462.00R296/5049
Memorandum of Trans-Atlantic Telephone Conversation12
Edge: There are one or two points in the conversation this morning between Mills and Mellon that I would like to make certain that you have clear in order that you may send us a telegram of instructions that can be decoded before our meeting tomorrow morning at eleven or twelve.
Castle: Yes, I heard everything.
Edge: With reference to the paragraph numbered “third” in your telegram No. 313 of June 30 (top of page six in Department’s “pink” copy), reading, “but, of course, the same length of time will apply to the payment on account of the American debt”,13 we want to make entirely sure that we understand your view. The French view is that whether their loan to Germany is for 5, or 10, or 25 years, they are not prepared to repay the United States for the suspended debt annuities on any different basis than any other country. The French take the position that they will lend Germany out of their own surplus, entirely out of their own money over and above any money that they owe the United States. Assuming that the United States is willing to give its debtors 25 years in which to repay the suspended annuities, the French object to paying their own debt to us on any different basis merely on account of the length of the term agreed upon for repayment of the amounts reloaned to Germany.
Castle: If they insist on Germany’s paying back in ten years, they will have to pay us in the same length of time.
[Page 122]Mills: We will make the same provision for other countries. If it is ten years for France, it is ten years for England and for every other country.
Edge: That is fine. That completely answers the first point. I just wanted to make quite sure that was your understanding.
I saw Tyrrell, who said he had told Briand this morning about the plans of the British Government for a discussion in London, and Briand replied that he could not possibly think of going at this time. To do so would be to give the impression in France that he was going to London to get instructions. On account of the difficult political situation he positively refuses to go.
Castle: I talked to Henderson14 a little while ago and told him I thought it was important that our negotiations should be buttoned up before there is any conference in London, but that it would be very much worthwhile for the others to get together in London afterwards. He more or less agreed with me.
Edge: That is splendid. Tyrrell is telephoning his Government to find out (1) whether London regards the Young Plan as permitting the distribution of the Guarantee Fund in such a way that the French will not be called upon to deposit more than will be required to pay the other nations under the Young Plan in case of a moratorium; (2) what is the British attitude on the question of a $25,000,000 loan from the central banks to the Central European countries, with the Bank of France participating to the extent of $10,000,000.
I should like to have from you tonight your general reaction with regard to these same questions.
We are pretty close to an agreement. The French don’t want to break. In discussing the possibility of a further note from the French, it was Flandin’s reaction that we had exchanged enough notes already and that we could get to a settlement faster through direct conversations.
Castle: The French delaying has already spoiled half the effect.
Edge: All we need now, is a pretty general statement from you which will enable us to go ahead tomorrow.
Castle: That is exactly what we are doing now.
Mills: We would like to know whether the British agree with the French interpretation of the Guarantee Fund before we send you our cable.
Edge: That is impossible. We had the British Ambassador at a quarter of eight this evening, and he telephoned to London after that. He cannot get an answer before ten tomorrow morning. Give us your views and we will get those of the British experts. I do not see that we need worry about their views. If they are willing to meet the [Page 123] French with regard to the Guarantee Fund, I think we need raise no objection since, as we have already pointed out, we are not parties to the Young agreement.
Mills: I think so too. It is our view that the Young agreement is open to the French interpretation.
Edge: The way Mellon feels is that the pertinent section does not prohibit it, and what is not prohibited can be done.
Morrow: Going back to the time period for which the payments are to be postponed; I think it is a good argument to use with them that by shortening the period they also cut down the period in which they and our other debtors must pay us. Paris being one of the financial capitals of Europe, the French would be doing themselves a good turn if they should agree to an extension of the period. By pushing the Germans, they are also pushing Europe to pay us.
Edge: I think we might arrive at a compromise of from 12 to 15 years.
Castle: That is the minimum.