462.00 R294/691: Telegram

The Ambassador in Germany (Schurman) to the Secretary of State

215. From Wilson. Reference my telegram November 7, 5 p.m., Embassy’s 209.

I had second meeting with Ritter and his associates yesterday afternoon and further meeting this morning. He began by saying that there were, in general, two bases upon which our agreement might be drafted. The first was to take the Young Plan as a basis and provide merely that the payments allocated to the United States in the Young Plan, subject to the conditions of that plan, would be made direct by Germany to the United States; this was the basis which Germany would have preferred. The second basis, which was the one adopted by the United States, was to make the payments depend on the agreement, the obligations of Germany under the Armistice agreement,68 and the Treaty of Berlin. If the agreement was to follow this basis [Page 1089] he felt that certain provisions would have to be included in it in order to bring it into line with Germany’s position under the Young Plan.

He then went on to stress two points which he said the German Government regarded as of primary importance as follows:

(a) The renunciation of sanctions and special pledges.

He pointed out that under the Young Plan (paragraph 102) the creditor Governments would release all controls, securities, et cetera; furthermore, many of the creditor Governments had already renounced the rights accorded them, under paragraph 18 of annex 2 of part 8 of the Versailles Treaty.69 He said that the German Government felt it would be an anomaly if the other creditor Governments should release such sanctions and pledges and the United States still retained them. He stated that the French Government was the only one which was making any difficulty over the release of these pledges and that Great Britain, Italy, and Belgium had advised Germany that they would accept any formula which was satisfactory to France and Germany. The French and German Governments are now discussing a formula and the German Government hopes that when agreement has been reached upon this formula it may be followed as closely as possible in our agreement. For the moment, therefore, Ritter said that he would like to reserve the question of the exact wording of the form of release but that the German Government wishes to inquire whether the United States would agree in principle to renounce its rights to sanctions and pledges under the treaties. In order to give me a more definite idea of just what they had in mind he handed me the following rough draft:

“The obligations of Germany under this agreement shall be of a purely commercial and financial character. With regard to these obligations the United States therefore renounces all sanctions, securities, pledges, charges and controls, to which she might have or might be entitled according to the treaty signed at Berlin, August 25th, 1921; and according to the parts [terms?] of the Armistice convention signed November 11th, 1918; and of the treaty signed at Versailles, June 28th, 1919, which are referred to in the said Treaty of Berlin. The United States agrees that the relations between the Reparation Commission and Germany will be terminated with the coming into force of this agreement insofar as the United States should participate in the Reparation Commission.”

[Paraphrase.] I submit the following observations with regard to the foregoing:

In general, the German proposal looks to two categories of release: (a) As to application of sanctions; (b) as to special securities for payments made by Germany.

[Page 1090]

I assume that we should be willing to give up any right to sanctions as such; but I think that question of renunciation of our right to special pledges might be influenced by decision reached with regard to German request for revision of safeguard clause (see below, paragraph (b)). Paragraph 102 of Young Plan recommends release by creditor Governments of all controls, etc., except those which are specifically referred to in part 8–A of plan. Should Germans insist on safeguard clause, then it is obvious that all our rights in the way of special pledges, under the treaties, should remain intact. If, on the other hand, they agree, as I think that eventually they may do, to give up idea of a safeguard clause and to make their payments to the United States in effect unconditional, then I think that we might consider releasing special pledges and regard basis of security for payment of the annuities as resting upon solemn undertaking of German Government. [End paraphrase.]

(b) The so-called revision or safeguard clause.

Ritter laid emphasis on obvious points such as the size of the total German annuity, danger to Germany’s economy involved in transferring the annuity, and the fact the German Government had accepted the Young Plan only because of the safeguards which it contained. After discussion, however, he agreed that the relatively small annuities to be paid to America did not in themselves constitute any threat to German economy so long as Germany retained the safeguard provisions of the experts’ report as concerns the bulk of the postponable payments. He then went on to point out the difficult situation which would arise for Germany at the final Hague Conference if the other creditor Governments realized that Germany had voluntarily increased the amount of her unconditional payments in this special agreement with the United States. In this case Germany would probably be faced with a demand from the other creditors for an increase in the unconditional payments to them, and he felt that every effort should be made to avoid these difficulties being raised.

[Paraphrase.] (I am inclined to feel that this is chief preoccupation of German Government with regard to this matter.) Bitter then put forward as his entirely personal suggestion the thought that if complete text of our agreement were not made known to the other powers before assembling of Hague Conference—that is to say, if the other powers did not realize that German Government was promising to make payments to the United States unconditional—then it might be possible to have inserted in final Hague protocol a clause simply to effect that other creditor powers raised no objection to direct payment by German Government to the United States without passing through the bank the payments which under the Young Plan are allocated to the United States. [End paraphrase.] [Page 1091] He said that Jaspar was planning to hold the final Hague Conference during the first week in December and that if this was done he felt that we probably should not have completed our agreement by that time and that this would facilitate the presentation of the matter at The Hague. The German Government, he added, regards it as essential that the special agreement should be recognized by the other powers at their final approval of the Young Plan. I replied that I felt the advisable thing for us to do was to complete our agreement as soon as possible and then to deal with the question of the other powers when that problem arose. I also said that I personally did not feel that the United States should take any part in presenting the agreement at The Hague where we were not officially represented. As regards the attitude of the other powers, the United States has rights and priorities under the January 14, 1925, agreement which would doubtless be taken into consideration in connection with the special American-German agreement. I repeated the opinion I had expressed on November 7th that I personally felt strongly that for obvious reasons any so-called revision or safeguard clause would be entirely unacceptable to the United States. In view of his insistence, however, I agreed to transmit to you his request for the inclusion of a clause which he drafted reading as follows:

“Should Germany declare that she has come to the conclusion in good faith that Germany’s exchange and economic life may be seriously endangered by her payment under this agreement in connection with her other international obligations resulting from the war, the two Governments shall enter into new negotiations.”

[Paraphrase.] With reference to date of Hague Conference, I may add that from word I have received from London and Paris, it seems possible that British and French Governments may prefer to postpone meeting until German plebiscite on Young Plan is definitely over with. [End paraphrase.]

I shall report in a subsequent telegram upon the numerous other points which Ritter has raised. [Wilson.]

  1. Foreign Relations, 1919, The Paris Peace Conference, vol. ii, p. 1.
  2. Manoy, Treaties, 1910–1923, vol. iii, pp. 3331, 3424.