The Acting Secretary of State to the Ambassador in France (Wallace)
Washington, February 26, 1920—5 p.m.
425. For Rathbone from War Trade Board and Davis.
Embassy’s 494, February 17, 9 p.m. R–328.
- Paragraph 1. It appears from your cablegram that we were misinformed by Dr. Herty concerning the effect of the Versailles arrangement with regard to rates of exchange. In view however, of your statement that the Reparation Commission is likely to favor current exchange rate for all impounded stocks of dyestuffs and chemical drugs, the observations in Department’s 325, February 10, 4 p.m. would seem to be still pertinent.
- Paragraph 2. It is obvious from the statements in your cablegram that Department’s 325, February 10, 4 p.m. was garbled. The last half of paragraph b of part I of our cablegram should have read as follows: “however with respect to the guarantee against reexportation intimated in the German proposal it should be observed that it would be impossible for this Government to give such explicit guarantee in the absence of appropriate legislation. Therefore, in lieu of such explicit guarantee you may give assurances that this Government, during the exercise [existence] of the arrangements resulting from the acceptance of the German proposal, will be careful to limit its demands for deliveries under paragraph 2 of annex VI to its actual [Page 489]needs for domestic consumption.” By implication our cablegram was intended to convey to you the fact that with respect to stocks on hand this Government, in the event of the adoption of procedure A, although it could give no explicit guarantee against reexportation, would be careful to limit its exercise of the option to its actual needs for domestic consumption. With this explanation we assume, in view of your comments on procedure A which are set forth in your cablegram, that you will not find it impossible to urge the allied Governments to adopt procedure A.
- Paragraph 3. The adoption of procedure A or procedure B would seem to be very essential for although the entire stocks on hand represent only one-fourth of the conceded total consumptive needs of the five countries, the allotments to each particular country may be in excess of the requirements of that particular country for domestic consumption.
- Paragraph 4. With regard to your suggestions that this country should adopt the same method of control over chemical drugs as now exists over dyestuffs, please note that (1) the War Trade Board’s powers will cease immediately upon ratification of peace and that (2) confidentially, Congress is not likely to adopt protective measures against results of operation of treaty of peace until treaty is ratified.
- Paragraph 5. We should be advised immediately with respect to the following: First. What rate of exchange will prevail with relation to distribution remaining stocks on hand of dyestuffs and chemical drugs. Second. Since German proposal does not relate to chemical drugs what rate of exchange will prevail with relation to deliveries of chemical drugs under paragraph 2 of annex VI.
- Paragraph 6. We are making every effort to find successor to Jacoby and hope to find someone within next two or three days. We appreciate conditions in Paris and will make every possible effort to expedite his sailing.