462.00R296/2908½: Telegram
The Chargé in France (Armour) to the Secretary of State
224. Reparation No. 246. Reference your No. 164, May 17, 12 p.m. Your telegram has proven most helpful. Moreau was persuaded by Young and Morgan yesterday not to submit his views in writing for the present, and your message now seems to have straightened out the situation satisfactorily.
The great problem now is the question of distribution. The scheme now under discussion by the creditor groups is that of distribution according to existing rights. The figures put down for the United States are 40.8 millions for mixed claims and approximately 30 millions, Army costs. The figure for mixed claims appears to me to represent our strict legal rights under the agreement of January 14, 1925. It is calculated at 2¼ percent of amount available for reparations after prior charges have been deducted. In view of fact that there is to be a reduction of the total annuity, I do not see how we can claim as a legal right the amount of 45 million marks which we now receive on basis of an annuity of 2500 million marks. I do not believe that the agreement of January 14 can be so construed unless we should wish to assume position that we would not consent to reduction of the total annuity below 2500 million marks. The approximate figure of 30 million marks is calculated to satisfy 90 percent of our Army costs in period of 37 years at 5½ percent, upon understanding that British and French will waive their Army costs arrears.
If such figures as these for the United States are recommended by the experts, there is nothing to be gained, in my judgment by appearing [Page 1074] officially before the Committee. Yesterday Young defended these figures for United States participation against strong attempts made by other groups to reduce them. In their memorandum of April 12,50 you will recall, no provision was made by the creditor groups for Army costs, and the payments for mixed claims were materially reduced. Inclusion of these figures to cover our legal rights is due to Young’s efforts. I am convinced that it would not be possible to obtain any better figures from the other experts. An attempt in that direction would certainly risk causing break-down of the conference and in the eyes of the world assuming the responsibility for it. If these figures are not acceptable to the Government of the United States, we can state that fact when the report of the Committee is made public, and then defend our position at subsequent conference of the governments. Our legal rights, in that event, would remain unaffected by anything which the experts have done.
If the annuity proposed for mixed claims is not sufficient to satisfy all the awards to the Government, in addition to the private claims, then we could reserve in any case our rights as against Germany under Treaty of Berlin.
Reference your No. 148, May 11, 2 p.m. It would seem doubtful that we could claim 4 percent of average annuity on any basis of legal rights. We could receive 4 percent of the Dawes annuity for only 15 years; that is to say, until the Army costs are paid. We would receive thereafter only 1.8 percent. Present proposal means flat participation of about 3.5 percent for 37 years. We could claim, of course, 55 million marks a year under existing rights on account of Army costs until we have been paid in full. It would seem, however, on assumption that we will desire to waive 10 percent of these costs on the understanding that the other creditors will do the same, that the annuity provided to cover our Army costs over a 37-year period is satisfactory.
After you have considered the foregoing, if you still think it advisable for me to appear before the experts on basis of your telegram under reference, please instruct me immediately. Events are moving rapidly and if you wish me to meet the experts I ought to have your instructions by Monday morning at latest, as it is possible that on Monday or Tuesday agreement regarding distribution may be reached.
Foregoing recommendations are made, of course, on assumption that distribution which will be recommended by the experts of the creditor groups will include figures for the United States at approximately amounts mentioned.
[Page 1075]Reference your No. 161, May 17, 1 p.m.,51 you inquire as to method by which figures for the average annuity have been reached. The figure of 1988.8 as average annuity with service of the Dawes loan deducted and figure of 2050.6 as average with service of Dawes loan included have both been calculated as representing the flat annuity which would produce required sum, discounted at 5½ percent, for 37 years.