462.00 R 29/684: Telegram

The Commissioner at Berlin (Dresel) to the Secretary of State

443. Section l.36 Following is Foreign Office translation of text of German reparation proposals:

The Government of the United States have by their note of the 22d instant37 opened the possibility in a way which is thankfully acknowledged of solving the reparation problem once more by negotiations ere a solution is made impossible by coercive measures. The German Government appreciates this step in its full importance. They have, in the following proposals, endeavored to offer that which according to their conviction represents the utmost limit which Germany’s economic life, even under the most favorable development, can bear.

1. Germany expresses her readiness to acknowledge for reparation purposes a total liability of 50 billions gold marks (present value).

Germany is also prepared to pay the equivalent of this sum in annuities adapted to her economic capacity totaling 200 billions gold marks.

Germany proposes to mobilize her liability in the following way.

2. Germany to raise at once an international loan of which the amount, rate of interest, and amortization quota are to be agreed upon. Germany will participate in this loan, and its terms in order to secure the greatest possible success will contain special concessions and generally be made as favorable as possible. The proceeds of this loan to be placed at the disposal of the Allies.

3. On the amount of her liability not covered by the international loan Germany is prepared to pay interest and an amortization quota in accordance with her economic capacity. At the present juncture she considers the rate of 4 percent the highest possible.

4. Germany is prepared to let the powers concerned have the benefit of improvements in her economic and financial situation. For this purpose the amortization quota should be made variable. In case an improvement should take place the quota would rise whilst it would correspondingly fall if the development should be in the other direction. For the regulation of this variation an index scheme would have to be prepared.

[Page 47]

5. To accelerate the redemption of the balance Germany is ready to assist with all her resources at reconstruction of the devastated territories. She considers the reconstruction the most pressing part of the reparation because it is the most effective way to combat misery and hatred created by the war. She is prepared to undertake herself the rebuilding of townships, villages, and hamlets or to assist in the reconstruction with labor, material, and her other resources in any way the Allies may desire. The cost of such labor and material she would pay herself (full details about this matter [have] been communicated to the Reparation Commission).

Note by American Commission[er]: see my 444, April 24, midnight.38

  1. Section 2, which completes the German memorandum herein quoted, is telegram no. 445, infra.
  2. See telegram no. 717, Apr. 21, to the Commissioner at Berlin, p. 44.
  3. Not printed.