ABSTRACT
Although Hoover suffered a bruising series of rebuffs at the hands of Congress and the President-elect over his plans to tackle the debt problem, the experience did little to dampen Stimson’s belief in eventual progress. At a political level, it was widely recognised in Washington that with the December payment behind them they were ‘now on solid ground and must not make our position weaker by refusing to negotiate with a debtor who wants to negotiate’. Similarly, the Federal Reserve Bank of New York now advised the Treasury Secretary that war debts had ‘become a symbol of uncertainty, destroyer of confidence, and a powerful barrier to economic recovery’ and that it was in the interests of America and the entire world to resolve the problem as swiftly as possible. The only alternative was to continue to demand payment with the increasing danger of mass repudiation and default which would only further strain relations with powerful foreign countries whose cooperation was needed to deal with other great international problems. On this basis, in mid-December Stimson and Mills pressed a pessimistic President to take the first steps towards a general settlement in the belief that ‘unless Hoover started it with all his knowledge and momentum of the facts, it will take Roosevelt months to get to the same place if he ever does, and that will be a tremendous setback to recovery’. Yet as Stimson also recognised, it would be difficult to persuade Roosevelt to join them in any initiative, and that if he declined to do so ‘it will be pretty hard . . . to do anything’ because the President would then be ‘very reluctant to hang around his own neck the sole responsibility for starting it’.1
