June 6, 1931 Saturday

At ten o’clock this morning Ogden Mills telephoned me that the United Press had a flash from Germany saying that the German Government had announced that Germany could no longer pay reparations. Mills said that he had been talking to New York with George Harrison of the Federal Reserve Bank, and that he and Gilbert Parker were together in conference on this subject. This announcement of Mills seemed to be a facer, a bombshell, in view of the plans which we were discussing with the President the day before. I sent for McDermott and told him to get me the flash, or report, and in a few minutes he did so. Mills had only had the substance telephoned to him over the wire, and I found on reading it that it was not quite so bad as it had been given to Mills. It was pretty bad, but it was on its face only a fragmentary account of a long announcement by Germany on the subject of domestic taxation, and I couldn’t help feeling that probably the United Press correspondent in Germany had misrepresented the tenor of the thing. I had phoned the President at the Rapidan immediately after Mills’s word, and I later telephoned him telling him that I did not think it could be quite as bad as the first report indicated. The President was very much upset of course, for it seemed to knock all our plans into a cocked hat. I cabled at once to Germany asking Gordon to send me a full statement, rather a full copy of the German Government´s statement. I had telegraphed the night before to Atherton in London asking him to see MacDonald immediately after the conference with the Germans at Chequers1, and to ask|2| MacDonald to give him for me any news and any reports of Germany´s condition as it had come from the Germans, which he, MacDonald, felt at liberty to pass on. I then sent for Sir Ronald Lindsay, the British ambassador in Washington, and he came to Woodley2 immediately after lunch; and I told him of the bad effect which this pronouncement of Germany as reported in the Press was likely to make on the New York market, particularly on the credit which New York has given to Germany. I pointed out that these credits were all likely to be withdrawn, and Germany might really made bankrupt and put into a real default by a message which did not give as coming through the press the real meaning which the German Government intended it to have. I, therefore, asked Sir Ronald to communicate with his Government and caution them that any message which came out of the conference after the conference should be drawn very cautiously with a view to this possible effect upon the market, particularly as it would follow this message from Germany. Sir Ronald said that he would communicate at once with his government and that they would get it by tomorrow morning, Sunday. During the morning I had called in Boal and Feie and Castle and told them of the situation and prepared to get the precedents and the facts to guide our own action in the future, particularly in reference to the President´s plan as developed last night.|3|1Gemeint ist hier eine länger geplantes Zusammentreffen des Reichskanzlers und des Reichsaußenministers mit dem britischen Premierminister auf dessen Landsitz, das am 5.6.1931, also dem Datum von Simpsons Tagebucheintrag, stattfand. Vgl. Vermerk des Staatssekretärs Pünder über die Unterredung mit den sozialdemokratischen Reichstagsabgeordneten Breitscheid und Hertz am 20. April 1931. BA Berlin-Lichterfelde, R 43, 2701. 2Gemeint ist ein Herrenhaus in Washington D. C., in dem Simpson wohnte. 

During the morning Sir Arthur Salter, formerly the head of the Economic Section of the League of Nations, came in to call on me and told me of his trip to India and China, where he just been on behalf of the League of Nations. He told me, among other things, of his conferences with China on the subject of raising money, and how he had advised against general loans but rather in favor of special loans on the security of her customhouse. I then put to him the direct question of whether they had discussed any national monopoly upon opium as a means of raising revenues. He did not deny it but rather by inference admitted it; but said that it could not be used because China did not control all of the sources of opium and also she did not control the use of opium in one of her largest cities, Shanghai, which was under the International Settlement.

I had also a conference with Mr. Carr on the subject of office organization and signed some important letters requesting from the President executive orders putting into effect the new Moses-Linthicum law.3.3Der Moses-Linthicum Act reorganisierte die Aufsicht des Personals im Auswärtigen Dienst der USA. Dabei ging es darum, Freundschaftsdienste und Nepotismus zu bekämpfen. Die Zahl der Gehaltsklassen wurde reduziert, die Zahl der Zuschüsse und Urlaubstage erhöht. Gleichzeitig wurden die Ruhestandsregelungen verbessert. 

This made a very busy morning, but at four o´clock Mabel Regnier and I got off in a car and motored out to Larry Ritchey´s camp in Maryland, where we arrived just in time for a little fishing before supper. It was a delightful change after the pressure of the last two or three days, the coolness and stillness of the woods, with a little trout stream running through it, at the lonely camp which is always refreshing and cool. We had a delightful time. I caught a few fish. The fish in the stream seem to be better and larger than last year. We had a good supper, a quiet evening and went to bed and had a good sleep.