462.00 R 29/2804
The German Ambassador (Wiedfeldt) to the Secretary of State
[Translation]
Washington, June 7,
1923.
Mr. Secretary of State: The German Government
has received different replies from the Allied Governments to its note
of May 2nd. In order to avoid everything which might render more
difficult the continuation of the interchange of views the German
Government considers it should in its counter-reply confine itself to
those points on which the Allied Governments, as expressed in their
replies, held similar views. Owing to this consideration my Government
has instructed me to transmit the enclosed memorandum to the Government
of the United States of America.
In doing so, I may remark that the same communication is being made to
His Britannic Majesty’s Government, to the French Government, to the
Royal Italian Government, to the Royal Belgian Government and to the
Imperial Japanese Government.
Accept [etc.]
[Enclosure—Translation]
Memorandum
1. The German Government after careful and conscientious examination
expressed its sincere opinion as to what Germany is able to pay in
reparations. The German Government would not act honestly nor bring
the problem nearer to its real solution, if, merely in order
temporarily to alleviate the political difficulties of the day, it
were to promise more than what according to its conviction, the
German nation by exerting all its powers is in a position to
fulfil.
The question of Germany’s capacity to pay is, however, a question of
facts about which various opinions are possible. Germany does not
fail to recognize that under the present circumstances it is
exceedingly difficult to achieve a reliable estimate. For this
reason the German Government proposed to accept the verdict of an
impartial international body as regards the amount and the mode of
payments to be made. A more convincing proof of Germany’s will to do
reparations is unthinkable. The German Government is willing to
produce all material for a reliable judgment on the question of
Germany’s capacity to pay. The German Government will on demand
grant every facility to investigate Germany’s state finances
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and also give all
information desired as regards the economic resources of
Germany.
2. The German Government had contemplated the floating of large loans
in order as soon as possible to pay the creditor nations large
amounts of capital. As long as the floating of loans in large
amounts proves to be impracticable, the German Government is also
willing to agree to a system of annuities instead of sums of
capital.
3. As the Allied Governments lay stress on receiving now already more
detailed information as regards the choice and nature of the
guarantees contemplated by Germany, the German Government suggests
the following guarantees for the accomplishment of the final
reparations plan:
- a.
- The state railways with all their constructions and assets
to be severed from the other capital of state and to be
converted into a separate estate independent as regards its
proceeds and expenditures from the general administration of
finances, and to be placed under separate administration.
The state railways to issue gold bonds amounting to ten
billion goldmarks which are to be entered as a first lien on
the separate estate bearing 5% interest as after July 1st,
1927, thus guaranteeing an annuity of 500 million
goldmarks.
- b.
- In order to guarantee a further annuity of 500 million
goldmarks as after July 1st, 1927, the German Government
will immediately call upon the entire German economic
system, i. e. the industries, banks, commerce, traffic, and
agriculture to act as a guarantee which as a first lien
amounting to ten billion goldmarks will be entered in the
industrial, urban, rural, and forest real estate of Germany.
The annuities of 500 million goldmarks will either be raised
indirectly by universal taxation comprising also other
property or directly only by the mortgaged objects.
- c.
- Besides that the duties on table luxuries and the duties
on tobacco, beer, wine and sugar, as well as the proceeds of
the monopoly for the sale of spirits, are to be pawned as a
guarantee for the annuities. The gross receipts of these
taxes and of these duties amounting during the last years
before the war to an average of approximately 800 million
marks, have however since, owing to the loss of people and
territory as well as owing to reduced consumption, declined
to one quarter of their former value. But these receipts
will, with the recuperation of German economics, rise
automatically.
4. Lastly, the German Government considers itself bound to lay stress
on the following:
In such a large and complicated question decisive progress
cannot be made by written expositions but only by oral
intercourse at a conference. Germany’s capacity to pay
depends on the mode of solution of the entire problem. The
method of payment can only be agreed upon in direct
conversation with those entitled to receive payment. The
establishment of guarantees in their details makes the
co-operation of those necessary for whom the guarantees are
to
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be established.
For a solution of these questions oral discussions are
necessary.
Germany acknowledges her obligation to pay reparations. The German
Government reiterates its request to call a conference in order to
agree upon the best mode to fulfil this obligation.
Washington, June 7,
1923.
