855.51/344

The Secretary of State to the Ambassador in Belgium (Phillips)

No. 111

Sir: With reference to your despatch No. 50 of August 18, 1924,90 and other correspondence regarding the repayment by Belgium of certain debts owed to Great Britain, and the bearing thereof on the obligation of Belgium to make corresponding payments to the Government of the United States, the Department transmits herewith the text of a note to the Belgian Government which you are instructed to present at the first available opportunity.

Please inform the Department by telegraph of the date of the note which you present pursuant to this instruction.

I am [etc.]

Frank B. Kellogg
[Enclosure]

Text of Note To Be Presented to the Belgian Foreign Office91

Under instructions from my Government, I have the honor to refer to certain correspondence exchanged in 1919 between representatives of the Government of Belgium and representatives of the Treasury Department of the United States regarding the conditions under which the Government of the United States was prepared to make further advances to the Government of Belgium. I have been instructed to refer in particular to a letter dated February 5, 1919, from the Belgian Minister in Washington to the then Secretary of the Treasury, to a letter dated April 22, 1919, from Mr. Rathbone, Assistant Secretary of the Treasury, to Mr. Symons, Counsellor of the Belgian Legation, to Mr. Symons’ reply of May 14, 1919, and to [Page 108]letters dated June 15, 1919, and July 8, 1919, from Mr. van den Ven, Special Delegate of the Belgian Minister of Finance in Paris, to Mr. Davis of the United States Treasury.

The letter dated February 5, 1919, from the Belgian Minister in Washington to the then Secretary of the Treasury, was as follows:

“In reply to your letter of January 18th, I have much pleasure in informing you, on receipt of telegraphic advice from my Government to that purpose, that the Belgian Government willingly grants the request from the United States Treasury that advances which it has made or which would be made to Belgium for food and relief purposes during the period which has elapsed since the cessation of hostilities, will receive treatment as favorable as that accorded to advances which may be made to my Government by the British or French Governments for reconstruction purposes.”

The letter of April 22, 1919, from Mr. Rathbone to Mr. Symons was in part as follows:

“I take pleasure in informing you that the Secretary of the Treasury is prepared from time to time to establish further credits in favor of your Government to be availed of from time to time against obligations of your Government in a corresponding amount at such times and to such extent as shall be determined by the Secretary of the Treasury up to the amounts hereafter indicated, for the purposes hereinafter set forth and on the understanding herein expressed.92

. . . . . . . . . . . . . .

“The amounts of the credits which the Secretary of the Treasury is prepared to establish in favor of your Government, as aforesaid, (subject to reduction as hereinafter stated) and the purposes for which the same are to be availed of, are as follows:

  • “(a) $2,150,000 or such lesser amount as may be sufficient with the unexpended credit balance in favor of your Government for relief purposes in the amount of $28,300,000, to provide for the amounts which shall become due from your Government to the Commission for Relief in Belgium in connection with the April program of said Commission and to defray the cost of the purchase in the United States of not exceeding 80 tons of wheat and 10 tons of lard, and shipping charges in respect thereof to the extent such payment is made to the United States Shipping Board on ships under the control of the United States Shipping Board;
  • “(b) $1,000,000 or such lesser amount as may be sufficient to provide for such purchases of your Government in the United States up to June 1, 1919, for military supplies as may from time to time be approved by the Treasury;
  • “(c) An additional sum sufficient to pay the interest due on May 15, 1919, on obligations of your Government held by the United States.92

. . . . . . . . . . . . . .

[Page 109]

“The advances which may be made by the Secretary of the Treasury to your Government against these credits will be made on the faith of the assurances given to the Secretary of the Treasury by the Belgian Minister in his letter dated February 5, 1919, that advances made or to be made by the United States to the Belgian Government for food and relief purposes after the cessation of hostilities would receive treatment as favorable as that accorded to advances which might be made to the Belgian Government by the British or French Governments for reconstruction purposes, and on the understanding that in accordance with the determination of the Supreme Economic Council in Paris all advances made to your Government after November 11, 1918, by any of the allied governments and powers associated in the war for food, relief and reconstruction purposes would be made a first lien or charge on the amounts received by your Government from the enemy countries for reparation or indemnity.

“As under the terms of the armistice the cost of the maintenance of the Belgian army of occupation since November 11, 1918, is to be paid by Germany, and as it is understood that the only part of this cost for which cash is received now is the part for which expenditures are incurred in marks, the balance constituting a claim against Germany to be liquidated out of its additional payments to Belgium in priority to payments for reparation, the Secretary of the Treasury is not prepared to make further advances to your Government except upon its assurance that the Belgian Government will repay to the Government of the United States the amount of advances made to your government after November 11, 1918, by the United States Treasury to provide supplies for the Belgian army, out of the first moneys received by the Government of Belgium from Germany under the terms of the armistice.”

The letter from Mr. Symons dated May 14, 1919, replying to the above-mentioned letter of April 22, 1919, from Mr. Rathbone, was as follows:

“I have the honor to inform you that I have received a cable message from the Minister of Finances of Belgium confirming the acceptance by the Belgian Government of the conditions established for further advances to Belgium by the United States Government as set forth in your letter of April 22nd.”

The letter dated June 15, 1919, from Mr. van den Ven to Mr. Davis contained the following statement:

“In reply to your letter to the Belgian Minister of Finance of April 29, and to your letters to me of May 12 and May 28, I am requested to inform you that the Belgian Government agrees to repay to the United States Government the amount of advances made by the United States since November 11, 1918 for the purchase of supplies necessary to the maintenance of the Belgian army of occupation out of the first moneys which Germany will pay to Belgium under the terms of the Armistice to cover the cost of the maintenance of the Belgian army of occupation.”

[Page 110]

The letter from Mr. van den Ven to Mr. Davis dated July 8, 1919, was as follows:

“In answer to your letter to me of the 21st of June, the Belgian Government agrees entirely to your understanding of the terms of my letter of June 15th. The agreement referred to in this letter equally includes moneys paid by Germany to Belgium to cover the cost of maintaining the Belgian army of occupation, whether such moneys will be paid under the terms of the armistice or of the Treaty of Peace.

“The Belgian Government accepts, moreover, that the first moneys received by Belgium from Germany under the terms of the armistice or the Treaty of Peace to cover the cost of the maintenance of the Belgian army of occupation shall be alloted to the Governments of the United States, Great Britain and France in proportion to the advances made by each of these three Governments to Belgium since the armistice in support of the Belgian army of occupation.”

The understanding pursuant to which the Government of the United States continued after the armistice to make advances to the Government of Belgium is clearly set forth in the above quoted extracts from the contemporary correspondence which establish beyond question the duty of Belgium to repay its post-armistice borrowings out of its receipts from Germany, and to accord to the United States no less favorable treatment in connection with payments on account of such borrowings than is accorded to other creditor governments.

On August 18, 1921, the Secretary of State of the United States addressed a note to the Belgian Ambassador at Washington93 referring to the assurances given by the Belgian Government in the course of the above-mentioned correspondence, stating that it was the information of the United States that certain cash payments on reparation account had been or were about to be made to Belgium, and requesting information as to what steps the Belgian Government was taking towards the allocation of the proper proportion of these cash reparation payments to apply on the advances made by the United States pursuant to the understandings in question. No reply was received to this communication, and on October 22, 1921, a further note on this subject was addressed to the Belgian Chargé d’Affaires.93 No reply was received to this second communication, and on January 3, 1922, a third note was addressed to the Belgian Embassy93 requesting an explanation of the position of the Belgian Government with respect to the repayment of the post-armistice advances made by the United States. In a note dated January 7, 1922,93 the Belgian Ambassador replied that he had drawn the attention of his Government to the matter and that he would not fail to inform the Department of the reply of his Government when it reached him. Although more than three years have since elapsed, the Government of the United States [Page 111]has received no further reply to its inquiries of August 18, 1921, and the Government of Belgium, although according to the figures of the Reparation Commission it has received on reparation account considerably more than one billion gold marks in cash, and than 300 million gold marks in kind, has made no suggestion that any portion of such receipts should be applied in accordance with the above-mentioned understanding between the two Governments.

In April, 1922, the Government of Belgium was informed of the creation of the World War Foreign Debt Commission and of the desire of that Commission to receive any proposals or representations which the Government of Belgium might wish to make for the settlement or refunding of its obligations to the Government of the United States,94 and in a note dated April 27, 1922,95 the Belgian Ambassador at Washington stated that he had been designated by his Government to negotiate with the World War Foreign Debt Commission with a view to arriving at a satisfactory settlement within the scope of the Act creating that Commission. The Belgian Ambassador at Washington later submitted to the World War Foreign Debt Commission certain data regarding the financial situation of Belgium, stating that his Government would pay the interest due on the notes maturing in August, 1922, but would be unable to pay the principal, and informed the Commission that he was sailing for Belgium on June 17, 1922, and that on his return he would lay before the Commission definite proposals for the consolidation of the Belgian indebtedness to the United States.95a No such proposals have, however, been received from the Belgian Government and, excepting payments which will be made by Belgium out of sums received under Article 4 of the Agreement signed in Paris on January 14, 1925,96 Belgium is at the present time making payment to the Government of the United States only on account of the interest accruing on obligations, now overdue, which were taken by the War Department in exchange for war material sold to Belgium by the Liquidation Commission of the War Department. The obligations in question are but a small part of the total indebtedness of the Government of Belgium to the Government of the United States, which on November 15, 1924, aggregated $377,029,570.06 in principal amount and $94,794,143.33 in unpaid interest, a total of $471,823,713.39.

In view of the clear understanding reached in 1919 between the Government of the United States and the Government of Belgium regarding the advances made by the former Government to the latter [Page 112]subsequent to the armistice, and in view of the failure of Belgium to negotiate a general debt settlement in substitution therefor, it is with no little surprise that the Government of the United States has learned that the Government of Belgium has made substantial payments to certain other creditor governments on account of post-armistice advances made by those governments for purposes similar to those for which the Government of the United States made its advances. It appears from an official publication of the Belgian Government97 that from November 11, 1918, to June 30, 1919, the Government of Belgium became indebted to the Government of Great Britain in the sum of £8,096,680:12:7. The details of this indebtedness are reported to be as follows:

1. Advances in cash to the Commission for Relief in Belgium £1,276,956. 2. 7
2. Advances in cash to the Belgian Government 1,768,515.13.12
3. Assignments and loans to the C. R. B 1,434,619.15. 4
4. Assignments to the Belgian Government 1,387,348. 6. 7
5. Restoration of the Ports of Ostend, of Zeebrugge, and of the Belgian Coast 1,358,262.14.11
6. Interest due on these advances 870,978  –  –
Total £8,096,680.12. 7

This same publication states that the above-mentioned debt has been repaid as follows:

1. By means of a remittance to England of a sum of on November 20, 1918, deposited to the account of the Belgian Treasury at the Bank of England before the Armistice and consequently carried to Germany’s account. £1,290,229. 2. 8
2. By previous deduction from the English credit of Reconstruction, of £9.000.000—(payment of part of the work effected on the Coast) 650,000. 0. 0
3. By reduction granted by England on the price of materials (cessions) 333,576. 5. 2
4. By installments during January–February [1922] taken from the sum of installments paid by Germany for “Reparations” account. 5,822,875. 4. 9
Total £8,096,680.12. 7

[Page 113]

The Government of the United States is also informed that on December 31, 1924, the Belgian Treasury paid to the Canadian Government the sum of 2,278,558.63 Canadian dollars representing the principal amount of a credit extended by Canada to Belgium in 1919, aggregating 1,762,789.63 Canadian dollars, for the purchase in Canada of Canadian products and merchandize, together with interest at 5½%, amounting to 515,769 Canadian dollars. The agreement under which this loan was made to the Government of Belgium provided that the advances were to enjoy treatment pari passu with claims of other Allied and Associated Powers of a similar nature.

The Government of the United States has also received information that the Government of Belgium is paying interest to the Government of Great Britain on the relief advance of £9,000,000 made by the latter Government subsequent to the armistice. A letter from the Secretary of the Treasury to the Belgian Minister at Washington, dated January 18, 1919, referred specifically to the above-mentioned British credit and stated that

“the United States Treasury must take the position that the advances which it has made to your Government for food and relief purposes during this period must receive treatment as favorable as that accorded to advances which may be made to your Government by the British or French Governments for reconstruction purposes.”

As indicated above, the Belgian Minister in Washington informed the Secretary of the Treasury in a letter dated February 5, 1919, replying to the latter’s letter of January 18, 1919, from which the above extract is taken, that the Belgian Government agreed that American advances subsequent to the armistice for food and relief purposes should receive as favorable treatment as that accorded to advances by the British or French Governments for reconstruction purposes.

I have the honor to state that, in the light of the foregoing circumstances, I have been instructed by my Government to inquire when it may expect to receive payments from the Government of Belgium on account of its indebtedness to the United States incurred subsequent to the armistice for the purposes set forth in the correspondence above-mentioned, proportionate to the payments which the Government of Belgium appears to have made to other creditor governments on similar account.

I am also instructed to add in this same connection that the Government of the United States would be pleased to have the Government of Belgium make proposals in the near future to the World War Foreign Debt Commission looking to the funding on a mutually [Page 114]satisfactory basis of the Belgian obligations now held by the United States Treasury which bear interest at the rate of 5% per annum, and which, as the Government of Belgium is aware, are in their present form all overdue or payable on demand (with the exception of obligations in the principal amount of $2,284,151.40 which mature April 9, 1930).

  1. Not printed.
  2. In telegram No. 32, Apr. 22, noon, the Ambassador in Belgium reported the delivery of this note to the Belgian Foreign Office on that day (file No. 855.51/396).
  3. The omission which follows was indicated in the original note.
  4. The omission which follows was indicated in the original note.
  5. Not printed.
  6. Not printed.
  7. Not printed.
  8. Not printed.
  9. See telegram of Apr. 21, 1922, 12 noon, to the Ambassador in France, Foreign Relations, 1922, vol. i, p. 399.
  10. Ibid., p. 400.
  11. See Minutes of the World War Foreign Debt Commission, 1922–1926 (Washington, Government Printing Office, 1927), pp. 3–4.
  12. See p. 150.
  13. Rapport fait, au nom de la Commission Permanente des Finances, des Budgets et des Economies (Chambre des Représentants, séance du 24 Juillet, 1924).