462.00 R 296/740: Telegram
The Secretary of State to the Ambassador in Great Britain (Kellogg)
457. Your 509, December 4, 10 a.m.
1. The following is text of reply to British note:3
“I have the honor to acknowledge the receipt of Your Excellency’s note of [December 3, 1924] with respect to the participation of the United States in the payments to be made by Germany under the Dawes plan and I am instructed by my Government to make the following reply:
(1)—My Government is gratified to receive confirmation of the assurance verbally given by Sir E. Crowe that so far as His Majesty’s Government are concerned there is no question regarding the costs of the American Army of Occupation, as the principle at stake is deemed to have been finally settled by the agreement of May 25, 1923, between the United States and the Principal Allied Powers, but my Government must express its surprise at the attitude taken by His Majesty’s Government in relation to the other American claims which were the subject of my memorandum of November 15th.4 My Government has seen fit voluntarily to limit its claims against Germany to categories of damages for injuries to persons and property and debts, and it has not been thought that His Majesty’s Government would be disposed to question the right of the United States to participate pari passu with the Allied Powers in the payments to be made by Germany.
(2) My Government regrets that His Majesty’s Government find difficulty with the legal position taken in the memorandum which I presented and my Government is unable to concur in the views which Your Excellency has expressed upon this point.
The suggestion that the other Powers (under Article 248 of the Treaty of Versailles or otherwise) could assert a charge upon all the assets of Germany to the exclusion of the United States from recovery upon its just claims would be, in the judgment of my Government, not only repugnant to equity but also inadmissible from a legal standpoint. The United States effectively participated in the war and contributed to the common victory. As one of the Allied and [Page 103] Associated Powers, it was equally entitled with its co-belligerents to enforce its just claims against Germany. The Armistice agreement provided for reparation for damage done, with the reservation that any subsequent concessions and claims by the Allies and the United States remained unaffected. The contention of His Majesty’s Government would appear to come to this,—that one or more of the Allied and Associated Powers could properly make a separate agreement with Germany by which that Power or Powers would be entitled, not simply to recover upon its own claims, but to provide for the deprivation of co-belligerent States of satisfaction or remedy. The Treaty of Versailles provided that it should come into force between the ratifying parties when ratified by Germany and by three of the Principal Allied and Associated Powers. But my Government is unable to conceive that, if that Treaty had contained provisions which made it unacceptable to His Majesty’s Government and had come into force without ratification by the British Empire, His Majesty’s Government would have taken the view that France, Italy and Belgium, for example, would have had the right to demand the appropriation of all the available property of Germany and leave Great Britain without recourse for her claims. If such action were admissible, it could conceivably have been taken, as suggested above, by any one Power which had been able to enter into a separate engagement with Germany of like purport.
The general principle that a later treaty may not be permitted to alter or vary the obligations assumed by one of the Contracting Parties in favor of other Powers does not, as it seems to my Government, warrant the conclusion that other Powers by an earlier treaty may lawfully deprive third States of their rights. The position of the Powers ratifying the Treaty of Versailles is stated in Article 231 of that Treaty as follows:
‘The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.’
Thus the Powers ratifying that Treaty explicitly affirmed the responsibility of Germany to each of the Allied and Associated Governments for the loss and damage each had sustained. The claims which are urged by the United States against Germany for injuries to persons and property arose out of these injuries, and not out of the Treaty of Versailles, and the United States lost none of its rights by not ratifying that Treaty. By its Treaty with Germany the United States has not sought to enforce any claims at the expense of its co-belligerents; Germany was under responsibility to the United States no less than to its co-belligerents and Germany accordingly has recognized the just claims of the United States; and it is the view of my Government that the Allied Powers have not been, and are not, in a position to deny these claims or to deprive them of effect by insisting upon absorbing all the assets of Germany for their own purposes.
I have noted Your Excellency’s reference to the Separation Commission, but I do not suppose that it would be contended that the competency of the Powers in their relation to the just claims of their [Page 104] co-belligerents could be enlarged by any attempt to create an exclusive collecting agency.
(3) It may be added that the Treaty of Versailles does not appear by its terms to have intended such a result as the deprivation of the United States of recourse for its claims, for that Treaty apparently contemplated provision for the payment of all the claims for which the responsibility of Germany was affirmed. There is found no obligation, expressed or implied, in the Versailles Treaty that can be regarded as intended to incapacitate Germany to provide for the payment to the United States of the separate claims of the United States and its nationals. Subsequently, it became necessary to devise some plan which would enable the currency of Germany to be stabilized and her budget to be balanced by arranging a practicable scheme of payments and with this purpose the Dawes plan was formulated. In Section XI, Part I of the Dawes report it is said that the Committee desires to make it ‘quite clear’ that the sums to be paid ‘comprise all amounts for which Germany may be liable to the Allied and Associated Powers for the costs arising out of the war, including reparation, restitution, all costs of all armies of occupation’ et cetera. It was added that wherever in any part of the report reference was made to Treaty payments it was intended ‘to include all charges payable by Germany to the Allied and Associated Powers for these war costs’. It is thus evident that whatever may have been the purpose of the Treaty of Versailles, and my Government does not believe that it was the intent or could have been the effect of that Treaty to exclude the United States from recovery of its just claims, it is the intent of the Dawes plan to provide comprehensively for all the payments that Germany can make.
(4) With reference to Your Excellency’s observations concerning the insertion in the Dawes report of the words ‘Associated Powers, I may point out that there is no question of an instruction to the American members of the Dawes Committee as they were not representatives of the Government of the United States. When, however, it came to the notice of my Government that there was likelihood of consideration being given to inclusive payments by Germany that might utilize her full capacity of payment, my Government did take occasion to cause attention to be drawn to the claims of the United States in order that there should be no question of their exclusion. My Government does not assume to raise a question as to the personal understanding of the British member of the Dawes Committee, but I must beg leave to point out the clear import of the language used.
But if there could have been earlier misapprehension it certainly was dispelled at the London Conference which took action to make the Dawes report effective. As I have already stated in my memorandum, to which Your Excellency’s note refers, that Conference was fully aware of the comprehensive scope of the Dawes report and the nature of the American claims. I notified the representatives of Great Britain and the other Powers participating in that Conference individually and also the plenary Conference as a whole of the position of the United States. Permit me to repeat that on August 5, 1924, I sent a letter to the Secretary General of the Conference directing attention to the scope of the Dawes report and stating the interest of the United States in the distribution of the payments [Page 105] under the Dawes plan. Accordingly I insisted oil behalf of my Government that it should have the right to participate in the proposed Conference of Finance Ministers which was to meet for the purpose of discussing the allocation of the payments to be made by Germany. (Proceeding of the London Reparation Conference, page 126, No. 29.)5
On August 12, 1924, I further explained in the plenary session of the Conference the American position.6 The London Conference acted on the Dawes plan with full knowledge of the American claims and the inclusive provisions of the Dawes report.
My Government does not consider it open to question that the Dawes report contemplated that the funds in the hands of the Agent General should be charged with all the claims against Germany, including the claims of the United States. This report was accepted by Germany and by all the Allied Governments by the final Protocol of the London Conference. It seems hardly necessary to discuss the functions of the Dawes Committee as their report was thus acted upon by the Powers directly and, having been adopted by a protocol signed by the Allied Powers, must be deemed to be as binding as the Treaty of Versailles itself. If any question had been open under the Treaty of Versailles with respect to the participation of the United States in payments made by Germany, and it is the opinion of my Government that there was not, it was competent for the Powers to provide for that participation; and this provision was made.
(5) In view of the facts that I have stated, my Government is unable to understand the expression of surprise in Your Excellency’s note at the claim of the, United States to share in the payments under the Dawes plan. Nor does my Government find itself to be debarred, by any action it has taken, from the right of such participation pari passu with the other interested Powers.
I observe Your Excellency’s reference to the Conference at Spa in 1920. My Government did not participate in that Conference and it may again be remarked that it was not competent for the Allied Powers to affect the just claims of the United States without its consent. This, it is believed, was clearly understood. On August 5, 1920, Mr. Boy den caused to be inserted in the minutes of the Reparation Commission a statement referring to the Spa arrangements that ‘these decisions to which the United States is not a party, do not affect the position of the United States’. At the meeting on September 10, 1920, the Reparation Commission in referring to the Spa agreement adopted a resolution which was intended to express the view that that agreement was not regarded as being in force with respect to those Powers which were not signatories.
(6) The Treaty between the United States and Germany came into force in November, 1921. Germany accepted responsibility for the same categories of claims of the United States as those which were recognized in the case of the Powers ratifying the Treaty of Versailles. In August, 1922, an agreement was made between the United States and Germany for the establishment of an arbitral commission which should pass upon the claims of the United States. [Page 106] In negotiating that agreement my Government notified Germany that it would not present claims of the sort described in subdivisions 5, 6, and 7 of Annex I of Part VIII of the Treaty of Versailles, including pensions, assistance to prisoners of war, their families and dependents, and allowances to families and dependents of mobilized persons, et cetera. My Government is informed that the claims of these last mentioned categories submitted by the Allied Powers amounted to very large sums. Had my Government pressed claims of these categories its total claims would have been vastly increased.
While my Government did not urge these claims for general reparations which were described in the Treaty of Versailles as ‘damage caused to the peoples of the Allied and Associated Powers’, my Government did arrange in the agreement with Germany, to which I have referred, for the determination of its just claims for actual injuries to persons and property and debts. And these claims my Government has had no intention of relinquishing. In the speech of the Secretary of State of the United States at New Haven in December, 1922, to which Your Excellency alludes, the Secretary of State did not intend to forego, and did not forego, the right of the United States to enforce such claims against Germany. The reference in that speech, as its language shows, was to ‘general reparations’, the claims for which as already stated my Government was not pressing, and not to the classes of claims which were then in process of adjudication under the agreement which the Secretary of State had already negotiated. The United States was not proceeding to the adjudication of its claims under this agreement as a mere matter of form, and when the Dawes plan was developed to provide for all the payments within the capacity of Germany, my Government appropriately directed attention to its claims and asserted its right of participation.
(7) I have dwelt upon the legal questions raised by Your Excellency’s note, but in doing so I have no desire to lessen the emphasis upon the clear equity involved, as my Government does not understand that this equity is disputed. By reason of its relation to the war the United States, certainly as a matter of justice, is entitled to receive payment of its claims pari passu with the other Powers associated in the common victory. By its voluntary action in not pressing large categories of claims for general reparations, my Government has greatly limited, to the benefit of the Allied Powers, the extent of its participation in Germany’s payments. My Government is unable to conceive that there would be any disposition on the part of His Majesty’s Government to contest the equity of its participation in such payments to cover the limited classes of claims for which the United States seeks recovery.
(8) The amount of my Government’s claim for the costs of the American army of occupation has already been stated with very close approximation. As the claims against Germany for injuries to persons and property and debts are in course of adjudication, it is impossible at this time to give a final statement of their amount, but it is estimated that they will be in the neighborhood of $350,000,000.
With respect to Your Excellency’s suggestion as to the reduction of claims ‘by reduction past or prospective of German payments’ I may say that my Government has already reduced its claims by [Page 107] eliminating pensions, allowances, et cetera, as I have already stated, and there is not perceived to be any occasion for a reduction in respect to the limited classes of claims for which the United States seeks participation.
I have noted Your Excellency’s inquiry as to German assets which have come into the hands of my Government and in this relation I must call attention to the provisions of Article 297 of the Treaty of Versailles which give to each Government perfect freedom in dealing with such property. Each Government may take the property and apply the same on Germany’s obligations or it may not; in other words each Power is left free to dispose of such property in accordance with its laws and regulations. It is understood that some, if not all, of the Allied Powers have released at least a part of such property. Only in the event of the retention of such property or its proceeds by the Allied or Associated Powers is the amount of the proceeds or the value of such property to be credited against its claims. My Government is entitled to the same freedom of choice in its disposition of German property as that enjoyed by the Allied Powers. The disposition of the property in question is subject to the control of the Congress of the United States but my Government of course intends with respect to such property or proceeds as may be finally retained to give appropriate credit upon its claims.
(9) My Government has not failed to observe with gratification the expression of the desire of His Majesty’s Government to give full and friendly consideration to its position in this matter and has instructed me to assure Your Excellency that while it must insist upon its legal and equitable right to participate in the payments by Germany under the Dawes plan, it has no wish to be oppressive. As it has already indicated, the Government of the United States is ready to make a fair arrangement as to the annual extent of its participation. And my Government will be glad to enter into a discussion of the details of such an arrangement.
Accept, Excellency, et cetera.”
[Paraphrase]
2. Telegraph at once if you desire to suggest changes in the note.
3. Repeat to Logan as no. 447, L–164, with request that he similarly telegraph as above, advising you.
4. If no changes are proposed please present note. You may prefer, however, to await Chamberlain’s return.