462.00 R 296/866
The American Representative at the Preliminary Meeting of Experts (Logan) to the British Representative (Leith-Ross)30
Subject to the following observations, our position is that set forth in your letter of December 23, 192431:
[Page 133]1. United States Army cost claims: The following statement in your letter under reference is noted:
(a) “The U. S. Army Costs arrears should be met by an annuity spread over 24 years from the 1st January, 1923, which would be a prior charge on future cash receipts and which would amount to from 45 to 50 million gold Marks per annum.”
We are prepared to recast the Wadsworth Agreement, provided the Finance Ministers Conference agrees to accord our Army Costs claims an absolute foreign exchange cash priority annuity of 65 million gold Marks over a period of approximately 19 years from September 1, 1924, the date of the commencement of the first Dawes annuity. The balances which have already accrued to our Army Cost account through payments falling due before the going into effect of the Dawes Report are not to be considered as Annuities, but are to be credited to the capital amount of our Army Cost claims.
The foregoing proposition is advanced solely on the condition that satisfaction is given with respect to other American claims.
As already admitted by all concerned, our Army Cost annuities have a priority immediately after the cash priorities incident to the service of the recent 800 million gold Marks loan and after such limited amounts of foreign exchange as may be necessary to meet the cost of the Reparation Commission including the Dawes organizations, the Inter-Allied Rhineland High Commission and the Military Control Commissions, and immediately before any other priorities. This priority and the provision that any arrears after 1927 shall bear interest will, of course, be maintained. As the amount of foreign exchange available during the first one or two years of the operation of the Dawes Plan will in all probability be limited, which might possibly mean that the United States would not receive in these two years the full annuities in respect of the American Army Costs, it is felt that the figure of 65 million is fair and reasonable.
2. Other American claims: With respect to other American claims, the following statement in your letter is noted:
(b) “The other claims would be met by an annuity not exceeding 40 to 50 million gold Marks per annum, expressed as a percentage of the Dawes annuity, i. e., as the annual payments in the normal year are fixed at 2½ milliards, the percentage required would not exceed 2%. These payments would not be entitled to any priority and would be transferred pari passu with the reparation shares of the Allied Powers.”
You are quite correct in your statement that we do not ask any priority in payment of these claims over the so-called “Reparation” [Page 134] claims of the Allies. We do, however, expect to participate in the annuities on as favorable a basis as that accorded the Allied Powers.
Our claims, other than Army Costs, are, as you know, in the neighborhood of 350 million dollars. In respect of these claims, it is intended that they should be met by an annual payment of about 60 million gold Marks per annum, expressed as a percentage of the net Dawes Annuities after allowing for priorities. The exact percentages cannot, of course, be determined at this time, in view of the unsettled position of the various priorities. It naturally follows that any decision reached relating to priorities must be in agreement with the United States, and, in addition, we must be in a position similarly to consider any foreign exchange priorities that may be accorded.
3. Belgian War debt: We are naturally interested in any arrangement made for payments on account of the Belgian War Debt. In the absence of definite instructions from Washington, this point must be reserved for later.
4. Remarks: The fact must not be overlooked that under the Wadsworth Agreement we are entitled to the benefit of 21 million dollars (i. e., approximately 88 million gold marks) per annum during a period of 12 years from January 1, 1923. Attention is also invited to the fact that any arrears in the payments during the first four years of the currency of the Wadsworth Agreement, must be made good in the last 8 years. As such arrears have actually occurred and as they probably will reoccur in the next one or two years, we would be entitled from January 1, 1927, to a total annual amount in respect of Army Costs of between 30 and 32 million dollars (i. e., between 126 and 134 million gold marks). In view of this latter situation it will be noted that the amount requisite for payment of all our claims under the Dawes Annuities, as outlined above, would be less annually than the amounts provided for under the Wadsworth Agreement for our Army Costs alone, although extended over a longer period of time. Furthermore, (so far as the Dawes Annuities are concerned), we would not claim an absolute priority for the total of these annuities as is the case of the annuities payable under the Wadsworth Agreement, but only a priority for the portion received in respect of Army Costs. Therefore, in its entirety, and vis a vis the payments which we would otherwise be entitled to under the Wadsworth Agreement, we consider the foregoing entirely fair and in fact a liberal concession in deference to the Allies.
- Copy transmitted to the Department by the Ambassador in London in his despatch no. 978, Jan. 5, 1925. This memorandum, handed to Mr. Leith-Ross by the Ambassador, Jan. 3, 1925, is substantially the same as the draft (not printed) telegraphed to the Department by Mr. Logan, Dec. 29, 1924, except for slight modifications of the text, chiefly verbal, made by the Department.↩
- See telegram no. 606, Dec. 29, 1924, from the Ambassador in France, p. 117.↩