462.00 R 296/834: Telegram

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


21. L–304 from Logan. Churchill disclosed in conversation last night that he is willing to recommend a settlement on the basis of 55,000,000 gold marks cash priority per annum to commence September 1, 1926, on our Army costs account, plus 2 percent, or approximately 40,000,000 marks minimum in normal year, participation in [Page 136] “reparations account”. This offer privately made was in nature of compromise. The formal British offer remains 50,000,000 cash priority plus 2 percent on claims. He declined to go any further on a compromise but agreed to submit any proposals to Cabinet.

I made the following alternative proposals, all, of course, subject to the Department’s approval: (1) 55,000,000 gold marks cash priority, and 2¼ percent on “reparations”, that is, 45,000,000 in normal year; (2) 60,000,000 cash priority, and 2 percent, or 40,000,000 gold marks; and (3) 50,000,000 cash priority and 2½ percent, or 50,000,000 on “reparations”. That is to say, I stood on the basis of 100,000,000 in a normal year, with, however, Army costs starting September 1, 1926, and “reparation” starting September 1, 1924.

It will be noted that all that separates the British from our tentative proposals is 5,000,000 gold marks.

It is probable that under these proposals we would be forced to waive interest on Army costs arrears. We are inclined to feel that offer made by Churchill is about as far as we can get him to go, though we may be able to obtain advance to 100,000,000 basis. If impossible to do better may we settle on either the 95 or the preferable 100 basis? Logan.

  1. The first paragraph of this telegram has been paraphrased from a corrected copy received Jan. 9, 1:10 p.m., as telegram No. L–305 (file No. 462.00 R 296/837).