462.00 R 29/107: Telegram

The Acting Secretary of State to the Ambassador in France (Wallace)

552. For Rathbone from Davis. Treasury R–278.

  • First: Referring to Bayne’s letter of February 2064 enclosing copy of his opinion dissenting from the opinion of the majority of the jurists reporting to Reparation Commission who hold that the value of deliveries under Annexes III, IV, V, VI and VII of part VIII of Treaty must not be credited on account of the 20 milliards of marks payable under Article 235, we fully agree with opinion of Bayne that the value of such deliveries must be credited on account of the 20 milliards of marks. It is impossible to ignore Article 236 which so clearly sustains our opinion. There is no justification for disregarding the letter of provisions which, as Mr. Bayne points out, it is practicable to execute. The opinion of the majority of the jurists appears to contain no convincing argument that the express terms of Article 236 do not represent the intention of the framers of the Treaty. As the position taken by Bayne is so clearly in accord with justice and also with the Treaty provisions, we cannot account for the contrary position taken by the Allies unless they desire to force the German Government to take over and deliver to the Allies all of the remaining investments and properties of German nationals in neutral countries, and thus indirectly obtain the same results as would the interpretation which the majority have insisted upon giving to Article 235 with a view to such action.
  • Second: I recall very distinctly the various discussions regarding Article 235 and that at one time when practically every one held the opinion that Germany could not meet such instalment even after crediting the value of ships, etc., delivered under Annexes III, IV, V, VI and VII, the advisability of reducing this amount to at least 10 milliards of marks was seriously considered. Finally, instead of reducing the amount, the Article was redrafted, stipulating that the expenses of the Armies of Occupation and also the food and [Page 371] raw materials imported by Germany with the approval of the Commission should be deducted therefrom. Realizing the probable inability of Germany to meet her obligation under Article 235, even after all of the deductions contemplated, it was also provided in paragraph 12, C–1, Annex II that such amount of the 20 milliards as had not been liquidated by May 1, 1921, shall be exchanged for long-time bonds.
  • Third: It is my clear recollection that at all the meetings at which the drafting of Article 235 was under consideration, it was always contemplated that the value of ships and commodities which Germany should deliver for purposes of restoration and otherwise should be credited against the initial payment of 20 billion gold marks. I find my recollection confirmed specifically on page 8 of Mr. Dulles’ “Record of Informal and Confidential Memoranda and Conferences Dealing with Reparation Clauses”65 where he records that on account of the sum of 20,000,000,000 marks there shall be handed over to the Reparation Commission the enemy mercantile marine, enemy gold, and property and rights of enemy nationals situated outside of Germany. We subsequently succeeded in getting the Allies to forego the taking of enemy gold and likewise secured, as we understood, their agreement to forego the taking of property and rights of enemy nationals except as specified in Article 260. This understanding is not sustained however in the recent opinion rendered by the majority of jurists interpreting Article 235 in a way to permit the taking of these properties in violation of the understandings expressed by the President and Lloyd George in the meeting of the Heads of State on April 23, 1919, and later confirmed in the note to the Germans.
  • Fourth: The position which the Allies are taking in respect to Article 235 and the values to be credited against the twenty milliards of marks is in my opinion and the opinion of the Department and [of] State most unreasonable and inexpedient and we therefore suggest that you formally advise them of our views and position.
  1. Letter not printed; text of Mr. Bayne’s dissenting opinion is printed on p. 354.
  2. Not printed.