611.626/154: Telegram
The Ambassador in France (Wallace) to the Acting Secretary of State
[Received March 19—1:18 p.m.]
743. R-431 for Davis and War Trade Board. Department’s 505, March 10, 6 p.m.
1st. Dyestuffs from Germany under annex VI, paragraph 1 and 2, fall into three divisions: (a) the 5,200 ton lot from the impounded [Page 491] stocks according to protocol November 3d; (b) the balance due Allies from impounded stocks; and (c) daily production.
2d. Concerning prices 5,200 ton lot: (a) protocol November 3d provides that German delegation will carry out delivery of dyestuffs in accordance with following details. United States will immediately accept delivery of 500 tons and reserves right of taking later supplementary delivery of 1000 tons, prices which appear in list of August 15, 1919, are to be understood as prices for delivery in original barrels of at least 150 kilos net, free in works, barrels not returned; (b) extra charge allowed for delivery in smaller containers; (c) list of August 15 quotes prices in paper marks; (d) this covers the 1200 tons still due us. Careful inquiry here among representatives of various nations who discussed this protocol with Germany, confirm their understanding that rate of exchange to be applied on deliveries dyestuffs from 5,200 ton lot is rate of exchange on date of delivery, that is to say, date of bill of lading.
3d. Prices balance impounded stocks are prices which appear in list of August 15 mentioned above. It was general understanding of those charged by various governments with dyestuffs matters that rate of exchange date of delivery would also apply to balance impounded stocks.
4th. Prices daily production covered by following agreement of January 30 (see my R–27713) formally accepted by Bergmann for German Government February 20th, 1920.
“The German Government undertakes, pending the final execution of the agreement which was discussed at the meeting of the dyestuff [subcommission] of the Reparation Commission January 28, 1920, which agreement must be finally executed by April 30, 1920, to see that the various dyestuff factories in Germany will deliver to the United States of America, to the United Kingdom, France, Italy and Belgium, such dyestuffs as these countries ask for by priority on all other deliveries for Germans or others up to 25 per cent of the daily production. The prices at which these dyestuffs will be delivered shall be the lowest at which these same dyestuffs have been delivered during the previous month to any buyer, German or other. These deliveries will be credited to Germany in reparation account. On the other hand the Reparation Commission binds itself to suspend immediately the control which is at present exercised on the dyestuff factories. It however reserves the right to reestablish this control whenever it may consider it necessary.”
Germans have been requested to furnish prices at which they will deliver dyestuffs under this agreement.
5th. Pharmaceuticals from Germany under annex VI, paragraphs 1 and 2, fall into two divisions: (a) impounded stocks which appear [Page 492] in list of September in which prices are quoted in paper marks; (b) daily production.
6th. Were it not for the considerations hereafter mentioned foregoing would furnish explicit answers to your questions (a) and (b). In regard to your question (c), list price has nothing to do with the daily production, price will probably be fixed as for daily production of dyes. Regarding your question (d) your understanding is correct.
7th. It is only Reparation Commission that can finally decide credit to be given Germany on reparations for deliveries of commodities under annexes and Commission has not yet either adopted general principles to govern nor passed upon these particular dye-stuffs matters. The general question is of great importance and highly complex. It will be recalled that it has been United States opinion that Germany should be credited with fair value for deliveries under annexes and that owing to abnormal conditions a paper mark price converted at current exchange rates would not in general at least for a time operate to give Germany sufficient credits for its reparation account for deliveries under annexes. On the other hand so far as crediting Germany for deliveries of dyestuffs and pharmaceutical products is concerned, as situation in respect to deliveries, made and being made is substantially same for all countries concerned, it is most particular [sic] that Reparation Commission will make no decision that will operate to alter credits to be given Germany on basis set forth in previous paragraphs of this cable. I am taking steps to bring up this question so far as past and current deliveries of dyestuffs and pharmaceutical products are concerned through dyestuffs sub-committee and finance service. It may, however, be impossible to obtain a decision of Commission on this point for some time.
8th. Replying more in detail to your paragraph 1, Herty’s understanding undoubtedly same as that of all others who are directly concerned with matters in question both American and of other nationalities and who have negotiated with Germans on the subject, nevertheless, as stated above and in my R–328,12 Reparation Commission has not yet directly passed on matter of what credit is to be given Germany for these deliveries. As stated in preceding paragraph it is most improbable that Commission will as to past and current deliveries give credit to Germany greater than that to which Germans have apparently assented and upon faith of which presumably all governments participating in deliveries have made sales to their nationals. Rathbone.