462.00R294/823: Telegram

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

183. 1. Ritter last night sent me a draft of a note unsigned which he asked me to examine and which he said he would explain at a conference this noon.

[Page 328]

Section 2. The draft sets forth the German Government’s understanding of the facts in the case which as indicated in my telegram 178, September 13, noon, is not entirely in accord with the statement of facts set out in the Department’s telegram under reference.

Section 3. The draft recites the German Embassy’s negotiations with Mr. Castle beginning on March 31, 1932 and ending with its letter of May 26th receipt of which was acknowledged by Mr. Castle on June 4. The draft further states that the German Embassy at that time reported that the Secretary of the Treasury “did not reject the German reservation, but only requested that it be presented not in the agreement itself but in a separate accompanying communication”.

Section 4. The draft then asserts that the German Government had no indication that its reservation of May 26th had not been accepted by the United States and as soon as it recently learned, in connection with the declaration of the postponement of the payment due September 30, that the reservation was unacceptable to the Secretary of the Treasury it immediately instructed the German Chargé d’Affaires to drop the reservation.

Section 5. The draft continues “since the proposed reservation was immediately dropped the German Government is of the opinion that for the mutual consideration of the present situation both the withdrawn present reservation as well as the reservation of May 26 must be completely disregarded”.

Section 6. The draft then refers to a conversation between the German Ambassador and the Secretary of the Treasury on June 29 concerning an eventual waiver of the 90–day notice, and characterizes this as “a binding declaration by the Secretary of the Treasury”, in consequence of which the German Government believes itself entitled to declare postponement “at any time before September 30, 1932, in its discretion, without any condition or supplementary declaration”.

Section 7. The draft then concludes as follows: “The German Government also desires on this occasion to state that both parties must be fully aware of the fact that the German-American Debt Agreement of June 23, 1930, as well as the further agreement of May 26, 1932 is a bilateral agreement. The German Government has, therefore, as it has already declared in the past not the intention unilaterally to alter anything in this legal situation”.

Section 8. The conference with Ritter developed the following points:

With regard to the actual facts in the case he states that the German Embassy informed him that the Treasury would not consider reservation being inserted in the agreement of May 26. He had [Page 329] not been informed that Treasury representatives had advised German representatives that an exchange of letters embodying such reservations would be unacceptable; however, Ritter said that even had this been the case such an exchange of letters would have been but another form of bilateral action and he still did not see that the Treasury had done more than to refuse to consider bilateral action with respect to this reservation. Ritter added that Prittwitz had reported that in his preliminary conversation with Castle it was envisaged that Prittwitz should embody the reservation in a letter to the State Department which would merely acknowledge it, and this was subsequently done by Castle’s letter of June 4. Ritter contends that the German Government was therefore entitled to believe, in the absence of an express statement to the contrary, that while the Treasury objected to bilateral action with respect to the reservation it did not entertain a similar objection to a unilateral expression of this reservation.

Section 9. With regard to the sentence in the German draft quoted in the 5th section of this telegram supra, I asked Ritter if this sentence should not be interpreted to mean that the reservation of May 26 was also to be withdrawn.

Ritter replied emphatically in the negative and said that “disregarded” was by no means equivalent to “withdrawn”. In view of the then impending Conference at Lausanne,58 Germany last May had been forced to make this reservation on account of the position she had to take at Lausanne vis-à-vis her reparation creditors; and even if Lausanne could now be considered as a consolidated success if Germany were to change her position by withdrawing the reservation then made any of her other creditors could rightfully impugn her good faith. However, short of using the expression “withdrawn” he was willing to consider suggestions for amplifying the passage quoted so as to make it absolutely clear that the reservation of May 26 only applied to the specific agreement of that date and was not to have or be deemed to have any force, effect or bearing on-the present postponement declaration.

Section 10. To save time I am forwarding text and translation of the draft by mail of the Europa sailing tomorrow. If you desire me to telegraph text of the draft which is approximately 325 code words, please instruct.

  1. For correspondence concerning this Conference, see vol. i, pp. 636 ff.