Papers Relating to the Foreign Relations of the United States, 1920, Volume II

763.72119/10211: Telegram

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

Washington, September 1, 1920—1 p.m.

1436. B–103. For Boyden.

Your B–173, July 29, 3 p.m.

1. First part, paragraphs 2 and 6. Department in harmony with principle of cash premium and coal credits but believes that no restrictions should be placed on expenditure of these sums by Germany. On proper occasion you might point out that restrictions would lessen economic and political advantage of premium and loan to Germany and would thus imperil beneficial results desired by Allies.⁸³

2. Second part, paragraph 3. Department desires full information about any trade agreements or advantages, about manner in which credits will be put at disposal of Germany, about kinds and quantities of supplies Germany will need and where and how she intends to secure them.

3. First part, paragraph 3. Your judgment approved, and no American representative should be appointed on commission to distribute German coal.

4. First part, paragraph 4. The Department offers no objection to agreement for control of Upper Silesian coal. But improper application of the principle might necessitate withdrawal of support. The United States has direct interest in establishment of stable economic conditions in Central Europe, a desideratum closely linked with equitable distribution of Silesian coal. Department believes that Germany should be actively and adequately represented on commission to supervise distribution. In view of abnormal conditions a temporary system of allocating specific amounts of coal to various countries may be necessary. You are right in insisting that Silesian coal arrangement must take account of pre-war distribution. Reparation Commission should closely supervise administrative body entrusted with distribution, you can thus assure yourself that substantial justice is done to various claimants for Silesian coal. Period of artificial control should be short as possible and administrative machinery for distribution should be along broad general principles rather than according to detailed and rigid rules of procedure which are often wanted by French. Attitude of United States should be placed on record that systems of rationing and artificial control are in general disapproved and, though convincing reasons may exist for permitting temporary restrictions, free play of economic forces should be recognized as normal and that systems of artificial control are only legitimate if and as long as they are contributing toward establishment of normal conditions. While governments continue to control distribution friction is bound to continue.

5. First part, paragraph 7. There must be no occupation of additional German territory without unanimous agreement of the Allied and Associated Powers that failure on Germany’s part to meet coal obligations has been willful.

6. Why did Great Britain assume 24 per cent of coal credits and express willingness to take up larger share? We surmise that it is connected with Britain’s desire to escape payment of cash to Reparation Commission on May 1, 1921.

7. Question could properly be raised why Allies charge Germany 6 per cent on coal advances and charge themselves 5 per cent on sums they receive in excess of proper reparation quotas.

8. Second part, paragraph 3. Since Treaty does not specify relative priority of Armistice and Treaty charges, it should be distinctly understood that United States claims against Germany rank on equality with those of Allies. Extreme care should be taken not to indicate by implication waiver of rights under treaty pending ratification or other arrangement or that our rights depend only on Armistice rather than on Treaty. Ratification of Treaty would merely limit our rights to terms of Treaty. In view of our services as one of co-belligerents, it must be considered that Treaty provisions were formulated for our benefit as well as for benefit of Allies, and we have moral and equitable claims which cannot be waived and should not be ignored when dealing with Germany’s assets. Department feels that there has lately been tendency to neglect equitable claims of United States against enemy powers.

9. Second part, paragraph 4. This Government cannot even discuss reducing costs of army of occupation to a uniform basis. During the peace negotiations the question was fully considered and it was clearly understood and definitely agreed that the only basis of settlement acceptable to the United States is the payment of all actual expenses of American troops in Germany.

Davis

83. Boyden reported, Sept. 14: “Commission accepted principle no restriction Germany’s use of advances except used only for food, raw materials.” (File no. 763.72119/10414.)