462.00R294/691: Telegram
The Secretary of State to the Ambassador in Germany ( Schurman )
83. For Wilson. Your No. 215, November 12, 5 p.m.
(a) The United States perceives no objection in principle to renunciation, ultimately, of its rights to sanctions and pledges in the event that this agreement and the Young Plan become effective, but it would prefer a formula which is consonant with the character of a financial agreement rather than that of a political treaty. For example, have included in the draft at the appropriate place the following new paragraph:71
“Security. The United States hereby agrees to accept the full faith and credit of Germany as the only security for the fulfilment of Germany’s obligations hereunder.”
Reference may be made, in this connection, to the reservation made by the Senate to the ratification of the Treaty of Berlin to effect that this Government shall neither be represented in nor shall participate in any body, agency, or commission in which the United States is authorized by that treaty to participate unless and until provisions for such representation or participation shall be made by act of Congress. Reference may also be made to the statement issued to the press, May 16, 1929, by the Secretary of State, as follows:71a
“This Government does not desire to have any American official, directly or indirectly, participate in the collection of German reparations. … Ever since the close of the war the American Government has consistently taken this position; it has never accepted membership on the Reparation Commission; it declined to join the [Page 1095] Allied Powers in the confiscation of the sequestered German property and the application of that property to its war claims.”
It would seem from the foregoing that statement in this agreement of any renunciation of our relations to Reparation Commission would be meaningless.
(b) This Government is unable to accept any so-called revision or safeguard clause. Regarding Ritter’s suggestion on procedure, the United States in compliance with expressed and obvious interest of German Government in expediting transition to Young annuities, desires to lay agreement before Congress as soon as this can be done in the regular session which opens on December 2, but not until the agreement has been brought to attention of the other creditor powers, either at Hague Conference72 or individually. This Government concurs in suggestion that agreement be recognized, in some appropriate manner, by the other creditor powers.
The Government of the United States does not share apprehensions of German Government that other creditors will demand increase in unconditional payments to them unless this Government accepts a clause either of revision or safeguard. Essential characteristics of unconditional annuities within meaning of Young Plan are that they are nonpostponable and noncommercializable. The annuities to be paid to this Government have neither of these characteristics.
While the Young committee (acting under pressure of conditions which it is unnecessary to describe) and the first Hague Conference allocated annuities to the United States without regard to position of this Government under agreement of January 14, 1925, it is not believed that the powers signatory to the agreement of January 14, by which the priority of American Army costs over reparations was recognized, either can or will argue that special terms, which are consistent with the Young Plan and which are less rather than more favorable to the United States, negotiated between this Government and the Government of Germany and accepted by the United States in order to avoid the raising of questions which might obstruct entire program of relief to Germany through putting Young Plan into force, afford excuse to ask for further concessions to them in excess of those which the Young committee recommends. The discussions in the first Hague Conference turned on the Spa percentages,73 which have always been subject to the priority of Army Costs and which remain subject to the priority of United States Army Costs arrears. This Government’s rights in this respect have been fully reserved.
[Page 1096]With regard to the mixed claims awards, the United States has been receiving payments, under the agreement of January 14, 1925, on a parity with the reparation payments to the other powers in the amount of 2¼ percent of the payments by Germany which are available for distribution as reparations. The recommendations of the Young committee allocated these awards to an inferior position in relation to the unconditional annuities in which no participation has been allocated to this Government, although it has not in any way waived its rights in this respect. In addressing the Government of the Reich, it is not necessary to argue with regard to the respective equities of the mixed claims awards and the reparations payable to other creditor powers. Irrespective of fact that German nationals, under the Settlement of War Claims Act of 1928, are participating in the payment of these awards, the claims of this Government were subjected to rigorous examination and determination by a judicial commission which was set up by an agreement with Germany and in which the German Government had equal representation; and the United States is returning to German nationals the property on which these awards, by treaty, were secured, while the reparation claims of other creditor powers were determined unilaterally and were collected under the economic clauses of the treaty through establishment of clearing offices and confiscation of German property; certain ones, it is understood, not returning to the German Government even the balances which remained after their own claims had been satisfied.
This Government will have to obtain the authorization of Congress before it can release its rights under the agreement of January 14, 1925, and the utmost that can reasonably be asked of Congress to sanction is a promise on faith and credit of Germany similar to the undertakings of other debtors of the Government of the United States, with respect to all of which this Government, while granting liberal postponement terms at option of the debtor, has refused to grant any so-called safeguard clause. Draft agreement which has been submitted to Germany contemplates acceptance of Young annuities in full discharge of Germany’s obligations to the United States under the treaty.
This acceptance on our part means a sacrifice of (a) the priority which this Government now enjoys applicable to very considerable portion of its claims; (b) substantial reduction of principal which is owed on account of arrears of Army costs; (c) material postponement of the payments on the Army Costs account and the mixed claims account; (d) permitting postponement of both the mixed claims and the Army costs accounts, while other creditor powers are [Page 1097] to receive large unconditional and nonpostponable payments. It is unthinkable that this Government should be asked to make any further concessions. The President would be unable consistently to recommend them to Congress, and even if he did there is no reason to believe that Congress would authorize them. In disregarding priority enjoyed by United States and allowing us not one cent of unconditional payments over which they themselves wrangled so bitterly, the other creditor powers are hardly in position to assert that proposed agreement constitutes preferential treatment to us.
If the United States is to collaborate effectively with Europe in obtaining advantages contemplated by Young committee, this Government must be free to present matter to Congress in manner which is consistent with our special position, while minimizing the grounds for objection which are indicated above, and at same time providing utmost safeguard to American interests concerned.
This Government’s effort is to collaborate to furthest extent in promoting success of Young Plan, benefits of which will be felt chiefly in Europe. The difficulties in our efforts to collaborate arise from the elements prejudicial to the United States which have already been recommended by Young committee in response to exigent demands of the European creditor governments.
It is not believed that any government which seriously desires success of Young Plan will place any further obstacles in way of American collaboration or that any responsible official who is acquainted with the facts could do so without displaying an animus that would clearly fix responsibilty for the consequences.
The Department will discuss matter informally with the representatives here of the interested powers.