462.00 R 296/840: Telegram

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

26. L–193 for Herrick, Kellogg and Logan.

Department understands proposal your L–30714 involves: first, 55,000,000 gold marks cash priority 17½ years equivalent to about $230,000,000 from September 1, 1926; and second, 2¼% of reparation yield from September 1, 1924, such yield not to exceed in any year 45,000,000 gold marks; also that subject to the above the United States (a) would not claim Ruhr receipts beyond the amount already received in accordance with the understanding with Belgium, which sum would be released to the United States Treasury at once, and (b) waive claim on reparation payments by ex-enemy powers other than Germany.
(a) Amount received from Belgium to be credited on army cost account pursuant to understanding with Belgium is $14,725,154.40. Treasury states that it has notified this amount to the National Bank of Belgium.
(b) Assume waiver in (b) above would apply only while Dawes Plan in effect.
Priorities should be defined as set forth in previous instructions so that portion of Dawes annuities on which percentage applies will [Page 139] in normal year yield this figure. In this connection refer to your L–30515 in which Churchill seems to have been committed to the understanding that this amount should be at least 2,000,000,000 gold marks.
Adding to $230,000,000 (see paragraph 1) about $15,000,000 in blocked account, there remains about $10,000,000 uncovered in our total bill of about $255,000,000. Department’s information indicates that credits under Wadsworth agreement will be somewhat less than $10,000,000. Therefore 17½ year provision should be qualified so that there will be no question of full payment of army costs. If necessary it should be extended, for example, to 18 years.
[Paraphrase.] Regarding interest on Army costs, which you do not mention, the Department would prefer interest on arrears but would not insist. [End paraphrase.]
Subject to foregoing which should present no difficulty, you are authorized to accept above mentioned proposal.
I am very gratified and congratulate you upon your successful handling of this difficult negotiation.
  1. Supra.
  2. Not printed; see footnote 12, p. 135.