462.00 R 296/192: Telegram
The Secretary of State to the Ambassador in France (Herrick)
77. L–56, for Logan. Your L–100, February 28, 6 p.m. The statements made in (1) and (2) of your telegram have been carefully noted. It does not appear, however, why the cash payment of American Army costs would make a moratorium any more of a fiction than would the payment of Allied Army costs in cash, nor would it appear to be fair to give preferred treatment during the moratorium to the Allied Army costs at expense of our overdue and unpaid Army costs. To be assured of full payment over the last 8 of the 12 years is one thing; it is quite another if the Army Costs Agreement should be made abortive by reason of any plan the experts submit. This was the reason why the Department believed that General Dawes and Mr. Owen Young should be advised of our Army cost plan and of the provisions of the agreement of May 25, 1923.
From communications received including Arthur Young’s personal letter of January 24 to Mr. Hughes,10 it appeared to the Department that the committee’s report might contain recommendations for utilization of all of Germany’s assets in settlement of Allied claims. Department believed that Dawes and Owen Young should be informed that solid American claims against Germany exist. The Department did not intend to demand an immediate adjustment of its claims against Germany, nor did it wish to countenance any action bearing on its claims which would prejudice its ultimate interests. The Department agrees with you that the needless injection of this issue into the deliberations of the committee would not [Page 6] serve any useful purpose. The Department still believes, however, that Dawes and Owen Young should be acquainted with the claims in question in order that they may be on their guard against recommendations which might constitute in fact an estoppal of the proper collection of this Government’s claims against Germany. If the recommendations of the committee will not prejudice our rights in any way with respect to payment by Germany of claims adjudicated by the Mixed Claims Commission it will not, of course, be necessary for Dawes and Owen Young to raise the question. The Department has noted your statement that recommendations of the committee will not take into consideration question of distribution of the payments to be made by Germany, and has also noted your further statement that you could take appropriate action to safeguard our rights if and when the Separation Commission renders definite decisions upon the reports of the committees. It may be true that the experts are not authorized to distribute payments, but it is not impossible, for instance, that they may in their recommendations look to the creation of certain credits to be made available to the interested powers through central bank or by other means which would cover all of Germany’s available assets; or, after certain fixed charges have been determined, the plan may provide for surplus to be allocated among certain creditor powers on percentage basis which would exclude, in fact, this Government from participation. Percentage basis, even if not explicit or stated in plan, may be assumed in discussions. Such an arrangement might be a controlling factor in eventual acceptance or rejection of the experts’ plan either by Separation Commission or by the Allied Powers, and it would be most embarrassing should it become necessary, in order properly to protect our legitimate interests, to raise an objection at that late hour which might afford excuse for other objections and result in either embarrassment or defeat of the plan. To include at this time some provision under which the door to participation by this Government would not be definitely closed would obviate any necessity for objection or reservation on its part; for example, it might be provided that any credits or surplus made available should be distributed among the powers that have claims against Germany.
Department has no desire at this particular juncture to jeopard constructive results of the committees’ work by insisting on Allies arranging adjustment with Germany which would give our claims specific mention and place. On the other hand, it is important that American interests should not be overlooked and that no final action be taken by which Army Costs Agreement would be rendered nugatory, or which would make it impossible to arrange, should it be necessary to do so, for appropriate payment by Germany of claims adjudicated by Mixed Claims Commission. American claims are not [Page 7] large and this Government has already foregone categories upon which other Powers have insisted.
Please advise Dawes and Owen Young of Department’s views.
- Not found in Department files.↩