462.00 R 294/188½
Memorandum by the Secretary of State of a Conversation with the French Ambassador (Jusserand), April 27, 1923
The French Ambassador called by appointment.
Army costs.—He stated that he had been instructed by his Government to take up the question of army costs. He had been informed that through the efforts of the French Government a compromise proposal had been made18 and that there were two points especially presented for consideration. The first was with regard to the American priority and this he understood was likely to be acceptable. He believed that Mr. Wadsworth had said that he would recommend it for acceptance. The other related to the provision that in case the American Government received direct payments from Germany or passed a Recovery Act or similar legislation and did not apply the monies obtained in this way to be discharged for army costs that the Allies should have the right to abrogate the agreement. The Ambassador said that he did not gather from his Government’s instructions that the French Government was urging this, but they were very much concerned because of the attitude of the British and [Page 169] Belgians who were very insistent that this should be incorporated in the agreement. The French Government feared that if this were not assented to by the American Government that it would be impossible to make an agreement.
The Secretary reviewed the entire course of the negotiations. He pointed out the clear equity of the United States in being entitled to be paid for its army costs on a parity with the other Governments. The Ambassador at once assented to this. The Secretary said that instead of being paid in this way the Allied Governments had taken pay for themselves for their army costs and the American Government had not been paid. The Ambassador suggested that they thought that very likely the American Government did not intend to press its claim. The Secretary said that this, he believed, was not accurate, because at the time of the large payments our position had been distinctly reserved. It had been expected that we would receive proper treatment and when for the first time we were advised that it was intended to ignore us the Secretary had at once sent an explicit demand.
The Secretary said that in view of the circumstances it would have been entirely just if the American Government had asked to be paid out of what the Allies had already received; that the American Government stood on the same footing as the Allies with respect to the payment of the army costs; but in deference to the economic situation abroad the American Government had been willing to accept the proposal that it should postpone its claim and accept installments running over a period of twelve years without interest. The Secretary said that this, he believed, was most generous treatment. Then on top of this the Allies had asked that in the future payments by Germany of deliveries in kind should be excepted. Further than this the British desired to retain the proceeds of the British Recovery Act. The Secretary said that he thought this was a demand that went beyond what was entirely appropriate and fair, but in view of the difficulty in payment in dollars, when the Allies received payments in kind, and the general situation, the American Government had yielded this point and it was thus reduced to sharing in the cash payments that might be made by Germany. Then, on top of this, the Allies had insisted that we should only have 25 per cent of these cash payments for the first four years. Again appreciating the situation the point had been allowed, but when there came in addition a proposal by the Allies that during this entire period of twelve years the American Government should be postponed even as to the cash payments by Germany to the payment by the Allies of their current army costs, and that of the balance of [Page 170] the cash payments they should be limited to sharing, for four years, to 50 per cent, that is by dividing with Belgium to meet the Belgian priorities, he thought it was time to stop. The Secretary accordingly had told Mr. Wadsworth that much as he desired a settlement of this matter if the Allies were disposed to take this position he could inform them that it would be unacceptable and return home. The Secretary said he thought this treatment was most unfair and that he felt that he would rather have the claim of the Government than an agreement made under such conditions and that he would have no difficulty in showing to the American public that we had been treated in a most inconsiderate fashion. The Secretary then said that he understood that Mr. Wadsworth had made this position clear and then the compromise suggestion had been made that the postponement to the current army costs of the European Governments should only continue for four years and that the United States should have a clear priority in the cash payments by Germany for the remaining eight years. The Secretary said that he had this proposal under consideration. He felt, however, that to join with this the proposal that the American Government could not pass any legislation of the sort of the British Recovery Act or obtain any direct payments for [from?] Germany on account of its claims or the claims of its nationals without giving the Allies an option to rescind the agreement was indefensible. The Secretary pointed out that we had not advanced general reparation claims; that our claims were for actual injuries to property and that it was fair they should be discharged, but saw no reason why we should be put in a position where we could not obtain payment of these claims without losing our claims for our army costs. We were entitled to both. The Secretary pointed out the demand of the British to retain the proceeds of their Recovery Act. He also pointed out that the claims as filed with the Mixed Claims Commission would doubtless be found to be largely in excess of the amounts allowed, but whatever they were we were entitled to have them paid. The Ambassador spoke of the property in the hands of the Alien Property Custodian. The Secretary said that this was the property of private persons many of whom were no more responsible for the war than the Ambassador or the Secretary, that they were simply enemy nationals, many of them living in this country. The Secretary said that he did not wish to make a further statement as an official communication or for communication to the French Government, but he would say to the Ambassador that it was hoped that this Government would not be put to the necessity of confiscating the property of private persons, [Page 171] although it might have the right to take it under its treaty with Germany. The Secretary said that under the proposal made by the Allies, if the American Government was able to make an arrangement with the German Government by which the German Government obtained a release of the private property of its nationals, imposed a tax and paid the equivalent to the American Government, because we would receive this direct payment from Germany we might have our army costs agreement rescinded, although no harm then would be done to the Allies. The Secretary said that he could not agree to such a limitation. He thought this Government had been generous enough and he had entered into the negotiations with the supposition that the Allies desired to be equitable in making an adjustment.
The Ambassador indicated that he felt the force of these points and again stated that he did not know that his Government was particularly urgent in the matter; that the British and Belgians seemed to be quite stiff about it.
The Secretary said that he was willing to go to this extent. Apparently, the Allies were fearful of some new situation arising out of dealings with Germany of the sort that the Secretary did not think probable. The Secretary said he would be perfectly willing to say that in the event described in the paragraph of the proposed agreement under consideration,19 that is, in case of direct payments by Germany or the passage of legislation similar to the British Recovery Act, the United States would be willing to discuss the matter with the Allies in order that all equities could be considered in the light of the new situation. The point that the Secretary distinctly objected to was making an agreement and giving the right to the Allies to abrogate it in case an entirely reasonable arrangement was made by this Government to secure the payment of its claims and the claims of its nationals. The Secretary asked why this Government should not be able to have payment of its claims as well as payment of its army costs when the Allies had already obtained the payment of their army costs and were insisting upon protection for a considerable number of years for their current army costs.
The Ambassador said that he could not speak for his Government; that he was inclined to think that the Secretary’s position would be entirely acceptable to the French Government. He would communicate with them at once.