462.00 R 29/565: Telegram
The Commissioner at Berlin (Dresel) to the Secretary of State
[Received March 24—9:44 p.m.]
318. My 315, March 21.30 In relation to interview to which Simons31 summoned me, ostensibly regarding the Silesia question (see my telegram 314, March 21, 5 p.m.30) his chief object was evidently to discuss reparations as reported in my telegram 315, March 21, 6 p.m.30 Since then he has handed me a carefully phrased signed statement of which the text is quoted below. I have been assured that this is entirely for my personal use and that it has not been communicated to anyone else. It is possible that the German Government is using this means to endeavor to start new negotiations. Since several new ideas are contained therein it may be advisable to bring the statement to the attention of the Allied Governments. I shall take no steps to communicate it to Allied representatives here unless so instructed by the Department.[Page 38]
“The German Government regrets extremely that at the London Conference an agreement was not reached in the reparations question. It had the sincere wish to meet the Allied Governments as far as it was in any way possible. The German delegation in this effort far exceeded the boundaries of what was possible according to the judgement of the overwhelming majority of all economic experts.
It is not correct when Mr. Lloyd George makes the assertion that Germany is not ready to give reparation obligations. It is not only entirely clear to the German Government but also to the German people that Germany must afford reparation up to the limit of its ability to pay and that no change in the political grouping will alter this in any respect. All responsible circles in Germany and particularly the German workmen are fully determined to take part with all their strength in the reconstruction of the devastated regions. Not the least of these reasons for this readiness is the sober conviction that it lies in the essential interests of Germany to cause the traces of devastation in France to disappear as quickly as possible. All responsible circles in Germany are unanimous that the German proposals for reparations must take account of the financial needs of the Allies and especially of France. Two important aims in reparations, therefore, come to the front: (1) rehabilitation of the devastated regions; (2) creation at once of an important tangible cash sum in foreign exchange.
In regard to number 1 of the 86 French departments 10 which for years were the theatre of war were hardest hit; numerous cities and villages are [were] completely or partially destroyed; wide stretches of fruitful farm lands were devastated. For the rebuilding of the houses and the recultivation and reoccupation of the land, in the two years since the close of the war only very little has been done. Germany has in repeated instances offered its labor, its technical and material help for the immediate rehabilitation. None of these offers have been accepted and neither came to discussion. Why? A real interest in the rehabilitation of the devastated regions is in France, strange as it may sound, very small. The former occupants have received advance indemnities and settled down in other parts of the country. Influential groups of promoters are occupied with the liquidation of the abandoned material and with the work of cleaning up. They do not in the least hurry the performance of their tasks. That which weighs most heavily in the scale is that important circles in France see in the devastated regions an unusually strong means for political agitation which always leaves a deep impression on the inhabitants and on foreigners. Germany wishes no perpetuation of hate between nations. It will, therefore, once more, submit proposals to the French Government, the details of which are at present being considered and discussed with the German laborers themselves. If the French Government has objections to the use of such large amounts of German labor in the reconstruction area, the German Government would also be ready to offer their good services and strength in any other possible form agreeable to France.[Page 39]
As to point 2, the creation of important sums in foreign exchange is possible for Germany only through a strong increase in its exports. In the annexed memorandum33 of the German experts for the conference is explained in more detail what an enormous increase would be necessary in order to regain great sums and what dangers this would mean for the economic life of other countries. In any event the necessary cash sums could not be realized at once in this way. All other thoughts which have been given expression from time to time such as participation of our former opponents in German industry through sharing capital stocks or other forms of sharing would produce only proceeds in paper marks which are of no use to the foreign creditor. The financial needs of the Allies can only be taken care of by means of credits. The prerequisite for German credit abroad is Germany’s financial responsibility. This, however, is wholly undermined by the Allies themselves who in the Treaty of Versailles have reserved for themselves a first mortgage on the total wealth and all sources of income of the German commonwealth and states. In the Paris decisions the Allies have in addition to this claimed for themselves the right to decide whether and in what cases Germany may seek foreign credits as France and England themselves are in debt beyond their capacity and a granting of credit by a neutral is blocked by the general mortgage. The only possible solution of the problem is the acceptance of an international loan in favor of which the Allies would be obliged to waive their general mortgage. Germany would be ready to grant the necessary securities for the service of the loan. It believes that if the loan were put out in proper form and if an amnesty were granted to those who had evaded taxation, the German capital which had fled from the country in considerable amounts could be drawn in for the loan and so made available in the services of reparation. The Allies have repeatedly indicated that Germany’s situation is more favorable than [that] of many Allied countries because it has no foreign debts. Germany would not refuse within the bounds of its capabilities to take over the interest and amortization of the obligations of [the] Allies if this should be desired by the Allies and their creditors themselves.
Germany also expressly declares herself ready to join in with any other proposal which seems adapted to bring about a disentanglement of the European economic and financial problems. It will gladly submit the examination of its own financial capability of payment to the decision of unbiased experts. Germany believes that the idle [enormous] damages which the World War has caused, the immense weight of debts which all states which took part have to bear, cannot be laid on the shoulders of any single people. It believes also that the reconstruction of international economic life cannot be obtained by a policy of force and threats but only by the way of peaceful discussion and understanding. The German Government considers it important to issue the assurance with all emphasis that for its part it is honestly willing to follow this path. Signed Simons.”