462.00 R 294/365: Telegram
The Ambassador in France (Herrick) to the Secretary of State
255. L–161, from Logan. The Belgian representative on the Reparation Commission has approached me on the following matter:
- (1)
- The sum of approximately 100,000,000 gold marks is on deposit at Coblenz as the net product of the Ruhr occupation obtained jointly by Belgium and France. France is agreeable to handing this sum over to Belgium directly for application on Belgian priority, deeming it to be reparation money.
- (2)
- To avoid at this important juncture raising difficult questions of the legality of the Ruhr occupation and Belgian accounting for Ruhr army costs, etc., both Belgium and France prefer not to put this money through the Reparation Commission in the regular course. Bradbury46 thinks it highly desirable to avoid raising issues such as these at present and does not object to the proposed disposition of funds.
- (3)
- Belgian representative states it is feeling of Prime Minister Theunis that in fact and in equity even if not technically the payment does constitute a cash reparation payment and thereby falls within intent of language of Army Costs Agreement.47
- (4)
- In spite of fact that Army Costs Agreement has not been ratified, Belgian representative says that his Government, following broad policy outlined in Bemelmans’ letter of November 22, 1923,48 which I forwarded to Department in December, 1923, feels bound morally to put aside 25 percent of amount it receives in a blocked or special account which will be available to Government of the United States in part payment of American Army costs if and when Army Costs Agreement is ratified.
- (5)
- I do not see any objection, under the circumstances, to our Government’s accepting special agreement, and I feel that the possible chance of our getting several million dollars should not be lost. We shall not be entangled indirectly in Ruhr controversy because funds would not be specifically set aside for us as Ruhr proceeds, but [Page 141] instead would be merely a cash reparation settlement received from Germany by Belgium without regard to the immediate source.
- (6)
- I suggest that the Department authorize me to communicate with
the Belgian representative in terms substantially as follows (if
place of deposit or method of withdrawal is unsatisfactory, a
change in either instance would readily be made):49
“I have not failed to communicate to my Government the generous proposal which you have made that 25 percent of a cash sum of approximately 100 million gold marks which the Belgian Government expects shortly to receive upon the reparation account of Germany should be set aside in some special or blocked account for the ultimate benefit of the United States in view of the fact that by the terms of the pending agreement relative to the reimbursement of the costs of the American Army of Occupation to which Belgium is a signatory, the United States would be entitled to 25 percent of the cash reparation receipts subject to certain modifications which are not material for the present purposes. It is understood that although the agreement is not yet effective, the Belgian Government is ready to set aside 25 percent of the sum in question for payment to the United States as soon as the agreement shall have been ratified.
I have the honor to advise last [you?] that the Government of the United States accepts the proposal which you have made and appreciates the liberal attitude of the Belgian Government in spontaneously suggesting this action. My Government will be pleased should the Belgian Government see fit to carry its suggestion into effect by causing the Banque Nationale de Belgique to open a special account in the Federal Reserve Bank of New York to be known as the ‘American Army costs account’ into which shall be deposited in dollars the proper proportion of the cash reparation payments now under consideration and withdrawals from which shall be made upon the order of the Treasurer of the United States if and when the agreement relative to the reimbursement of the costs of the American Army of Occupation is ratified and pending such ratification shall be effected only by a specific decision of the Reparations Commission in each case.
Accept, etc., etc.”
- (7)
- The method set forth above of creating deposits follows line taken with respect to relinquishment of all cash payments subject to requirements of Reparation Commission in regular course. To introduce Reparation Commission as protective medium against the withdrawal of money for purposes besides payment of American Army costs does not involve commission in decision of any question about the Ruhr, for by that time money will have lost entirely its identity as a Ruhr product and will be merely the property of the Belgian Government in dollars which is put aside for the benefit of the Government of the United States upon ratification of the Army [Page 142] Costs Agreement. The Separation Commission, having in view the fiduciary nature of its prerogative, would not in practice permit withdrawals from account unless it were clear that the Army Costs Agreement was to fail of ratification, and I could always keep an eye upon any proposed decision secured by this account to be made by the commission.
- (8)
- I believe that the creation of deposit will be effective moral force in bringing about ratification of the agreement. Logan. Copies sent to Great Britain, Italy, and Belgium.