462.00R296/2772: Telegram

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

[Paraphrase]

114. Reparation 200. From Young. For the President, the Secretary of the Treasury and yourself:

“Experts Committee had reached impasse through inability to get figures on the table, and this morning in order to break deadlock I made following statement:13

‘The Committee has now reached the stage of its work where figures must be considered. Until now the Committee has devoted its attention to the development of methods and the creation of machinery for the effective handling of such obligations and payment as will result from a settlement. We have felt that if “a complete and final decision of the reparation problem” were to be reached we must arrange some mechanism such as the proposed bank for international settlements that would remove the German debt from the realm of politics and place it upon a just and orderly financial basis. You have considered on the one hand the facts presented to you bearing [Page 1035] on the economic strength of Germany, and on the other hand the requirements of the creditor countries. Only after such important preliminary work could intelligent consideration be given to the figures.

The general problem bristles with difficulties, one of which is the method of approach. There has been a natural hesitancy on the part of those most vitally interested to suggest figures lest they be considered offers. So, with the approval of all the groups, the chairman takes the responsibility of suggesting certain figures for discussion. It is a difficult and unwelcome task and I do it reluctantly in order to aid the Committee in its work. My American associates are in accord with these suggestions but I make them on my own responsibility. The information on which they are based has been gained largely from private discussion with the several groups. It is probable that each delegation will from its particular point of view regard them as unsatisfactory. That is one test and a rather vital one as to whether these suggestions fall within the area of fair debate.

It is obvious at the start that the initial suggestion should deal in the amounts to be received by the larger creditor countries. The cases of countries entitled to lesser participations may well be postponed until it shall have been determined how the first amount shall be met. If the requirements of the larger creditors cannot be satisfied it is fruitless to discuss those of the others. If they can be, the problem, so far as this committee is concerned, is a common one of doing justice and equity to all. With this in mind I suggest that the committee consider a set of figures which will provide for the four larger creditor countries the following results: For France, her out-payments and not less than 40 milliard francs present value determined on fair rate. For Italy, her out-payments and some reasonable additional amount for reparations taking into account her damage. For Belgium, her out-payments on the understanding however that an additional amount adequate to make the so-called mark settlement and provide for reparations will be arranged between Belgium and Germany. For Great Britain, her out-payments only and without reimbursement for her arrears.

The above sums are to be covered by annuities in addition to providing for:

(a)
The prior service of the German external loan of 1924.15
(b)
Costs of the armies of occupation and any expenses of administration under this plan.
(c)
Payments required to satisfy the awards of the Mixed Claims Commission.16
(d)
Appropriate amounts (reserved for later discussion) for the out-payments and reparations of Servia and the remaining creditor powers.

No suggestion is made by the chairman as to the number and amount of the annuities which will produce the above results; nor as to what part of the annuities if any should be qualified as to transfer [Page 1036] or payable in deliveries in kind. These also are matters which should be developed by discussion. The question of how long a period annuities should run is merely a matter of apportionment. It is a method of distributing a burden as distinguished from determining it. How the annuities are to be made up, whether they shall be moderate in the earlier years and higher later, or high in the first years and lower later, is also a matter for examination and debate. It is certain that all of these matters will obtain careful consideration by you if discussion of them can get a fair start without prejudice.

And finally it is not necessary to emphasize again that these suggestions are made only for the purpose of securing an area for fruitful debate. The chairman himself, like every other delegate, would wish to make all reservations on the question of what the final figures of the settlement should be. I believe that these specifications and the memorandum already presented at this meeting (this will be cabled in subsequent message18) afford opportunity for illuminating and fruitful discussion; and I hope that when we reconvene next week the active consideration of specific figures may begin.’

I regretted to have to deal with out-payment and with reparations separately, but as the creditor Governments had made all their figures on that basis there was no other way of inducing creditor group to develop discussible figures. It has been agreed by all groups that these memoranda be treated with closest secrecy as any publicity might well arouse public opinion to point where conference would be broken up. [Young]”

Herrick
  1. Telegram in two sections.
  2. Quotation not paraphrased.
  3. Provision for an external loan to Germany in the amount of $800,000,000 was included in the Dawes Plan; see The Experts’ Plan for Reparation Payments, p. 2.
  4. Foreign Relations, 1922, vol. ii, pp. 240 ff.
  5. See infra.