462.00R296/4187a: Telegram
The Acting Secretary of State to the Secretary of State78
1. Up to 4 o’clock this afternoon the situation regarding the debt discussions may be summarized as follows:
In reply to our message of last night79 Ambassador Sackett telephoned from Berlin to give the substance of his talk with Bruening. These principal points were made:
- (1)
- The plan which the French have suggested for reloaning the money paid by Germany to the Bank for International Settlements to other European countries is not acceptable.
- (2)
- The payment of marks to the Bank would not be agreeable to the people of Germany. The Chancellor suggested in a tentative way the issuing of German bonds which would be held by the Bank. I understand that the Chancellor’s objection to payments to the Bank for International Settlements applied only to the scheme advanced by the French and not to a like feature in our Plan D.
- (3)
- The Chancellor feels that it would be politically impossible for Germany to make a public and formal reaffirmation of acceptance of the Young Plan.
Secretary Mellon is to have additional talks with Laval scheduled to begin at 3 p.m. today Paris time.
[Page 84]The information in this telegram has been repeated to Secretary Mellon for his confidential use.
This afternoon Mr. Mellon stated by telephone that he had seen Laval, who gave him the suggestion which follows: That the payment by Germany to the Bank for International Settlements be divided into five parts; Germany would receive four-fifths as a reloan and one-fifth would be loaned to other countries of Central Europe. Laval insisted, however, that instead of Germany’s repaying the loan in 35 yearly installments as we set forth in Plan D, repayment should be made within 5 years’ time. Laval’s idea was to divide repayment into three installments which would be paid during the final 3 years of the whole 5-year period and that accordingly the first 2 years of the period would demand no repayment from Germany. It appears that this plan would not prove acceptable to the German Government. There is under consideration here the altering of our suggestion for 35 annual installments into 25 annual installments.