Papers Relating to the Foreign Relations of the United States, 1924, Volume II

462.00 R 296/331: Telegram

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

[Paraphrase]

Paris, May 12, 1924—8 p.m.
[Received May 13—3:30 p.m.¹⁶]

253. L–160, from Logan.

(1) In the matter of whether the United States should participate in the experts’ plan with a view to the payment of American claims, there seem to be these alternatives, namely, indefinite postponement or an attempt to collect from Germany directly. The latter step would tend to undo the experts’ plan, inasmuch as the provisions touching the budget and transfers are based on an estimate of Germany’s maximum and transferable capacity. The whole scheme of transfer control under committee plan will break down if extensive transfers are made outside of the plan.

(2) From an international point of view I am inclined to feel that the United States may well assert claim to a share in payments. The moment is especially favorable to urging that we be paid on an equal footing with the Allies by reason of President Coolidge’s public praise of the plan, the need for an American loan, the language of the experts’ report including the costs of the United States, and the advantage to the Allies of American participation because of the moral effect in influencing Germany to meet her obligations. To file a reservation would cast possible cloud on the plan and would postpone our chance of payment unless we were to enter into competition with the Allies and make direct collections from Germany.

(3) Our Government might propose that, in agreement with Germany and the Allies, it might receive, say, 5 percent per annum, or a flat annual sum from funds deposited in a special account in bank of Germany. If Allies admit claim, they are likely to insist on a percentage instead of on a flat sum, so we would participate pari passu with them.

(4) Should the United States decide to participate, several questions arise, notably—

(a) The disposition of enemy property. The Allies feel that the United States has in hand funds out of which to meet part of American claims, and that our Government should not release these funds and then demand direct contributions from Germany, as Germany’s ability to pay the Allies would be reduced thereby. The subject apparently is one requiring Congressional action, but the following procedure may be worthy the Department’s consideration. Should the Executive branch of the Government decide to participate in the experts’ plan, it might promise to recommend to the Congress that former enemy property be liquidated upon the condition that German Government would compensate private owners by paying them from such a percentage of the annual payment in marks deposited in the Bank of Germany as might be allocated to the United States under the experts’ plan. This scheme has the advantage of providing compensation to private owners; it does not involve an additional burden upon Germany; and it eliminates the exchange difficulties connected with transfer of Germany’s mark payments to extent that German owners are resident in Germany.

(b) The crediting on claims of the value of any cables transferred to the United States. It seems that the Government of the United States might well agree to credit the value of these cables on one of its claims.

(c) Crediting the value of German ships taken over by the United States. Should we agree to credit cables but not ships, we can explain why we would credit the one and not the other. The Allies, Great Britain in particular, seem to feel that German-owned property which was seized and permanently retained by the United States should be computed as offset in accounts between Germany and the United States.

(d) Priority between our claims for Army costs and for the awards of the Mixed Claims Commission. This question is in part one of internal policy, and it is wholly possible that private claimants may object to having United States allocate receipts to its own claim first, while private citizens are left to await their chances. It is unfortunate that the Army Costs Agreement of May 25, 1923, has not yet been ratified; and it is quite probable that, if we decide to participate, the Allies may wish to scrap the agreement and to have one sum allotted to us to cover all claims, thereby leaving apportioning of amount to discretion of the United States. Even if the Allies do ratify Army Costs Agreement ultimately, they will bear in mind this financial obligation in making any further concessions to us on our other claim.

(5) I wish to emphasize the urgency of an early decision on the points I have raised. It is wholly probable that the Allied Governments are now formulating individual plans for division of funds which will make it all the more difficult for us to participate. An inter-Allied conference sometime next month is almost certain, and if we could reach a decision well in advance, it would be most helpful. Bluntly speaking, we must definitely decide, during or before the conference, to come in or stay out. To file a reserve is for practical purposes merely to postpone the evil day, and in effect is a decision to stay out. I expect opposition to the American claims, but for the reasons stated in (2) above, I think the present offers special opportunity to overcome this opposition. If the United States asserts its claim, I believe technical points should be disregarded as far as possible, and the claim be based on broad grounds of equity. I should appreciate an expression of the Department’s general views at such time as may be convenient.

(6) In my observations on this question of policy, I have spoken of internal aspects of the question of participation which will immediately suggest themselves to you, such as, for example, political repercussion, part Congress should play in reaching a decision on the course to be followed, and question of competence of the Executive to waive or reduce any part of the total of American claims. It is probable that the Executive has not such power. Participation in conference would not be waiving or reducing claims but instead would be attempting to collect them. It is conceivable, however, that if others are forced to scale down their claims, they may request us to do same.

Sent by mail to London and Home. Logan.

Herrick

16. Telegram in three sections.