862.51/1537: Telegram
The Acting Secretary of State to the Secretary of State2
6. On Saturday the German Chargé presented, under instructions, a brief note reciting the seriousness of the economic situation in Germany, the fact that dollar is two thousand marks, the extensive scarcity of means of payment; that Germany has done all in her power politically to fulfill her obligations, and referring to “the absolute need of immediate help from outside”. In addition, German [Page 161] Chargé expressed the hope that the President could make some public statement showing his appreciation of the dangers of the economic situation in Germany. Inasmuch as there is to be a final meeting of the Reparations Commission with German delegates in attendance on Wednesday, I feel it would be unwise for us in any way to inject ourselves into the situation at this moment, and did not, therefore, give any encouragement to this request of the Chargé. I immediately cabled Houghton the substance of the note, and asked for his comments, which have not been received as yet.
This morning, however, I am in receipt of a delayed dispatch from Houghton dated August 25th, as follows:
“Was called to Chancellor’s house last evening and talked with Von Simson,3 who had been directed by Chancellor to make me following statement:
‘It is impossible to surrender mines and forests as security for five months moratorium, first, because these properties belong substantially to individual states and not to Reich, and second, because such action would leave Germany stripped bare and without adequate security for necessary extension of moratorium. Bergmann4 however offered Bradbury5 and Mauclère6 to put up fifty million gold marks in foreign securities which government holds, to cover any default in deliveries of coal and wood. Chancellor hesitated to accept this proposal but finally agreed. Proposal agreeable also to Bradbury and Mauclère. This was Wednesday night. Yesterday noon when negotiations were resumed Mauclère presented telegram from Paris in which Bergmann’s proposal was flatly declined. Bradbury then proposed, in case of default, any mine or forest could be taken by Reparation Commission and used to make up default but in case default was not made up title of property was to pass definitely into the hands of commission. This proposition was declined by the Germans on the ground that they could not foresee what requisitions would be made at any time. Bradbury then asked them to have confidence in commission which Germans naturally refused, and then said frankly that under existing conditions England would simply stand aside and preserve a sulky neutrality and let France proceed.’
In my opinion negotiations are now at complete deadlock. Rumored that Mauclère has been ordered to return to Paris. D’Abernon7 is exceedingly active and working with Bradbury. D’Abernon’s conception of situation strikes me as essentially that of apologetic. He thinks entire problem based on control of mark. Both he and Bradbury apparently agree that a resumption of gold standard based on one gold mark to 100 paper will save situation. Government has one milliard gold and two hundred milliard of paper outstanding and Bradbury thinks intrinsic value of mark somewhat less than half its present value. Personally I believe this conception entirely too narrow. Problem political as well as financial. Evident no agreement can now be reached on different elements in problem. It must be taken up as a whole. France will not take initial step however and Germany is afraid to in the belief that France does not [Page 162] want settlement and seeks merely to ruin Germany. Situation obviously tense and electrical. Signed Houghton.”
If no agreement is reached at final meeting of Reparations Commission with German delegates Wednesday there may be an opportunity for this government to help the situation if we had some concrete proposals to put forward. The President writes me this morning that “I think this government would be very glad to be helpful in a practical and consistent way. Unless we are further advised, I do not understand what course we might helpfully pursue”.
Of course it is to be hoped, and in my opinion it is very probable, that an agreement will be reached by the Reparations Commission with the Germans at the Wednesday meeting, but, in case no agreement is reached and the French carry out their threatened policy of seizing the national mines and forests in the Ruhr, then I should wish to know whether you would care to have the Department take any step other than the withdrawal of the troops from the Rhine. Would you, for instance, care to consider putting forward the suggestion which you had in mind before the receipt of the Balfour note?8
- On board the S. S. Pan America, en route to Brazil.↩
- Of the German Ministry of Economics.↩
- German representative with the Reparation Commission.↩
- British representative on the Reparation Commission.↩
- French assistant representative on the Reparation Commission.↩
- British Ambassador in Germany.↩
- Note of Aug. 1, 1922, to the French Ambassador in Great Britain, vol. i, p. 406.↩