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

462.00 R 296/421

The British Embassy to the Department of State³⁷

undated

The British and French Governments have agreed to submit to the Allied Governments the following note, the conclusions of which they recommend to their acceptance:—

1. In the minds of the British and French Governments the object of the Conference which is to meet in London on July 16th is to arrange the execution of the expert’s plan in so far as concerns the questions the solution of which devolves upon the interested Governments:

2. The two Governments recognize the importance of the economic and financial points of view and particularly the necessity of creating a regime of confidence which gives the eventual lenders the necessary sense of security, but they do not consider that this necessity is incompatible with respect for the provisions of the Treaty of Versailles; that is what the following considerations clearly establish. Even more, the violation of these provisions would cause the disappearance, together with the permanent basis of a peace established with such labour, of any confidence in the solemn engagements of the nations and would be of such a character as would not forestall but rather prepare new conflicts:

3. The experts were appointed by the Reparation Commission and invited by that Commission on November 30, 1923, to “seek the means of balancing the budget and the steps to be taken to stabilize the currency of Germany”. The Reparation Commission has acted in the matter by virtue of the powers it holds under the Treaty of Versailles and notably under Article 234 which reads as follows: “The Reparation Commission shall after May 1, 1921, from time to time, consider the resources and capacity of Germany, and, after giving her representatives a just opportunity to be heard, shall have discretion to extend the date, and to modify the form of payments, such as are to be provided for in accordance with Article 233.”

It is in order to enlighten itself in the exercise of these powers that the Reparation Commission has consulted the Committees of experts constituted under paragraph 7 of Annex II of Part VIII which reads as follows: “The Commission is authorized to appoint all necessary officers, agents and employees who may be required for the execution of its functions, and to fix their remuneration; to constitute committees, whose members need not necessarily be members of the Commission, and to take all executive steps necessary for the purpose of discharging its duties; and to delegate authority and discretion to officers, agents and committees.”

4. The experts have submitted their reports to the Reparation Committee which by a letter of April 17th, communicated them to the interested Governments and informed them that the Commission had decided unanimously.

• “(a) to take act of the reply in which the German Government gives its adherence to the conclusions of the expert’s reports;
• (b) to approve within the limits of its attributes the conclusions formulated in those reports and to adopt the methods contained therein;
• (c) to transmit the reports of the committees officially to the interested Governments, recommending to them the conclusions which are within their competence in order that the plans proposed may produce as soon as possible their full effect, etc.”

As the Reparation Commission states certain of the measures to be taken to put the plan of the experts into execution are within the sole competence of the Governments. This view is moreover found in the most explicit manner in the Dawes Report of which paragraph 3 reads as follows:

“If political guarantees and sanctions destined to ensure the execution of the plan proposed are considered desirable they do not come within the competence of the committee, neither do the terms of its mandate qualify it to examine questions of military occupation. We have however the duty of indicating clearly that our proposals are based on the supposition that the present measures in so far as they hinder this activity will be abandoned or modified to the necessary extent, as soon as Germany shall have put into execution the plan recommended, and that they shall not again be put into force except in case of flagrant default under the terms accepted by common agreement. In such a case it is clearly for the creditor governments, acting with the consciousness of their common responsibility in regard to their own financial interests and in regard to the private interests which shall have advanced funds for putting the plan into execution, to determine the nature of the sanctions to be applied and to organize them in such a way that they will be prompt and effective.”

5. It is therefore necessary that the creditor governments conclude an arrangement by which they undertake to take such measures as are within their competence to ensure the execution of the Dawes plan. The British and French Governments declare that it is of the highest importance that the report of the experts be put into effect without delay in order to ensure the payment of reparation by Germany and to restore common action by the Allies. With this object the two Governments have agreed on the following points;—

(a) A conference shall meet in London on July 16th. The two Governments note with satisfaction that the United States of America has decided to be represented at this conference.

(b) The interested governments will first confirm their acceptance, in so far as they are concerned, of the conclusions of the Dawes Report, an acceptance which they have already given individually to the Reparation Commission.

(c) The arrangements which will supervene ought not to do injury to the authority of the Reparation Commission but in consideration of the fact that guarantees ought to be given to the lenders who supply the 800 million gold marks and to the holders of obligations, the two Governments will unite their efforts in order to secure the presence of an American on the Reparation Commission in case the Reparation Commission shall have to declare a default on the part of Germany. If this solution should not be possible and in case the members of the Reparation Commission should not succeed in agreeing on an appreciation of the facts, the two Governments would recommend that the Commission should summon the Agent General of payments who ought to be of American nationality.

(d) The Dawes Report contains provisions for meeting defaults on details by means of the various control bodies, but an important and voluntary default would at once raise the question of Germany’s good faith. In case the Reparation Commission should declare such a default, the interested governments will bind themselves to concert together immediately regarding the means for putting into execution the measures on which they shall be agreed, having regard to their own protection and that of the interests of the lenders.

(e) The plan according to which the economic and fiscal unity of Germany shall be restored as soon as the Reparation Commission shall have decided that the Dawes Report has been put into execution, shall be settled by the inter-allied Conference. The Reparation Commission will be requested to study and to present to the inter-allied Conference suggestions with a view to the establishment of this plan.

(f) In case experience should show the necessity of modifications in the expert’s plan and if the Reparation Commission does not already enjoy sufficient powers, such modifications could only be effected with all the necessary guarantees and by common accord between the interested governments.

(g) In order to take full advantage of the reparation payments foreseen by the expert’s report and in order to ensure the benefit of them to the interested nations, the Allies will institute a special body appointed to give an opinion to the interested governments with a view to their knowing what system it would be advisable to create in order to utilize the payments made by Germany (especially in so far as transfers and payments in kind are concerned). It will also be advisable to settle the question of the authority charged eventually with the interpretation of the Dawes Report and of the arrangements which will be taken in London to ensure its execution.

6. The two Governments agree to refer to the examination of their legal advisers any legal difficulty which may arise in the matter of the interpretation of the present text.

7. The two Governments have had a preliminary exchange of views on the question of the inter-allied debts; on this point the British Government declared that it will seek, with the Governments interested, a fair solution of this problem, taking into account all the elements which affect it. This question is thus referred for a preliminary examination to the Treasury experts.

8. The two Governments have also had a preliminary exchange of views on the question of security; affirming to what point public opinion desires complete pacification, they agree to seek the best means of attaining this object, either by the intervention of the League of Nations, or by any other way, and to continue the examination of the question until the problem of the general security of the nations receives a definitive solution.

37. This is an English translation of the note of July 9 of the British and French Prime Ministers to the Allied Governments. The translation was made at the British Embassy, and was left with the Secretary of State by the British Chargé on July 11. On the same day the French Chargé communicated the French text of the note to the Secretary of State (file no. 462.00 R 296/422).