462.00R296/2778: Telegram
The Chargé in France ( Armour ) to the Secretary of State
[Paraphrase]
145. Reparation No. 205. From Young:
This reply to your message dated April 829 is being sent after full consultation with my American associates on the Committee, and represents their conclusions and views as well as my own.
- (1)
- Although Secretary of the Treasury’s memorandum purports to be official definition of the American Government’s attitude on various important features of problem on which Committee of Experts engaged, we assume from its confidential designation that for the present the message is intended only for our information; and that if you think it necessary for protection of interests of the United States, the quoted memorandum or substance of it will be communicated to Experts Committee or to the interested Governments through official channels, not through us. Obviously, we cannot regard ourselves, any more than you have so far regarded us, as representatives in any sense of the Government of the United States for this purpose or for any other.
- (2)
- For reason stated above, and notwithstanding general tone and tenor of Treasury’s memorandum, we must assume that message was not meant to be an instruction. It is clear to us that should you give instructions and should we accept them, this would mean complete reversal of the course and a realignment of responsibilities. The Government of the United States declined to participate in this enterprise either through appointment of experts or by permitting any official of the Government to serve. It acquiesced in and even encouraged our assumption of this arduous task provided we assumed it on our own individual responsibilities. Whatever may be said for the [rejected?] procedure we do not see any way to return to it now. On the joint invitation of the Reparation Commission, acting for the Allied creditor powers, and of the Government of Germany we assumed these heavy responsibilities, and we are approaching the end of our work. Our view is that we are bound to complete the work as free agents accepting full responsibility for what we do and not in any respect serving in a representative capacity. Under these circumstances we cannot allow the situation to become at all ambiguous, and we deem it important, therefore, to place on record at this time and in this way our interpretation of the Treasury memorandum as neither [Page 1044] an official communication to the Committee of Experts through us, nor as an instruction to us.
- (3)
- Going on to substance of Treasury memorandum we are unable to avoid feeling that apprehensions set forth in it rest upon a misunderstanding. It should be borne in mind that memorandum mentioned in my statement of March 2830 had been prepared by the experts of certain of the Allied powers and that it was transmitted simply for its informative value; the American experts had no responsibility for it. We cannot accept any responsibility, moreover, for unauthorized press reports. We have, in fact, just reached critical stage in the negotiations, and speculation over final form and substance of report is for present moment futile.
- (4)
- Certain points which are touched upon in Treasury memorandum are
fairly clear, however, and are in line with our purpose to keep you
informed with regard to actual developments. As a supplement to my
previous message we are in a position to make following additional
statement:
- (a)
- Payment to the United States of Mixed Claims Commission awards are not called into question and all elements recognize that these payments must be covered. In what way this result is to be brought about has not yet been settled.
- (b)
- In my opinion the International Settlement Bank is an essential piece of machinery to hold the German obligations, facilitate their payment and effect the distribution of the sums received to Germany’s creditors. It may well be that International Settlement Bank would be asked to transmit to the United States some part of amounts received from Germany in payment of indebtedness to the United States; it would be normal and natural method of making such payments. In order for the bank to render the greatest service and to be as free as possible from political control and from private domination, the provision has been made that its directorate shall be composed of the governors of the central banks of issue or of persons nominated by them. At same time, we have made provision for representation of American banking system on directorate, but only to extent that it may be represented, not that there is any obligation upon it to be so represented; it is our belief that interests of the United States will be better served by standing aloof from such a bank. I am hardly able to conceive that America, with the scanty knowledge now available, would wish to decide for all time that she would not participate in the bank. The wiser course would seem to be to provide the option for exercise of it, if and when the interests of the United States are served thereby.
- (c)
- Details of possible division of German payments into categories remain to be established. There is no reason to feel apprehensive that report will state claims against Germany in terms of the inter-Allied debts. The Allied Governments are bound to demand, however, an amount sufficient to cover their indebtedness to the United States and the inter-Allied Governments, and to ask that Germany’s payments to them run through duration of same period. If any such coincidence exists, it is a coincidence of fact which is inherent in situation from which Committee of Experts cannot escape. We know of neither any sound or fair argument to use nor way to prevent the Governments which are our debtors from making such normal arrangements in handling of their own affairs. As matter of business, it would seem that the United States, as a creditor, would welcome any action on the debtor’s part to facilitate the regular and convenient payment of the debts which are owing from the Allies. The responsibilities of the several debtors are not lessened—their capacity to pay is increased. Present contemplated payment from Germany to the Allied Governments will be in excess of ten billion dollars, and out of this amount over six billion dollars, under the existing debt agreement, will eventually come to the United States.
- (d)
- Replying to Germany’s request for privilege of moratorium, the creditor powers so far have stated their unwillingness to grant any moratorium equivalent to that which is provided for by their agreements inter se and with the Government of the United States. It is our opinion that any plan will have to carry provision that in case out-payments of Allied Governments are diminished for any reason during the next fifty-eight years, then to some extent Germany’s obligations shall be diminished.
- (5)
- Work of the Committee of Experts has reached its most crucial stage. Since April 4, when we reconvened, the members of the Committee have labored literally night and day for purpose of seeing whether agreement can be reached on difficult question of the number and the amount of the annuities. Within the next few days either an accord or a break will come. Young.
Armour