462.00R296A/11: Telegram
The Ambassador in Germany (Sackett) to the Secretary of State
[Received 4:10 p.m.]
213. Embassy’s 210, 31st of October, 11 a.m. In order to give me the results of the conversations between Laval and the German Ambassador in Paris which followed our meeting reported in the aforementioned telegram, Von Bülow, Secretary of State for Foreign Affairs, called me in this morning.
Within the next few days the Germans intend to call for the Committee provided for in the Young Plan and in this way to exhaust the legal methods. Through another committee which they hope to have constituted by those who are parties to the Standstill Agreement they will also initiate negotiations with the private debtors. Although the Germans believe that the private debt matters will require longer and more intricate negotiations, these two committees will be practically simultaneous in beginning their work.
Von Bülow said that the Government of France will summon a conference of the Governments which are parties to the Young Plan after the Basel Committee under the Young Plan makes its report. Methods to relieve the economic situation of Germany with regard to reparation debt payments will be considered by the conference in the light of the Committee’s report. It is Von Bülow’s hope that the Bank at Basel will appoint practically the same personnel as acted after the London Conference in order to permit the conference of the Young Plan creditor powers to be put in prompt operation and in order that all possible time be saved in making a report. Von Bülow thinks that Laval plans as a result of the conference of creditor powers to continue for a further period of 2 or 3 years the Hoover holiday covering the present loans and to postpone until a later date any consideration of a reduction in reparation payments. Bruening’s internal political situation is made extremely difficult by this procedure, Von Bülow pointed out, because public opinion is firmly convinced that it makes practically certain a drastic reduction or remittance in reparations, whereas it appears as a surrender to French demands if Bruening calls for a Young Plan Committee with very limited powers.
The conversation which the German Ambassador had with Laval revealed that the latter did not realize the limitations upon a Young Plan Committee in the scope of the report it could make. The discussion also disclosed that it would require continued negotiations in the French capital (1) in order that Laval be convinced of the futility of such a report as they could make under the terms of their appointment [Page 340] and (2) that a method of procedure be found by which public opinion in Germany on the one hand could be appeased and French public opinion could on the other hand be satisfied. Through the cooperation of the two Foreign Offices, Von Bülow believes that the method of procedure and a plan have now been developed which will be satisfactory to both Laval and Bruening. According to these arrangements the French will agree that the Committee may cover a wider field of investigation than is in reality permitted under the Young Plan.
I was given to understand by Von Bülow that the French were not ready to insist on full preference of reparations over private debts but that in their opinion equal status in payment would have to be given the two classes of debts if, through the refusal of some of the private creditors to grant an extension on other terms, the collapse of German economy is to be prevented. It is also my understanding that Laval recognized this necessity. With regard to the communiqué issued in Washington on the 25th of October, there still seems to be some uncertainty in Germany as to the exact interpretation to be given it. The uncertainty applies particularly to the extent to which the United States is committed, if at all, to approve the ultimate action of the French.