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The President's News Conference

July 06, 1931

THE MORATORIUM

THE PRESIDENT. I am glad to announce that the American proposal for 1 year's postponement of all intergovernmental debts and reparations has now been accepted in principle by all of the important creditor governments. The terms of acceptance by the French Government are, of course, subject to the approval of the other interested powers, for whom the American Government naturally cannot speak. Without going into technical terms, while certain payments are made by Germany for reparations account, the substance of the President's proposal is retained as the sums so paid are immediately reloaned to Germany.

The technical difficulties arising from many complicated tuitional agreements, which involve the aggregate payment between governments of over $800 million per annum are now in the course solution by the good will and earnest cooperation of government leaders everywhere.

The American part of the plan is, of course, subject to the approval by Congress, but I have received the individual assurances of support from a very large majority of the Members of both Senate and House, irrespective of political affiliations.

The acceptance of this proposal has meant sacrifices by the American people and by the former Allied Governments, who are with all others suffering from worldwide depression and deficits in governmental budgets. The economic load most seriously oppressing the peoples of Germany and Central Europe will be immensely lightened.

While the plan is particularly aimed to economic relief, yet economic relief means the swinging of men's minds from fear to confidence, the swinging of nations from the apprehension of disorder and governmental collapse to hope and confidence of the future. It means tangible aid to unemployment and agriculture.

The almost unanimous support in the United States is again profound evidence of the sincere humanity of the American people. And in this year, devoted to economic upbuilding, the world has need of solemn thought on the causes which have contributed to the depression. I need not repeat that one of these causes is the burdens imposed and the fears aroused by competitive armament. Contemplation of the past few weeks should bring a realization that we must find relief from these fundamental burdens which today amount to several times the amount of intergovernmental debts.

Q. Mr. President, does that mean that the official connection of the United States with your proposal is ended excepting the sanction of Congress ? Is it over with so far as we are concerned ?

THE PRESIDENT. I will talk to you on that a moment for background. The French proposal we will get over the wire in a few minutes from Paris. We have had the text by telephone but are not quite sure enough of its details to be certain about it. We know its import. The French naturally raise questions which solely concern the European participants in reparations. They are not matters of agreement with the American Government. That requires that the various participants in reparations must get together and come to a conclusion on the French proposals. I do not anticipate any great difficulty in that, as a matter of fact. But so far as we are concerned, in case they come to an agreement or they accept the French basis of anything of that kind, we have no great further official relationship to it. We simply pass it over to the State Department.

Q. Is this to be taken as a proclamation of the proposal, Mr. President ? Does this mean it becomes effective as of July 1 ?

THE PRESIDENT. It is effective July 1.

Q. Mr. President, would you continue your narrative of this background ?

THE PRESIDENT. On what other points ?

Q. I thought perhaps you had something more to say in explaining it. When will these experts come together ?

THE PRESIDENT. It may be that the heads of governments may need to get together. There will have to be some discussion between them. I don't want to anticipate the announcement. It means beginning 1 year after the deferred year, and in 10 annual installments.

Q. July 1, 1933, instead of 1934 ?

THE PRESIDENT. Yes, and go for 10 years.

Q. Mr. President, is American ratification contemplated in a special session of Congress or at the regular session in December ?

THE PRESIDENT. We can do it in December. There is no actual payment due the United States until December (?) 1 with one small exception.

1 The question mark appeared in the transcript. Foreign debt payments were due on December 15.

Q. Mr. President, could you indicate how the matters of payments in kind were finally settled?

THE PRESIDENT. It is referred to the committee of experts to work it out within the spirit of the President's proposal. It is a very technical business you will find if you get into it.

Q. Mr. President, are the payments in kind for which contracts have already been made by any process of exclusion to be reloaned to Germany ?

THE PRESIDENT. That is not settled. What we said was a committee of experts to get together and work out the modification of the payment in kind plan in such a fashion as to make it conform to this proposal.

Q. You said the text of this note would be available--sent by cable or State Department?

THE PRESIDENT. By cable.

Q. Would it be exact to say that your proposal is already in effect?

THE PRESIDENT. I think it is morally in effect.

Q. As of the first of July ?

THE PRESIDENT. As of the first of July. Probably what makes it effective is that nobody would put in money.

Q. What constitutes effectiveness ?

THE PRESIDENT. So far as we are concerned, of course, as already stated, when those powers settle on arrangements--when they become final--that would be submitted to Congress, and then it becomes effective. As a matter of fact, the moral effect is that I doubt anybody is going to pay anything the first of July anyway.

Q. The French will make an announcement, Mr. President, won't they ?

THE PRESIDENT. Either they or Mr. Mellon--I don't know which.

Q. I mean on behalf of the French Government ?

THE PRESIDENT. I could not tell you.

Q. Is there to be a joint statement ?

THE PRESIDENT. An understanding in the form of a written memorandum.

Note: President Hoover's one hundred and ninety-eighth news conference in the White House at 5 p.m. on Monday, July 6, 1931. On the same day, the White House issued a text of the President's on the moratorium on intergovernmental debts and reparations (see Item 252)
The Department of State released a text of the agreement reached between American and French negotiators in Paris, France. The released text of the agreement follows:

After exchange of views the French Government states that it is in agreement with the United States on the essential principle of President Hoover's proposal and on the following propositions which may be expressed thus.

1. The payment of intergovernmental debts is postponed from July 1st, 1931 to June 30th, 1932.

2. However, the Reich will pay the amount of the unconditional annuity. The French Government agrees insofar as it is concerned, that the payments thus made by the Reich shall be placed by the B.I.S. [Bank for International Settlements] in guaranteed bonds of the German railways.

3. All suspended payments shall be subject to interest in accordance with the conditions suggested by the American Government payable in ten annual installments beginning with July 1st, 1933.

4. The same conditions shall apply to the bonds to be issued by the German railroads.

On the three points which it is recognized do not directly concern the American Government, the French Government makes the following observations:

A. A common action by the principal central banks acting through the medium of the B.I.S. shall be organized to assist the countries of Europe which would be particularly affected by the postponement of the payment as proposed.

B. A preliminary understanding should take place between France and the B.I.S. in order that France shall not supply the guarantee fund provided for in the Young Plan in the event of a moratorium except by monthly payments in accordance with the acknowledged rights of the creditor states after the actual transfer of payments by Germany.

C. The question of deliveries in kind and the various modifications which will become necessary as a result of the application of the American proposal and the present agreement shall be studied by a committee of experts named by the interested powers which shall reconcile the material necessities with the spirit of President Hoover's proposal.

France reserves the right to request of the German Government indispensable assurances concerning the utilization for exclusively economic purposes of the sums freed to the Reich budget.

Herbert Hoover, The President's News Conference Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/211444

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