462.11 W 892/42: Telegram

The Secretary of State to the Ambassador in Germany (Houghton)

104. Your 141, July 17, 6 p.m. Department before replying to counter proposals of German Government has been awaiting receipt of despatch respecting them which you mention. It has not yet reached Department.

A Bill was recently introduced in the Senate by Senator Underwood which provides for a commission composed of American citizens which is to pass on claims of American citizens against Germany and further provides for the use of sequestered property to make payment of such claims. The pendency of a Bill of this kind makes it very important that the agreement respecting claims which has been submitted to Germany should be promptly consummated. Delay may militate against the successful conclusion of such an agreement. In order to avoid any unfortunate delay, it is desirable that Germany should accept the agreement proposed by the United States.

The German Government’s proposal with respect to an alteration in regard to the designation of an umpire is acceptable in the light of the explanation made concerning it.

The proposal with regard to the modification of the provision in Article VI relating to the binding character of arbitral decisions as understood by this Government is entirely unacceptable. While legislative sanction is frequently required in connection with the consummation of international agreements, I consider as unprecedented a provision such as it proposed under which awards would not be binding without legislative sanction. Under this provision the purposes which it is the object of the agreement to accomplish could be nullified by the Reichstag and the agreement in reality would have the effect of an undertaking to determine amounts of claims to be submitted to the Reichstag for its approval or disapproval.

The provisions of Article 1 with respect to the determination of amounts of private debts was inserted with the idea that they would be entirely agreeable to the German Government. The United States and Germany did not establish the clearing office scheme provided for by the Treaty of Versailles, but under the provisions of sub-paragraph (2) paragraph (h) of article 297 of [Page 256] the Treaty the proceeds of sequestered property may be used for the payment of debts. It was thought that instead of at once proceeding with the adjustment of debts in this manner, their amounts might be determined by the mixed commission and arrangements as to the method of payment deferred pending such determination.

This Government is of the opinion that practicable application might be given to the suggestion of the German Government with regard to a separate declaration more specifically defining the category of claims to be dealt with by the commission.

Communicate with Foreign Office in sense of the foregoing and earnestly express the hope that the German Government may be willing to sign the proposed agreement without the material alterations which it has proposed. It is my opinion that if this is not done promptly, Congress will deal [with] the matter in its own way.