462.00 R 294/174: Telegram

The Secretary of State to the Ambassador in France (Herrick)

145. For Wadsworth. W–21. Your W–25.6

Heretofore Department had understood that it was contemplated to make payments to the United States a first charge on future payments credited to Germany with the specific exceptions enumerated in Article II subparagraphs a, b, and c, and Department had suggested that certain phraseology under consideration which had seemed to place in question the priority which was to be given the United States should be changed.

It appears from your statement, however, that it is now proposed that if costs of European Armies of Occupation in any determined year exceed the value of the deliveries in kind in that year received by the Powers respectively, the balance will be chargeable against the cash paid by Germany ahead of American Army costs. Further, that while American 25 percent is calculated on the total cash paid by Germany, it is proposed that there shall be a limitation of the actual payment to an amount equal to 50 percent of the balance of cash remaining after the current European army costs have been fully paid. For example, if the total cash paid by Germany was 80,000,000 gold marks, America’s share would be 20,000,000. If, however, the cost of the European armies of occupation over and above value of deliveries in kind for the current year amounted to 50,000,000 gold marks, this would be deducted from the total of 80,000,000, leaving 30,000,000, and then the American share would be limited to one-half of this remainder, or to 15,000,000. We would then have the benefit of the calculation on the whole but be limited to payment of one-half of what remained after the Allies were paid in full. We fail to see where the priority comes in so far as army costs are concerned.

You say that there is no provision for carrying forward any deficit of the European army costs. But if there is a deficit in the European army costs, all this results from an apparent assumption that these costs are to be paid in any event so far as there are deliveries in kind to pay them and cash to pay them and that, no matter how the [Page 160] American share is calculated, we actually get nothing until these costs have been paid. Are we right as to this?

It is impossible for me to understand from the paragraphs you have formulated what the actual agreement is intended to be with respect to the points above mentioned. When I know exactly what is proposed in the light of these points I could readily advise you as to what is acceptable or not acceptable and what language is preferred. Meanwhile it would seem desirable that you withhold submission of suggestions or formulae.

  1. Supra.