The Ambassador in Germany (Sackett) to the Secretary of State
[Received May 18—11 a.m.]
98. Your 50, May 11, 6 p.m., and 52, May 12, 5 p.m. Following is the full text in the Embassy translation of the self-explanatory aide-mémoire of May 17 handed me by Ritter:
“Referring to the aide-mémoire of the Embassy of the United States of America of May 12, 1932, the Foreign Office has the honor to reply as follows:
1. In article 3 of the protocol of the London Conference of Experts of August 11, 1931, for the purpose of giving effect to the Hoover plan the following was agreed upon between Germany and the reparation creditor countries ‘the amounts thus suspended shall unless otherwise agreed be repaid as from the 1st of July 1933 together with interest at 3 percent from the said date by 10 equal annuities of 117,831,000 reichsmarks’.
An alteration of the rate of interest of 3 percent thus presupposes a new different agreement between Germany and the reparation creditor countries. When sometime ago a demand was made to Germany by certain of the reparation creditor countries to enter into negotiations concerning such a different agreement in case Germany should increase the rate of interest from 3 percent to 4 rate of interest in respect of the United States of America the German Government did not refuse such negotiations. Drafts of the text of such an agreement have already been exchanged between England and Germany. The negotiations in this matter are still pending. Of late none of the reparation creditor countries, in particular neither France nor Italy, has indicated the wish that these negotiations be particularly accelerated. If under these circumstances any one of the nations involved were to make the reproach that Germany on her part had failed to cooperate such a reproach would therefore not be justified.
2. Agreement existed between the negotiators of Germany and the reparation creditor countries at the time of the drafting of the above-quoted regulation of article 3 of the London protocol that occasion for the alteration of the rate of interest of 3 percent is only given when Germany concedes another rate of interest to some other country. So far this has not happened. At present it is true that negotiations are in progress between the United States of America and Germany concerning the fixing of an interest rate of 4 percent. As in these negotiations only a minor question of technical [Page 622]calculation is still open it can be expected with the greatest probability that the negotiations will shortly lead to complete agreement. At the present moment, however, such an agreement between the United States and Germany which constitutes the premise for an alteration of the interest rate of 3 percent between Germany and the reparation creditor countries is not yet in existence. For this reason as well the above mentioned reproach against Germany would not be justified.
3. In accordance with the agreements of the London Conference the German Government declares its willingness in principle, as soon as the agreements between the United States and Germany mentioned in paragraph 2 have come about, to increase the rate of interest, vis-à-vis France and Italy also from 3 percent to 4 percent on the same basis as will then apply to the relations between the United States and Germany.”
Ritter states that Krosigk of Finance Ministry went to Geneva on the 16th and will inform the financial experts Great Britain, France and Italy, in the sense of paragraph 3.
Ritter explains that if the foregoing aide-mémoire should become public in Germany, as it seemingly commits Germany to an increase in the burden of reparations by raising the interest rate, it might at this juncture seriously compromise position of Government. He, therefore, requests that it be treated as strictly confidential. A similar request is being made of other countries concerned. I gained the impression from Ritter’s remarks that this interest rate matter as far as the French and Italians were concerned has been entirely dormant.
Copies by air mail to Paris, London and Rome.