Office of the Historian

463.00 R 29/164: Telegram

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

Paris, January 27, 1925—4 p.m.
[Received 5:43 p.m.3]

83. L–336. Your 52, January 22 to American Embassy Paris.

1. Problem presented indirectly raises question of method of our participation in reparation payments made by or on behalf of Austria [Page 191] and Hungary. Consider it desirable that we take a definite stand on subject and for that reason following considerations are offered.

2. Informally understand that there will be a mixed claims commission to adjudicate American [claims] against Austria and Hungary.4 Whatever be the amount of awards it shall be seen that to collect them we shall have to reach an agreement with the Allies as in the case of Germany5 unless we employ sequestrated Austrian and Hungarian property.

This latter method probably difficult in view of likelihood of the return of German property. It would seem that our treaty right[s] with respect to Austria and Hungary are identical with our treaty rights vis-à-vis Germany and that the arguments employed in the recent exchange of notes with England relative to Germany, apply with equal force to Austria and Hungary.

Granting then that we have claims against Austria and Hungary and enforceable right[s], the question of the method of exercising them arises.

3. As Department is aware Allied Powers in granting priority to Austrian reconstruction loan postponed their reparation claims for 20 years and we postponed maturity of our relief bonds.6 In the case of Hungary, Allies while granting a priority to its reconstruction loan, nevertheless insisted on certain considerable annual payments as reported in my L–96, February 22nd, and my letter of February 25th, 1924.7

[Paraphrase]

In consequence of the foregoing it now seems improbable that Austria will make direct payments for a long period and that, unless new arrangements prove to be possible, Hungary will not pay anything in addition to sums already allocated to Allies. There appears to be no substantial source, therefore, from which the United States could satisfy its claims in absence of special arrangement with Austria or Hungary, which might meet with objection from Allied Powers, except from proceeds of the liberation bonds. Value of these bonds is to be credited on Austro-Hungarian reparation account, and if distributed among powers the receiving powers will be debited on reparation account. In this connection see article 2 of Spa Agreement8 and paragraph 3, annex to Finance Ministers Agreement, March 11, 1922.9

[Page 192]

4. Czechoslovakia’s liberation bonds have value as to same degree, as have also bonds of Poland. Probable that other states will have reparation claims so large as to outweigh their liberation bond issue.

5. I think that we have an interest in the distribution of these liberation bonds on account of our claims. I suggest that we take no action in the Conference of Ambassadors until March and then request that delivery of bonds should be made to Reparation Commission as trustee with instructions to it to make no disposition of the said bonds or of their proceeds except in agreement with the United States. In Conference of Ambassadors we could indicate that we had unsatisfied claims against Austria and Hungary and in consequence could claim share in amounts distributed.

6. In past negotiations on participation in German reparation payments we were criticized for delay in not advising the Allies that we intended to collect damages from Germany. I think it good tactics, therefore, in present matter to state our position in advance. As far as I am able to gather from present conditions apart from use of Austrian-Hungarian property in the United States and possible separate financial arrangements with Austria and Hungary, I am inclined to believe that the proceeds of the reparation [liberation?] bonds offer the most promising outlook for some payment in near future. It is desirable, therefore, to make statement.

  • Logan
  • Herrick
  1. Telegram in two sections.↩
  2. See agreement between the United States and Austria and Hungary, Nov. 26, 1924, Foreign Relations, 1924, vol. i, p. 152.↩
  3. See ibid., 1925, vol. ii, p. 133.↩
  4. See ibid., 1922, vol. i, pp. 613 ff.↩
  5. Neither printed.↩
  6. Foreign Relations, 1920, vol. ii, p. 406.↩
  7. British and Foreign State Papers, 1922, vol. cxvi, pp. 612, 621.↩