462.00R296/2917½: Telegram
The Chargé in France (Armour) to the Secretary of State
225. Reparation No. 247. This morning I discussed your No. 165, May 19, 8 p.m., with Young. He said that he personally was not in position to communicate our stand to Committee, as latter had decided that it would not receive any communications from governments (see his message to you transmitted in my 156, Reparation No. 213, April 17, 10 a.m.). It had been agreed, however, that the four creditor groups should receive, unofficially, views of the position of the governments not represented at the present conference of experts. Young said he felt that time had now come when our position should be made known to Committee, and that in view of progress that is being made among the creditor groups regarding question of distribution, he felt that I should appear before them at once.
Consequently I met informally with the representatives of the four principal creditor groups this afternoon, and set forth our position as stated in your telegram No. 165.
Our position on Army costs, as set forth in first paragraph of your telegram is not entirely clear to me; it seems, perhaps, to have been based on misunderstanding of concession which British and French are making. You state that we would accept 90 percent of our Army costs “due September 1, 1929.” This would seem to mean that concession would amount to waiver of 10 percent of balance unpaid and due as of date in question. However, British and French are waiving 10 percent of total amount of their Army costs. My assumption is that we would wish to make similar concession; that is, 10 percent of our total Army costs. In figures this would be expressed as follows: Our unpaid Army costs, as of September 1, 1929, will amount, approximately to 813,000,000 gold marks; ten percent of our total Army costs is 122,000,000 marks; deducting this amount from 813 million marks would leave 691 million marks, to be paid over period of 37 years.
Regarding phrase “interest on all deferred payments, 5½ percent,” I assume it has following meaning:
[Page 1077]Accepting amount of 691 millions as being that of our Army costs to be paid starting September 1, 1929, approximately thirteen annuities of 55 millions would be required to discharge this amount. In agreeing to accept payment over term of 37 years we would receive 5½ percent on payments deferred after the 13th year, that is to say, during the last 24 years.
It may be added that in my discussion with the creditor groups I did not mention, of course, the foregoing points touching our Army costs, but merely made statement to effect that the President would recommend our acceptance of 90 percent of our Army costs, provided France and Great Britain did likewise, and that for the moment I was not in position to furnish them with figures as to annuity required to cover this amount, but that I hoped shortly to be able to do so. If you would instruct me definitely regarding points mentioned and furnish figures of approximate amount of annuity required, I should appreciate it.
In regard to second paragraph of your telegram concerning mixed claims, I set forth our position on basis of flat annuity. This was not discussed, if it appears later that there is serious objection to proposal for flat annuity, it may then become advisable to accept 2¼ percent of amount available for reparations over a period of 37 years and a flat annuity thereafter sufficient to discharge balance of claim in 15 years. I interpret your instruction as giving me the authority to do this should it seem advisable.
The meeting with the creditor groups was brief and entirely satisfactory. Only point which seemed to raise some doubt was whether the Germans could be induced to agree to the 15 annuities after the 37th year on the mixed claims account.
- Telegram in three sections.↩