462.00R294/693: Telegram

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

217. From Wilson. Reference last paragraph my telegram No. 215, November 12, 5 p.m.

Following further points have been raised by Ritter:

Paragraph 1 (a) of the draft agreement. He inquires whether it would be possible to maintain at 45,000,000 marks annually the [Page 1092] amount allocated to mixed claims until these are paid, reducing proportionately in the first years the allocation to Army costs and increasing it in the later years. He points out that this would be of advantage German nationals whose property would be returned more quickly and to the American claimants who would receive payment earlier. He has made it clear he is not suggesting any reduction in the annuity but only a rearrangement of the allocation of the total share of the United States.
Question has been raised as to the amount of the mixed claims awards. Since Germany is to agree to pay the exact amount of the awards with interest and since it is impossible at the present time to fix the exact amount in view of the fact that the commission is still sitting, Ritter feels it necessary to ensure that the payments set out in the agreement shall not exceed the total of the awards when these are finally established. He therefore proposes that the following should be added after paragraph 1 (a) “these payments shall cease however before said date if and when the obligations incumbent upon the United States by whom the Settlement of War Claims Act of 192870 shall have been fully satisfied. Bonds not yet matured at this time will be returned to Germany.” In this connection, the Foreign Office would appreciate full information as to the basis upon which it has been calculated that 52 annuities of 40.8 millions will satisfy the estimated total of the awards remaining to be paid. Department’s telegram 64, September 14, 2 p.m., to Berlin stated that as of September 1st, 1929, the unliquidated balance on account of mixed claims amounted approximately to [$]251,300,000 interest included. Does this cover only awards actually entered or does it include an estimate as to future awards?
Paragraph 3, draft agreement. Ritter suggests that after the word “interest” some such phrase should be inserted as “in case of postponement of payments under the provisions of paragraph 4 hereinafter,” since no interest will be paid except in the event of postponed payments. The same remark applies to paragraph 5 of the draft.
Attention has been called to the fact that no provision is made in the draft for payment at the option of Germany in obligations of the United States as is the case in the other American debt agreements. Bitter argues that if we are to follow the precedent of the other agreements, then Germany should be given the advantages of such agreements and it is conceivable that at some time in the future the option of making payment in United States obligations may be of value. He requests that a provision to this effect be added to the agreement.
It has also been pointed out that the draft makes no provision for payments before maturity as is the case in the other American agreements. Furthermore the Young Plan, in paragraph 154, provides for the right to anticipate payments. Bitter therefore requests that a clause be included in this similar to that in our other agreements.
Paragraph 7 of the draft. Ritter said he was struck by the fact that it was only Germany which was called upon to assume obligations under this paragraph. I pointed out that the clause was identical with that contained in our other agreements and that it is obviously only Germany which will be called upon to issue bonds in connection with which legal formalities must be fulfilled. Bitter said he appreciated this but that public opinion in Germany was very nervous and fearful of anything which might have the appearance of a new or unilateral obligation and that he must ask us to consider having the clause read throughout “Germany and the United States.” In support of this he pointed out that by the agreement the United States would be undertaking certain obligations to Germany such as a reduction in the Army costs and a renunciation of sanctions and special privileges, see my telegram of yesterday, and that it could be held in Germany that it was equally necessary to be assured that the pertinent legal requirements in the United States had been completed. In this connection I should appreciate it if the Department would telegraph me the exact significance of this paragraph. Ritter seems to feel that it may have the effect of a “ratification clause” in the sense that it indicates that the necessary prior approval has been given by the legislative bodies of both countries and that the agreement becomes immediately effective upon signature without requiring further submission to the legislatures. Furthermore an interpretation of the article would be helpful in view of the question which the legal experts of the Foreign Office are examining as to whether the legal requirements mentioned in the paragraph must include the new laws to be voted under the Young Plan concerning the Reichsbank, the railways and pledged revenues.
[Paraphrase.] For my own information I should also appreciate Department’s views as to whether it desires that Reichstag should approve agreement before signature as Congress will do. I observe that in our agreements with France and Italy the phrase “subject, however, to ratification” does not appear in final paragraph. Customary procedure in Germany would be, signature first followed by ratification.
Regarding that part of draft containing phrase “in two counterparts,” Ritter said he understood it to mean that each counterpart would comprise one text in German and one text in English so that both texts would possess equal validity.
Forms of bonds. The suggestion has been made that some phrase like “in view of the provisions of the agreement dated . . . . . . . . . . between the United States and Germany”, should be inserted to take place of the phrase “for value received,” which hardly seems applicable to Germany.
Should it be agreed that Germany have the option of paying in obligations of the United States (reference paragraph 4, above), appropriate reference thereto should also be included in the forms of bonds.

Ritter has reserved various other points with regard to which he is consulting with German treasury, the Reichsbank, and his own expert legal assistants. Wilson. [End paraphrase.]

  1. 45 Stat. 254.