September 4, 1934,
giving the substance of his conversation with M. Barthou on
August 31, 1934, with respect to exceedingly long-term bonds at
a very low rate of interest for the full amount of the now
outstanding French debt, approximating four billion dollars, to
be used to finance the movement of goods and services from
France to the United States. These bonds would be purchased in
the United States by those requiring French exchanges. These
would be presented in France to the French Treasury for francs,
thus avoiding all question of transfer.
M. Laval said that he would like to have a memorandum on the
subject, quite unofficially, so that he could study it with more
precision, and suggested that Mr. Marriner should get in touch
with M. Rochat, his Chief of Cabinet, quite informally, with no
papers of record.
The Minister then said that he wished to outline for the
Ambassador his point of view on the whole subject of the debt to
the United States. He said that Mr. Marriner would recall the
whole course of the moratorium discussions, and his attitude at
the time, namely, that the stoppage of payments from Germany
stopped all intergovernmental payments; that he had stressed
this still further in Washington where the communiqué43
agreed upon the last day of his visit, namely, three years ago
to-day, had said that, before the end of the moratorium year, an
agreement of all intergovernmental obligations should intervene
covering the period of business depression. This, in
[Page 576]
his mind, clearly
indicated that, without some such agreement, the moratorium
continued, and while he was aware that a communiqué was not a
treaty, and that its contents were not passed upon by the Senate
of the United States, nevertheless, he felt that the Senate, in
giving its consent to the moratorium in its Resolution of
December 23, 1931,45 having
knowledge of the communiqué and the negotiations attending it,
certainly in no way denied the theory that the moratorium would
continue in default of such an arrangement. Furthermore, the
business depression had continued and augmented. The Lausanne
accords46
were a partial agreement on this subject, made, however, without
the assent of the United States, and as they had expressly
stated that such consent was necessary, and as they had never
been ratified by the French Parliament, it was M. Laval’s
belief, not only as Minister for Foreign Affairs, but as a
lawyer, that these accords did not exist and that we were still
in the same state of moratorium as we had been at the conclusion
of the Hoover Moratorium in 1931.
With all this in mind, it was his consistent belief, from which
he had never varied, that there could be no payment from France
to the United States until such time as the question of
Reparations, still in abeyance, should find some suitable
arrangement. He said that he realized the position of the United
States that these two matters had no necessary relation, but at
the time of the moratorium discussions, France had succeeded in
having the unconditional annuities of the Dawes and Young loans
paid into the Bank of International Settlements for the French
account, thence to be reloaned to the German railways. He felt
that this act indicated clearly the principle that there was
some relation between Reparations payments and all international
payments, and that therefore France was justified in considering
that so long as the moratorium existed with respect to Germany
and France, a moratorium must be considered to exist between
America and France.
He said that he well understood that both the United States and
England, at the time of the moratorium, had been pushed by their
bankers to relieve Germany of Reparations payments, in order
that it might have some possibility of paying the enormous
charges on the loans made by both these countries within the
Reich, but that this gave the French taxpayer a cause to
complain that his prior obligations on Germany had been put
aside in favor of the service of later loans made to relieve an
enemy nation, which was thus escaping the consequences of the
war. He said that the Ambassador’s idea had something ingenious
[Page 577]
in it, and might
conceivably offer a means of approach along the same lines to
Germany, although he thought that the enormous sum involved,—60
billion francs,—stretched over no matter what number of years,
would look out of all proportion to the French mind at present,
and that no Government proposing it would have much chance of
life with the French Chambers in their present mood. Mr. Straus
remarked that there was no reason why the plan he suggested
should not begin with a further moratorium and proceed as the
plan envisaged in the communiqué. The Ambassador reminded the
Foreign Minister that the sum involved had been very much cut in
view of the Mellon-Bérenger negotiations in Washington,47
and did not by any means represent the total sums borrowed, and
that all interest had been left out of account. Furthermore, the
American dollar had been reduced in value, which created on the
already reduced total another reduction of 40%. The Ambassador
said that the time might come when France would need money once
more, and that, with the debt situation what it was and the
American taxpayer feeling that he had been called upon to pay
the costs of the war, there would be little chance of obtaining
credit again in the United States.
M. Laval said that he realized this and that it was one of the
problems which he hoped to examine in the friendliest spirit and
in a way that would improve the relations between the two
countries, which he knew Mr. Straus had close to his heart.
The Ambassador then asked the Foreign Minister his impression of
the present European situation. M. Laval said that it was bad;
that there certainly existed danger of war, accompanied, perhaps
fortunately, by a great and general fear of war among all
peoples. The immediate dangers raised by the assassination of
the King of Yugoslavia, namely dangers of any form of reprisals,
had been avoided. The danger of internal disruption within the
Yugoslav State was apparently removed, and if anything the
nation seemed unified by this sad event. He had the highest
hopes that an understanding with Italy would be possible within
a comparatively short time as progress was being made along
those lines, and that as soon as that was done, he felt that
Italy and Yugoslavia could be brought to terms, in which case it
would mean that the Little Entente, of which Yugoslavia was a
party, Italy and France could enter into an agreement for the
preservation of the territorial integrity of Austria. When this
should have been accomplished, with a continuation of the normal
relations which France had been having with Russia, and
presuming the somewhat equivocal attitude of Poland should get
no worse, Germany would find
[Page 578]
herself isolated in Europe by nations
desirous of peace. He said that the present government in
Germany, due to the character of the régime and its chief, was
extremely difficult to deal with, but that he felt that once
they saw that Europe had composed its other differences, they
might realize the interest of reaffirming the territorial
provisions of the Treaty of Versailles in some definite way, and
even perhaps keeping armaments within some adequate restraint,
since they would be unavailing against a united Europe. He said
that at present Germany was rearming as we all knew to the
fullest extent, and had succeeded in alarming all other
countries. Even England, the most conservative of all, was
feeling the absolute necessity of building up its air
defences.
He said that of course the Saar still constituted a sore spot,
and he was conferring this evening with the Minister of War for
the arrangements to provide, if necessary, requisite police to
be at the disposal of the League Commission, in case of
disturbances in that region, which of course, he hoped would not
take place.
He said, in reference to the general rearming, that Italy was
again becoming nervous on the naval side and wished to build
more ships. When the Ambassador spoke about the Japanese
attitude in London,48
he did not seem well informed, but said that their demands were
increasing,—a question which, he said, concerned only England
and the United States.
In conclusion, he hoped the Ambassador would feel free to come
and see him at any time and to expect from him the greatest
possible frankness.
